Cisco Is Coming To Intel's Rescue

APCisco CEO John ChambersIntel had a surprising bright spot in its rough quarter.

Data Center Group revenues were $2.8 billion, up 7% sequentially and 4% from the year-ago quarter.

That's not enough to make up for declining PC sales and unloved mobile products, but there's hope for Cisco in the business of making silicon designed for servers that run in large-scale data centers.

Cisco reportedly just signed up to be a big customer for Intel's new foundry business, where Intel will manufacture chips that its customers design, a big change from its past practice of only manufacturing its own chips. Cisco will become the largest customer, buying made-to-order networking chips, unnamed sources told Bloomberg reporters Ian King and Jordan Robertson.

Cisco has long been a buyer of Intel chips, but this new contract would be for chips of Cisco's design, and would be a big win as Intel tries to expands into the $30.7 billion custom-silicon market. Intel announced its custom foundry plans about a year ago.