Intel executives are currently working with several advisors, including Morgan Stanley, to explore options to address the company’s declining business performance. These advisors are expected to present a range of options, including splitting off and selling businesses, at an upcoming board meeting in September. Despite this, Intel and Morgan Stanley have not yet provided any comments on the matter to CNBC. CEO Pat Gelsinger has publically acknowledged investor skepticism and emphasized the need for operating efficiently and urgently to address these challenges.
Gelsinger also mentioned at Deutsche Bank’s Technology Conference that Intel is on track to launch its next laptop central processor, Lunar Lake. However, investors remain unconvinced of a potential turnaround, which has caused the stock to plummet by almost 60% this year. Intel’s recent struggles can be attributed to fierce competition, primarily from Nvidia, which specializes in producing graphics processing units (GPUs) essential for AI models. In addition to these challenges, Intel announced significant layoffs earlier this month as part of a cost-cutting initiative, which did little to appease investor concerns.
Intel’s foundry business, which has attracted interest from approximately a dozen customers, remains a costly endeavor for the company. The buildout of this business is crucial for Intel’s future success but requires significant investments. With increasing pressure from investors and a competitive market landscape, Intel faces significant challenges in revitalizing its business and restoring investor confidence. Gelsinger’s efforts to address these issues by focusing on operational efficiency and urgency demonstrate the company’s commitment to navigating these turbulent times.
Despite Intel’s efforts to improve its performance, the company still faces skepticism from investors and struggles to regain market share lost to competitors like Nvidia. The upcoming board meeting in September will be crucial in determining the strategic direction of the company and potential options for restructuring or divesting certain businesses. Intel’s continued investment in its foundry business signifies its commitment to innovation and long-term growth, but the road ahead remains challenging in light of intense competition and investor discontent. Gelsinger and his team must navigate these complexities to drive positive outcomes for Intel and its stakeholders in the months ahead.
