Intel saw an 8% jump in its shares after announcing plans to turn its foundry business into an independent unit. CEO Pat Gelsinger aims to turnaround the struggling chipmaker by restructuring the company. Intel will sell part of its stake in Altera and allow the foundry business to seek outside funding. The company is considering spinning off the foundry business into a separate publicly traded entity. Intel has faced challenges in its core PC and data center business, losing market share to competitors.
The restructuring efforts are aimed at improving Intel’s financials and separating the foundry business from the rest of the company. The move to create an independent unit will make it easier to potentially spin off the business into a separate entity. Intel has been facing challenges in its core business areas, resulting in a significant drop in its stock price this year. The company reported disappointing quarterly results in August and announced a significant cost-reduction plan, including layoffs. Intel’s focus is now on optimizing its operations and regaining market share in key segments.
Additionally, Intel plans to pause fabrication efforts in Poland and Germany based on market demand projections. The company will also scale back plans for its Malaysian factory but maintain its U.S. manufacturing projects. Intel was recently awarded up to $3 billion under the CHIPS Act to further its Secure Enclave program with the Department of Defense. The U.S. government is increasing investment in semiconductor production to mitigate geopolitical risks around Taiwan, a critical player in the chipmaking industry.
In a separate deal, Intel announced an expansion of its partnership with Amazon Web Services to produce custom chips for AI. This partnership will give Intel a new foothold in the growing market for AI server chips, where Nvidia currently dominates. Amazon has been developing its own AI chips and investing in custom processors to run AI workloads. Intel will produce the custom Xeon processor for AWS at its advanced manufacturing plant in Ohio. The partnership aims to offer more cost-effective solutions for AI workloads.
Overall, Intel’s strategic moves to restructure its business and forge partnerships with key players like Amazon demonstrate its commitment to innovation and growth. The company is focused on optimizing its operations, reducing costs, and regaining market share in key segments. The support from the U.S. government through the CHIPS Act further strengthens Intel’s position in the semiconductor industry. The success of these initiatives will be crucial in determining Intel’s future success and its ability to compete in the rapidly evolving tech landscape.
