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Intel is considering separating its chip design and manufacturing businesses as it faces significant financial losses and increasing pressure from investors. The semiconductor giant, currently experiencing one of the most challenging periods in its 56-year history, is also reevaluating its future projects. Despite these hurdles, Pat Gelsinger, CEO remains hopeful about upcoming products. Following recent layoffs, Intel is exploring further measures, including the potential split of its chip design and manufacturing operations. This comes amid rising losses and heightened scrutiny from investors and lawmakers. According to sources, Intel is working with investment banks, including Morgan Stanley and Goldman Sachs, to navigate these difficult times. The company is reportedly discussing the separation of its foundry division, which manufactures chips for external customers, and is also assessing which future factory projects might be cancelled.
This move would represent a significant shift in strategy for Gelsinger, who has seen the foundry business as key to restoring Intel's dominance in the chip industry since he took over as CEO in 2021. Intel’s financial struggles have added urgency to these considerations. The company reported a net loss of $1.61 billion in the second quarter of 2024, leading to a 26% drop in its stock price—the worst single-day performance in over 50 years. In response, Intel announced cost-cutting measures, including plans to lay off approximately 15,000 employees, about 15% of its workforce, by the end of 2024. Additionally, the company has suspended its long-standing dividend as part of efforts to reduce costs by $10 billion annually by 2025. These potential restructuring moves have drawn attention from lawmakers.
Republican Senator Rick Scott has questioned Intel’s CEO, particularly in light of the nearly $20 billion in U.S. grants and loans Intel is set to receive to boost chip production. Scott expressed concerns about whether these awards include sufficient safeguards to protect taxpayer money and ensure job creation. Intel has also been struggling in the artificial intelligence chip market, where competitors like Nvidia have gained a substantial lead.
However, Gelsinger remains optimistic about future products, including "Lunar Lake," which he described as "the most compelling AI PC product ever." The Intel board is expected to meet in September to discuss these options. While no major decisions have been made yet, the potential restructuring of Intel could have significant implications for the company's future, with industry observers, investors, and government officials closely monitoring the situation.
(TOI)
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INDUSTRIAL PRODUCTS FINDER (IPF) is India’s only industrial product portal. Referred to as the ‘Bible’ of the manufacturing sector in India,
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