Intel Corp. is exploring strategic options, including a potential sale or spin-off of its foundry division, as the company faces one of the toughest challenges in its 56-year history, according to sources. This move would mark a significant shift for CEO Pat Gelsinger, who has emphasized the importance of the foundry business in reviving Intel’s competitiveness in the semiconductor industry. Gelsinger had envisioned the foundry unit, which manufactures chips for external clients, as a way to compete with industry leader Taiwan Semiconductor Manufacturing Co.
However, insiders suggest that Intel may opt for less drastic measures before making such a move, possibly delaying some of its planned expansions. The company has already engaged in project financing agreements with Brookfield Infrastructure Partners and Apollo Global Management to manage its financial difficulties.
Gelsinger is under increasing pressure to turn around the company, which has been struggling with declining sales and mounting losses. Intel reported a net loss of $1.61 billion in the last quarter, and analysts forecast continued financial challenges in the coming year. Market strategist Amir Anvarzadeh from Asymmetric Advisors anticipates significant capital expenditure cuts from Intel over the next year, citing a broken business model that is overwhelmed by multiple challenges.
Gelsinger, who rejoined the company in 2021 after more than a decade away, has faced difficulties in executing his ambitious recovery plan. Under previous leadership, it lost market share and its reputation for innovation. Gelsinger’s strategy to split the company into two units—one focused on chip design and the other on manufacturing—has yet to bear fruit, and the foundry business remains heavily reliant on Intel’s own demand rather than external customers.
The company has already announced job cuts affecting approximately 15,000 employees, significant reductions in capital spending, and the suspension of its long-standing dividend. At a recent Deutsche Bank Technology Conference, Gelsinger acknowledged the challenges, noting that the market’s reaction to Intel’s latest earnings report was not favorable.
Further complicating matters, director Lip-Bu Tan, a key figure in it’s comeback efforts, unexpectedly resigned from the board, citing scheduling conflicts. His departure removes one of the few board members with deep semiconductor industry expertise.
Intel’s financial woes are reflected in its declining market value, now at $86 billion, which has pushed the company out of the top 10 global chipmakers. Intel has also been one of the worst performers on the Philadelphia semiconductor index this year, especially when compared to the meteoric rise of Nvidia Corp., whose revenue is expected to double that of Intel by 2024. Just three years ago, it’s revenue was triple that of Nvidia’s.
