Intel is trying to improve its financial position by restructuring. To this end, it is transforming its chip manufacturing business into an independent subsidiary.
Intel unveiled its plan in a memo to employees from its CEO Pat Gelsinger, published more than a month after the company announced it would cut 15% of its workforce. Intel is laying off more than 15,000 workers as part of its $10 billion cost-cutting plan to restore financial stability after a second-quarter net loss of $1.6 billion. In his new memo, Helsinger explained that the transformation of the chip business into a subsidiary of «will unlock important benefits for», including the ability to evaluate and directly obtain external financing.
Gelsinger said that there will be no changes in the management of the manufacturing unit, but the subsidiary will create its own operating board with independent directors for management. Intel is even considering making this business line a separate public company.
The company is currently modernizing its existing fabs and building new ones for its manufacturing business, which costs Intel billions of dollars. In this way, the company is trying to catch up with its competitors in chip manufacturing, such as TSMC and Samsung. It is reported that over the past two years, the company has spent about $25 billion a year on its manufacturing business, but it has not yet made a profit.
In April, in a presentation to investors, the company said that this business had a $7 billion operating loss for 2023, compared to a $5.2 billion loss in the previous year. At the same time, the division’s revenue amounted to $18.9 billion, which is 31% less than in 2022. At the time, Helsinger warned investors that Intel expects the operating losses of the manufacturing business to be even higher in 2024, and the company does not expect to break even until 2027.
In addition to spinning off the manufacturing unit, Gelsinger also said in a note that Intel will sell part of its stake in Altera, another chipmaker it acquired in 2015 for $16.7 billion.
Source: Engadget
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