Intel’s shares surged eight per cent following the announcement of a strategic overhaul to transform its foundry business into an independent entity.
This will involve the company establishing its own board and the potential for external capital, which forms a crucial part of CEO Pat Gelsinger’s broader strategy to navigate the company through its current financial tribulations.
To regain market share within the burgeoning AI server chip sector, Intel is also contemplating the spin-off of its foundry business, pausing European manufacturing projects and bolstering its AI chip production partnership with Amazon Web Services (AWS).
Gelsinger emailed staff to say Chipzilla would divest part of its stake in Altera. He stated that the restructuring would enable the foundry business to “evaluate independent sources of funding,” a decision that follows a recent board meeting to deliberate the company’s future trajectory.
The foundry business, which Intel intends to use to manufacture chips for external clients, has significantly impacted the company’s financials, with an expenditure of approximately $25 billion annually over the past two years.
According to the dark satanic rumour mill, Intel is establishing a standalone “operating board” and a streamlined corporate structure would facilitate a smoother separation process than disentangling a fully integrated unit.
Furthermore, based on projected market demand, Intel will delay its fabrication initiatives in Poland and Germany by roughly two years and scale back its plans for its Malaysian facility. However, its US manufacturing projects will remain unaffected.
In addition to the foundry developments, Intel has agreed with AWS to produce custom AI chips, extending their longstanding collaboration. AWS, a major consumer of Intel chips for its servers, will also procure a custom Xeon processor from Intel.
This partnership is poised to provide Intel with a stronger foothold in the expanding AI server chip market. Despite Intel’s array of AI-capable products, including the Gaudi 3, Nvidia has predominantly dominated this sector.
AWS has been independently developing its AI chips, such as Trainium, for over five years, while Microsoft and Google have also heavily invested in custom AI chips to offer more cost-effective alternatives to Nvidia’s general-purpose GPUs.
Intel plans to conduct its most advanced manufacturing, including the production of the AI chip for AWS, at its under-construction plant in Ohio. Gelsinger remarked, “All eyes will remain on us. We need to fight for every inch and execute better than ever before. Because that’s the only way to quiet our critics and deliver the results we know we can achieve.”