Intel restructures itself and turns the manufacturing division into an independent company
Intel has announced its future restructuring plans to transform its manufacturing division into an independent company with its own board of directors and the possibility of attracting outside investment.
As part of CEO Pat Gelsinger’s efforts to salvage its struggling chip manufacturing division, Intel said it would also sell part of its stake in Altrera, a company it acquired in 2015 for $16.7 billion that makes programmable processors known as FPGAs.
These recent decisions came days after Intel's board of directors met to assess the company's direction and future, following the recent challenges the company faced, which led to it losing nearly 60% of its value this year.
The manufacturing division, which Intel plans to use to make chips for other customers, has been a heavy drag on its financial results, with the company spending about $25 billion on it in the past two years, to little financial benefit.
The company's market share in its core business of personal computers and data centers has declined, it has lost the artificial intelligence market to Nvidia, which dominates it with its advanced chips, and recent reports indicate that Intel has failed to strike a deal with Sony to manufacture chips for the upcoming PlayStation 6 gaming console.
Last August, Intel reported disappointing financial results and announced that it would lay off more than 15% of its workforce as part of a $10 billion cost-cutting plan.
Intel also said it will halt manufacturing operations in Poland and Germany for about two years, and will backtrack on plans to build a factory in Malaysia, while its US manufacturing projects will remain unchanged, especially after the Biden administration granted the company $3 billion under the Chips and Science Act, which aims to localize chip manufacturing in the US.
In a related context, Intel said that it has entered into a deal with Amazon to produce chips dedicated to artificial intelligence, which expands the long-standing partnership between the two companies, as Amazon relies on Intel chips to operate its famous AWS servers.