Intel considers foundry split, fab cancellations
Intel is considering its strategic options around its manufacturing unit known as Intel Foundry, according to a Bloomberg report that cited unnamed sources.
The main issue focuses on splitting the company between its processor product business and manufacturing and then spinning off the manufacturing operation. At the same time the loss-making company may have to consider cancelling wafer fab projects, Bloomberg reported.
Morgan Stanley and Goldman Sachs Group have been providing advice on the strategic options including the potential for a sell-off or merger for the manufacturing business, the report said. It added that the options are for possible consideration during a board meeting in September.
According to a Reuters report CEO Pat Gelsinger is not yet set to propose splitting Intel and selling off its foundry business to the board. He is looking to identify other unneccessary business units for sell off — such as Altera — and reducing capital spending. However, the report said that plans around the manufacturing operations are not yet finalized.
Earlier in August it had been reported by CNBC that Intel was working with advisors, including Morgan Stanley, to defend itself against activist investors.
The debate has become more urgent since Intel published a poorly received set of financial results for 2Q24 in which it made a net loss of US$1.6 billion on revenue of US$12.8 billion.
Intel’s plans for two fabs at a new site in Magdeburg, Germany, could be under threat from the strategic considerations although the time line for these fabs is already long with plans for production not scheduled for four or five years after the European Union signs of on subsidies of about US$10 billion to be provided by the German government.
The news that Intel was considering its options sent Intel shares up 9.5 percent to $22.04 in New York on Friday.
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