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Intel is separating its AI-focused foundry business into an independent subsidiary, a move aimed at revitalizing the struggling tech giant, which has reported multibillion-dollar losses and seen its stock price drop by nearly 45% in the past year.
Intel CEO Patrick Gelsinger revealed in a Sept. 16 memo that Intel Foundry would become an independent business with its own board of directors and capacity for outside capital raising capability. Intel’s approach to challenge Nvidia—which has benefitted greatly from manufacturing processors for artificial intelligence systems—is based on this change.
Intel Foundry wants to start next year manufacturing chips for partners like Microsoft and Amazon using its 18A chipmaking technique. Gelsinger said that the reorganization would increase market competitiveness and profitability, therefore being the most important change the corporation has undergone in four decades.
Intel’s shares climbed 6.4% on the announcement, completing the day at $23.30, from $19.86 at market opening. Notwithstanding the buzz, a recent Reuters story said Intel’s 18A chipmaking technique suffered significant flaws in early testing.
Launched in February 2023, Intel Foundry is the manufacturing division of the business dedicated to developing AI-specific in-house rather than outsourced chips. Intel also intends to sell some of its ownership in Altera, a programmable chip maker it purchased in 2015, in line with restructure.
Intel has been granted up to $3 billion in cash by the Biden government to manufacture processors for the US military and is trying to minimize its worldwide real estate footprint. Aiming to have 15,000 employees by year-end, Intel has also reduced almost two-thirds of its personnel as part of a larger cost-reduction initiative.
Having stopped its Bitcoin-mining processors earlier this year after only one year of manufacture, Intel lags behind rivals such Nvidia and AMD.
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