Intel implements major changes to address financial struggles

Intel is going through a major restructuring by spinning off its chip manufacturing business into a new independent subsidiary called Intel Foundry. This decision comes after the company experienced significant financial losses, totalling $1.6 billion in the first quarter of 2024. The restructuring, which was announced by CEO Pat Gelsinger, is intended to address the company’s declining stock price. It includes the creation of a separate board of directors and financial reporting specifically for Intel Foundry.

As part of its reorganisation, Intel will suspend operations at its manufacturing plants in Poland and Germany for two years, while continuing projects in Arizona, Oregon, New Mexico, and Ohio. The company also plans to sell part of its stake in Altera and reduce its global real estate footprint by about two-thirds to cut operating expenses. Intel has already laid off 15,000 employees as part of its cost-saving measures.

On a positive note, the Biden administration has approved up to $3 billion in funding for Intel to build chips for the US military, which could boost its position in the defence sector. Despite these efforts, Intel faces challenges with its 13th and 14th generation processors and a $7 billion operating loss in 2023. The company is investing in the new 18A chip manufacturing process, but early tests have raised concerns. Intel plans to begin producing chips with this new process for partners like Microsoft and Amazon next year, which will be crucial for its recovery and regaining its semiconductor leadership.