Intel is said to be considering a potential spin-off of its semiconductor manufacturing business, which could lead to the company outsourcing production of future designs. The struggling corporation is said to be consulting with its financial advisors to explore options for reversing its dire financial performance, with divestment of its foundry business reportedly being a potential last-ditch solution under consideration.
Intense market fluctuations have beset Intel, causing its stock price to plummet from $47.80 in January 2024 to a mere $20.13 by that point? The gaming industry’s top processor options have recently been plagued by stability issues, but it’s also facing a lawsuit from Intel shareholders alleging that the company’s foundry business was struggling, incurring billions of dollars more than investors were initially informed.
According to a recently released report by Bloomberg, anonymous sources close to the situation have shared details with the publication, citing individuals familiar with the matter who wished to remain unidentified for confidentiality purposes. According to the sources, several options are being considered to recover funds, including a potential restructuring of its product-design and manufacturing operations, as well as scrapping underperforming manufacturing facility projects.
Six months ago, Intel CEO Pat Gelsinger expressed his desire for Intel’s foundry “crown jewels” to be accessible to everyone, including Nvidia and AMD, likely positioning Intel’s chip-making business as a competitor to Taiwan Semiconductor Manufacturing Company (TSMC) in the future.
Pentium founder Andy Grove reportedly proposed restructuring Intel into two distinct entities: a foundry specializing in chip manufacturing, and another focused on designing and producing Intel-branded products. This potential reorganization could theoretically enable Intel to create its own custom GPUs, potentially rivaling those of Nvidia. According to the latest report, Intel is reportedly considering a dual strategy: both designing and manufacturing chips for other companies, as well as creating its own custom silicon.
This transfer aligns with established company practices. In March 2009, amidst financial struggles, AMD decided to divest its foundry business by spinning off GlobalFoundries, which then leveraged Taiwan Semiconductor Manufacturing Company (TSMC) for manufacturing cutting-edge silicon in its high-performance gaming CPUs and GPUs.
AMD’s share value has experienced a significant surge following innovative work on its chip structure design. Since March 2009, it has risen from $2.52 to a current valuation of $145.49, exceeding the $200 mark earlier this year. Unlike competitors like Nvidia and AMD, Intel stands out for its commitment to fabricating its own microprocessors; neither company relies on external foundries to manufacture their chips.
According to Bloomberg’s sources, the likelihood of a full-scale production halt at Intel is seen as excessive, with a more plausible scenario being a delay in planned factory expansion rather than a complete shutdown. With guidance from their lead banks Morgan Stanley and Goldman Sachs, Intel is expected to outline its next move during a September board meeting, where the options will reportedly be disclosed in keeping with industry sources. While all current conversations remain in their infancy, there is little indication that a groundbreaking breakthrough is imminent anytime soon.
For PC enthusiasts, a significant trend is emerging: Intel CPU prices are plummeting, presenting an attractive opportunity to upgrade or build a new gaming rig. Additionally, a recent microcode update addresses stability concerns, further enhancing the overall gaming experience. If you’re considering building a new gaming rig from scratch, check out our comprehensive guide on how to build a gaming PC, which walks you through every step of the process from start to finish.
