Intel unveils turnaround plan and split into two companies

On Monday (16), Intel outlined its strategy to recover from one of the most significant crises in its history and regain its leadership in the semiconductor chip market.

In an open letter to employees, CEO Pat Gelsinger shared the company’s plan to rebuild and confirmed rumors that Intel would split into two divisions. Gelsinger explained that this restructuring is essential for future growth and highlighted several key benefits of the move. The changes aim to streamline operations, enhance focus, and position Intel more competitively in the rapidly evolving tech landscape.

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“To continue our growth, we plan to establish Intel Foundry as an independent subsidiary within Intel. This new structure will complete the process we began in early 2024 when we separated the financial reporting of Intel Foundry and Intel Products. A subsidiary structure will provide important benefits, including clearer separation and independence for our foundry customers and suppliers from the rest of Intel. More importantly, it gives us the flexibility to evaluate independent sources of financing and optimize the capital structure of each business to maximize growth and shareholder value creation.”

What are Intel’s priorities with this split?

Intel’s decision to split into two separate businesses will enable a sharper focus on three key areas, as highlighted by CEO Pat Gelsinger in his letter to employees.

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First, Intel Foundry Services will concentrate on launching Intel 18A, the company’s advanced 1.8nm lithography process, which is nearing the final stages of testing and approval. By dividing the businesses, Intel aims to improve capital efficiency and accelerate the launch of this next-gen product.

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Second, the company must create a more competitive spending structure to meet its cost-saving target of $10 billion by 2025. While Gelsinger did not provide specifics, reports suggest that Intel may initiate another round of layoffs and sell parts of its chip design division to streamline operations and reduce costs.

Lastly, Intel plans to refocus on x86 processors while advancing its AI strategy to serve its customers and partners better. This dual focus will be key to Intel’s efforts to maintain its semiconductor dominance and compete in the rapidly growing AI sector.

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What measures will Intel take now?

In addition to the business spin-off, Intel announced several key initiatives to meet its strategic goals.

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The most significant is a new deal with Amazon Web Services (AWS), where Intel will manufacture custom AI chips using its 18A lithography. The partnership also includes producing custom Xeon 6 processors using Intel’s Intel 3 process, solidifying the relationship between the two companies.

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Additionally, Intel secured $3 billion in funding from the U.S. government through the Secure Enclave program, which supports manufacturing advanced chips for military use.

These initiatives are expected to ensure a steady production flow and boost confidence in Intel’s lithography technologies, potentially attracting new customers.

CEO Pat Gelsinger concluded his letter by acknowledging that while Intel is taking critical steps toward recovery, significant work remains ahead, with tangible results likely to emerge in the next two years or more.

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Rohit is a certified Microsoft Windows expert with a passion for simplifying technology. With years of hands-on experience and a knack for problem-solving, He is dedicated to helping individuals and businesses make the most of their Windows systems. Whether it's troubleshooting, optimization, or sharing expert insights,
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