Friday, August 30th 2024
Report: Intel Could Spin Out Foundry Business or Cancel Some Expansion Plans to Control Losses
According to a recent report from Bloomberg, Intel is in talks with investment banks about a possible spin-out of its foundry business, as well as scraping some existing expansion plans to cut losses. As the report highlights, sources close to Intel noted that the company is exploring various ways to deal with the recent Q2 2024 earnings report. While Intel's revenues are in decline, they are still high. However, the profitability of running its business has declined so much that the company is now operating on a net loss, with an astonishing $1.61 billion in the red. CEO Pat Gelsinger is now exploring various ways to control these losses and make the 56-year-old giant profitable again. Goldman Sachs and Morgan Stanley are reportedly advising Intel about its future moves regarding the foundry business and overall operations.
The Intel Foundry unit represents the biggest consumer of the company's funds, as the expansion plans across the US and Europe are costing Intel billions of US Dollars. Even though the company receives various state subsidies to build semiconductor manufacturing facilities, it still has to put much of its capital to work. Given that the company is running tight on funds, some of these expansion plans that are not business-critical may get scraped. Additionally, running the foundry business is also turning out to be rather costly, with Q2 2024 recording a negative 65.5% operating margin. Separating Intel Product and Intel Foundry may be an option, or even selling the foundry business as a whole is on the table. Whatever happens next is yet to be cleared up. During the Deutsche Bank Technology Conference on Thursday, Pat Gelsinger also noted that "It's been a difficult few weeks" for Intel, with many employees getting laid off to try to establish new cost-saving measures.
Source:
Bloomberg
The Intel Foundry unit represents the biggest consumer of the company's funds, as the expansion plans across the US and Europe are costing Intel billions of US Dollars. Even though the company receives various state subsidies to build semiconductor manufacturing facilities, it still has to put much of its capital to work. Given that the company is running tight on funds, some of these expansion plans that are not business-critical may get scraped. Additionally, running the foundry business is also turning out to be rather costly, with Q2 2024 recording a negative 65.5% operating margin. Separating Intel Product and Intel Foundry may be an option, or even selling the foundry business as a whole is on the table. Whatever happens next is yet to be cleared up. During the Deutsche Bank Technology Conference on Thursday, Pat Gelsinger also noted that "It's been a difficult few weeks" for Intel, with many employees getting laid off to try to establish new cost-saving measures.
113 Comments on Report: Intel Could Spin Out Foundry Business or Cancel Some Expansion Plans to Control Losses
You must be an Intel shareholder, Intel "competing just fine" stretched their processors well past the limit needing to push power higher and higher to compete with AMD.
12nm GloFo is terrible compard to Intel 14nm
Also bought up Nvidia stock in abundance back in 2018
Have AMD too, pretty much all tech companies in my portfolio, in huge amounts
My Intel stock will be at several hundred percent gain in a few years, just wait and see, turnaround incoming
No-one really cares, Intel raised warranty
Arrow Lake 3nm incoming, next gen is soon here
9800X3D or 285K/265K for me ASAP plus a RTX 5090
Talk less, try more
in regards of Intel vs AMD, its known that Server clusters main used intel for performance, and investment not on thte CPU but in the other parts like RAM.
RAM is a big issues for servers builders. Intel always had the advantage of not relying on RAM speed for performance, something the AMD always strugled.
Faster ram with big capacity isnt cheap ... and AMD eco-system was not the option in this regard.
And the intel fans buying the latest shiny thing might not care, but a processor should be the last thing to fail in a system. Those who are loyal to team blue can go ahead and buy Arrow Lake, personally I'm avoiding anything from Intel for a while given how they've handled 13th & 14th gen issues.
Intel needs to be at their feet to keep pushing the competition and giving alternatives to chip-making.
Hope they'll get their sh1t together, and don't drop important segments.
Their CPU will maybe self-destruct again, but it will be with _NODE ADVANTAGE_ this time.
Unstoppable Intel. What will they destroy next time ? For their company, it's well underway.
What's more, he started as a tech doing repairs after getting his associates, worked his way through college.
From 2005, the game plan of Intel was abusing its dominant position, safely stationned behind its financial moats it thought unassailable (x86/x64) and juicing the share price with share buybacks. The peons were stuck with 4 cores they had to pay a lot for (and be grateful for). There was no real effort to create dGPUs even when Intel was developping iGPUs. So their horizon was the share price of the next quarter or the two next quarters. That way they were caught up and overtaken by AMD, nVidia, Apple ... Now they are scrambling to get back in the race.
When I say MBA leadership, I mean people solely focused on financial results. Same with Boeing, actually.
If anything I feel bad for him, he has to clean up the mess that his predecessors made when they focused so much on short term profits, in turn neglecting future viability and allowing the competition to essentially dropkick them.
Honestly if this happens it isn't good for anyone unless separated from Intel the foundry business flourishes. Gloflo has found their niche for sure but it's not like that has helped us much as consumers as of late. TSMC needs a competitor if not to keep prices in check to at least continue to innovate and push technology forward.
as I wrote earlier Government should give them a a loan intel can repay when they get trough this rough patch.
As it's just a rough patch because of their expansion spurred on by the US government and the EU