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
Meanwhile tons of new security flaws was detected in AMDs chip design and Zen 5 failed hard so far, GG, hopefully 9000X3D can save Zen 5.
Those were primarily Intel-related vulnerabilities in that they hurt Intel performance quite badly. Yes, AMD has had a few security issues but nothing like Intel.The only reason why Zen 5 failed so hard was because of AMD's stupid marketing department. If they had just shut the hell up and let the engineers say that Zen 5 would feature no new performance increases while using less power, we'd not have this damn problem. Would we?
Every company is going to try to put its product in the best light, so some of this is 'normal'.
However, starting with Zen 4, Zen 5 was touted to be the big reason to go with the new platform and DDR5. That's all turning out to be a big FUD operation.
In that respect, their marketing department succeeded in getting people to spend money on Zen 4 and the AM5 platform that they otherwise wouldn't.
I don't think you're going to see any change in tactics because, frankly, it worked.
These are the chips affected. Most OEM rigs have lower tier chips than any of these :
www.techspot.com/news/101890-amd-ryzen-cpus-impacted-all-serious-vulnerabilities.html
Also plenty of OEM systems have a 13700, and the 13600K or 13600KF is popular with prebuilt gaming systems.
Intel really needs to get their crap together and get rid of the higher ups who only care about money and hire some engineers.The AMD issue is much less worse than Intel spectre/meltdown, but I'm not surprised Intel users are using it as some kind of "gotcha" though. At least the AMD issue is fixable, not so much for every 13th and 14th gen CPU potentially affected by degradation.
1. Celeron exists because Dell and others wanted a cheaper CPU, so Cyrix saw the opportunity. AMD as well.
2. Pentium M was a response to Transmeta.
3. Core 2 was a response to AMD's Athlon and Athlon 64.
4. Lunarlake(Core Ultra Series 2) is a direct response to Apple's M1.
They SHOULD have made cheaper CPUs, they SHOULD have made more competitive CPUs that didn't focus on marketing(clock speeds), they SHOULD have made CPUs with lower power for better battery life.
Entirely a reactive company run by finance. Intel is a finance company with engineering at the side.
Intel will lose their biggest sinkhole and Nvidia will lose dependency on TSMC, which continuously raises prices of wafers and overall production costs.
Now that Intel invests in US and EU fundries, it might be even more important for Nvidia to acquire them.
Why? Nvidia has been critically dependent on TSMC for years now.
If China invaded Taiwan, that would basically mean a killswitch for Nvidia's greedy AI business.
Having own fabs outside of Asia is a way to squeeze Apple's, Intel's, AMD's wallet and also a way to achieve sustainable and ultimate greediness.
As a bonus, that would allow Jensen to buy even more expensive leather jackets.