On April 17, 2024, Intel CEO Pat Kissinger held a “Gaudi 3” artificial intelligence chip and delivered a speech at the 54th Annual Meeting of the Semafor 2024 World Economic Summit in Washington, DC.
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Intel Shares of the company rose nearly 10% in after-hours trading on Monday after the company said it plans to transform its foundry business into an independent unit with its own board of directors and the possibility of raising outside capital.
Intel said in a memo to employees that it will also sell part of its stake in Altera as part of Chief Executive Pat Gelsinger’s efforts to turn around the troubled chipmaker.
The reorganization will allow Foundry to “evaluate independent sources of funding,” Gelsinger said, days after Intel’s board of directors met to assess the company’s direction and future. Intel plans to use its foundry business to make chips for other customers, a business that has weighed heavily on its profits, with the company spending about $25 billion on the business over the past two years.
In addition to considering outside funding, Intel is also considering whether to spin off its foundry business, possibly spinning it off into a separate publicly traded company, according to a person familiar with the matter who spoke on condition of anonymity to discuss confidential information.
With separate “operating committees” and a clearer corporate structure, the mechanics of separation are much easier than trying to transform a fully integrated division into a separate company.
Before the post-IPO rally, Intel had lost nearly 60% of its market value this year. The company gave up market share in its core PC and data center businesses and focused on NVIDIA Escape from the chip market that powers artificial intelligence workloads. Last month, Intel reported disappointing quarterly results, triggering its worst sell-off in 50 years, and said it would cut more than 15% of its workforce as part of a $10 billion cost-cutting plan.
Gelsinger said Intel would also suspend construction of its fabs in Poland and Germany for “approximately two years, based on anticipated market demand” and cancel plans for its Malaysian factory. The company said manufacturing projects in the United States will not be affected.
Gelsinger said the company is about halfway through the job cuts it announced in August.
In addition to the foundry announcement, Intel said on Monday it had partnered with Amazon Web Services produces custom chips for artificial intelligence, expanding a long-standing partnership between the two companies. Intel said Amazon is a large customer of Intel chips that power its AWS servers and will also purchase customized Xeon processors from Intel.
The move could give Intel a new foothold in the growing artificial intelligence server chip industry. While Intel has several products for artificial intelligence, including Gaudi 3, Nvidia already controls the market to a large extent.
Amazon has been developing its own artificial intelligence chips, including one called Trainium, for more than five years. Microsoft and Google It is also investing heavily in custom chips to run artificial intelligence, aiming to provide processors that are cheaper than Nvidia’s general-purpose graphics processing units (GPUs).
Intel said it will conduct its most advanced manufacturing, including artificial intelligence chips for AWS, at the Ohio factory currently under construction.
“All eyes will be on us,” Kissinger said. “We need to go all out and execute better than ever before. Because that’s the only way to silence the critics and achieve the results we know we’re capable of achieving.”
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