Intel announced one of the biggest transformations of its history, with a series of changes that concern the spin-off of its foundries , temporary suspension of investments in Europe. The CEO Pat Gelsinger described the move as “Intel's most massive transformation in more than four decades,” noting that the restructuring is necessary to face market challenges and optimize operational efficiency.
Intel Foundry Goes Independent
The core of the reorganization is the Spin-off of Intel Foundry Division, which will become a independent subsidiary, with its own board of directors and separate financial reporting. Gelsinger explained that the decision is aimed at ensure greater transparency, operational efficiency and flexibility in raising external capital. “A subsidiary structure will unlock important benefits, providing our external customers and suppliers with a clearer separation from the rest of Intel,” Gelsinger said.
This move will allow Intel Foundry to operate with greater autonomy, in line with the group's long-term objectives, including cost reduction and capital optimization.
Investment pause in Europe
In parallel, Intel announced the temporary halt to investments in factories of Poland and Germany, a decision that will be in force for at least two years. A choice that was made on the basis of the forecasts of weak demand of the European market. Intel has, however, confirmed that will continue to invest in manufacturing facilities in the United States, with particular focus on Arizona, Oregon, New Mexico and Ohio. The strategy reflects a change of priority towards more profitable and secure markets, such as the US, and a more cautious approach to production expansion in Europe.
US Government Contracts and Amazon Partnerships
Despite the challenges, Intel also announced some major successes. Among them, the Direct financing up to $3 billion by the US government under the CHIPS and Science Act, which aims to expand the production of advanced semiconductors for military purposes. A contract that guarantees Intel a key role in the national security of the United States, strengthening its strategic positioning in the sector.
Additionally, Intel has signed a partnership with Amazon Web Services (AWS), with the aim of producing custom chips for the cloud. In particular, Intel Foundry to Build AI Processor based on the Intel 18A process, as well as a custom Xeon 6 chip with the Intel 3 process, dedicated to powering AWS servers. “This strategic collaboration marks a major step for our Foundry division, acquiring a key customer in Amazon,” said Gelsinger.
Layoffs and asset sales
Intel's transformation is not limited to the spin-off of Foundry and investments. The company is facing a profound internal renovation which includes massive layoffs and the sale of non-strategic assets. By the end of the year, Intel plans to cut about 15.000 jobs, reduce its global real estate assets by 66% and to sell part of its stake in Altera, a company acquired in 2015. A series of measures aimed at reducing operating costs and generating liquidity, necessary to support the new corporate structure.
Gelsinger defined these actions as “needed to make Intel an engine of operational efficiency and financial performance, built to win in the marketplace.” Cost reduction is just the beginning of a series of strategic moves aimed at reorganizing the company’s product portfolio, focusing on key markets such as data centers and artificial intelligence.
Investors like the moves, stock rallying on the stock market
The renovation news has had a positive effect on the stock market, despite a 58% loss since the beginning of 2024. The announcement brought the Intel shares to an 8% increase in overnight trading. With markets open, the stock rose more than 10%, touching EUR 20,18. Currently, the shares are trading around a gain of 8,42%, at $19,87 per share.
