Stocks Up, Employees Down … How 2024-ish
Intel dropped a few bombshells today, including the partial spin off of their foundry business into a subsidiary called Intel Foundries. They are not quite joining the ranks of fabless semiconductor companies and the management team that handles the foundries is not changing, at least for now. The reasoning given is to make their fabs more independent in order to provide greater separation between their other products and their fab business which they feel will benefit those companies who use Intel’s fabs to manufacture their products. It should also give Intel Foundries more flexibility when seeking out funding. Intel is receiving $3B from the US Government through the CHIPS Act, this separation might open up more opportunities for similar funding.
The change also seems to be an attempt to address Intel’s stock price dropping by over 50% this year, with the hope that the spin off will raise investors confidence in Intel. With a new deal to design and fab custom Xeon processors for AWS that is not an unreasonable hope. As you might expect the drop in stock price will also result in an unknown number of employees being let go later this year, an old tradition for publicly traded companies that has had very mixed results over the years. Intel will also sell of part of it’s holdings in Altera which should help replenish Intel’s cash reserves.
Intel Foundries will continue in Ireland but the build outs in Poland and Germany will be postponed for two years or so. There are a few more changes which you can check out at ServeTheHome, who published Pat Gelsinger’s email to employees.