Intel’s woes are far from over. Pat Gelsinger, the company’s CEO, has announced that Intel’s chipmaking business will be spun off and turned into a separate company.
A subsidiary structure will unlock important benefits. It provides our external foundry customers and suppliers with clearer separation and independence from the rest of Intel. Importantly, it also gives us future flexibility to evaluate independent sources of funding and optimize the capital structure of each business to maximize growth and shareholder value creation.
There is no change to our Intel Foundry leadership team, which continues to report to me. We will also establish an operating board that includes independent directors to govern the subsidiary. This supports our continued focus on driving greater transparency, optimization and accountability across the business.
↫ Pat Gelsinger
This is a big move, and illustrated the difficulties Intel is facing. Its foundry business lost $7 billion last year, and it’s cutting 15% of its workforce – 15000 people – indicating it needs to do something to turn the ship around. Intel is also pausing construction on two additional plants in Europe, but will continue its expansion efforts in the United States. Bitter note is that Intel received a massive cash injection from the US Biden administration, yet then proceeds to fire 15000 people.
Socialism for the rich, capitalism for the poor.