Intel CEO Unveils Bold Asset Divestiture

Key Takeaways

• Intel plans to sell Altera, halt $32 billion factory.
• 15% of workforce cut, reducing R&D.
• Plans expansion of foundry services.
  

Asset Divestiture and Cost-Cutting Plans

After a disappointing Q2 and weaker-than-expected third-quarter guidance, Intel’s CEO and other executives, along with input from their long-time investment bankers Morgan Stanley and Goldman Sachs, are now preparing a mid-September proposal to shed non-core assets and cut costs. This includes potentially selling businesses like programmable chip unit Altera, which Intel acquired for $16.7 billion in 2015, and possibly halting a $32 billion factory project in Germany. 

INTC‘s recent decision to lay off 15% of its workforce, affecting 15,000 employees, and reduce R&D spending, is part of a broader plan to cut capital spending to $21.5 billion in 2025, down 17% from this year.

INTC’s Foundry Ambition and IDM Strategy

Despite the potential changes discussed above, INTC aims to become the world’s second-largest semiconductor foundry by 2030 through an expanded foundry services strategy. Backed by over $50 billion in funding from U.S. and European governments, INTC is focusing on advanced technologies like Intel 14A and Intel 18A, aiming to meet growing AI demands. INTC’s foundry business is strategically positioned to manufacture chips for external partners while maintaining its Integrated Device Manufacturing (IDM) model.