[News] Former Intel Directors Urges the Company to Spin off its Fab Business

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According to a report from Silicon Angle, four former Intel directors have published an article in Fortune, urging the company to spin off its fab business.

The authors include Reed Hundt, a onetime Federal Commission Communications chair, Charlene Barshefsky, former U.S. Trade Representative, James Plummer, Stanford University’s dean of engineering for over a decade, and David Yoffie, a Harvard Business School professor and longtime Intel director.

Their argument basically are based on two reasons. First, they argue that if Intel is going to be acquired by other companies, the potential buyers would likely prioritize cost-cutting and see little value in the money-losing manufacturing fab. They highlight this possibility due to Intel’s recent significant drop in stock price, and with its fab business operating at a substantial loss, it could become a target for cost-cutting initiatives.

Secondly, according to their article in Fortune, they noted that since Intel operates its own foundry within its corporate structure, it struggles to attract business, as other chip design companies see it as a potential competitor.

In their article in Fortune, they pointed out that Nvidia, Qualcomm, Broadcom, and others are all looking for a second manufacturing option other than TSMC, but will continue to be cautious about Intel as long as it remains a direct competitor. They indicate that spinning off the fab business would alleviate these concerns.

They argue that while the U.S. government has already promised up to USD 8.5 billion in grants and USD 11.5 billion in low-cost loans for Intel, the government should further demand Intel to split its design and manufacturing operations into two completely independent companies.

On the other hand, Intel’s former CEO Craig Barrett has a different perspective on whether Intel should split its foundry business. In an article published in Fortune, Barrett argues that separating Intel into two distinct companies is not the answer. He pointed out that this approach would hinder the foundry business’s ability to keep pace with the latest technology, leaving the U.S. government dependent on foreign suppliers like TSMC for cutting-edge advancements.

Previously on September 16th, Intel announced that it will transform its foundry business into a wholly-owned subsidiary with its own board of directors. According to its press release, this new structure will provide greater separation and independence for Intel’s external foundry customers and suppliers from Intel’s other divisions. Importantly, it also gives the company the flexibility to evaluate independent funding sources in the future and optimize the capital structure of each business to maximize growth and create shareholder value.

Read more

• [News] Intel’s Foundry Spin-off Could Improve Chances of Securing Orders from Tech Giants such as Apple and AMD
• [News] Intel Reportedly Aims to Raise Billions through Sale of Minority Stake in Altera

(Photo credit: Intel)