[News] Intel to Turn Foundry Unit into Subsidiary, with Projects in Germany and Poland Delayed for 2 Years

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The struggling giant seems to gradually get a turnaround, as Intel reportedly settles down plans for restructuring after the board meeting. Intel, according to a latest report by CNBC, reveals schemes to transform its foundry business into an independent unit with its own board. Moreover, the strategy will allow the foundry business to explore “independent sources of funding,” the report notes.

In a post released on September 16^th, CEO Pat Gelsinger refers to the next phase of Intel’s transformation as “the most significant transformation of Intel in over four decades. Not since the memory to microprocessor transition have we attempted something so essential.”

The plan for its foundry unit to secure outside funding would be critical, as the business has weighed heavily on Intel’s finances, with the company spending around USD 25 billion on it annually over the past two years, CNBC suggests.

It is worth noting that Intel is thinking something even bigger regarding its foundry business, as it is having the ambitious idea that in addition to possibly spinning it off, it may mull to transform the business into a separate publicly traded company, according to a source familiar with the matter cited by CNBC.

The report notes that with the establishment of an independent operating board and a streamlined corporate structure, separating the business becomes significantly easier for Intel, especially compared to the challenge of turning a fully integrated unit into a standalone company.

Along with the decision, other details of Gelsinger’s efforts have surfaced. CNBC notes that the semiconductor heavyweight would also divest a portion of its stake in Altera, according to a memo to the company’s employees.

Regarding its plan on overseas expansion, according to CNBC, citing Gelsinger’s remarks, Intel will delay its fabrication projects in Poland and Germany by roughly two years due to projected market demand. Additionally, the company will scale back its plans for its factory in Malaysia.

Intel’s decision on the delay of the two projects in Europe, partly funded through state aid, would be a heavy blow to EU, as the region tries to boost its domestic semiconductor industry to increase its resilience and independence. The EU Chips Act, in force since September 2023, aims to double Europe’s share of global semiconductor manufacturing to 20% by 2030.

According to a report by EURACTIV, Intel’s €30 billion investment in Magdeburg, Germany, is the largest project envisioned under the EU Chips Act, with one-third of the funding coming from German subsidies. In Poland, Intel’s €4.2 billion project has also been recognized as the “largest investment in Polish history,” with €1.7 billion (PLN 7.4 billion) expected to be provided through state aid.

Notably, as the company proactively pursues the support of the U.S. government, it is holding steadfast on its investments in the country. Intel’s U.S. manufacturing projects will continue as planned, according to CNBC.

Intel plans to invest USD 100 billion over the next five years in new fabs and expansions across Arizona, New Mexico, Ohio, and Oregon, creating 10,000 manufacturing jobs and 20,000 construction jobs.

The semiconductor giant’s Fab 52 and Fab 62 in Arizona are previously scheduled to be completed in 2024. However, The Register notes that the schedule may be delayed a bit, as the fabs are likely to begin operations later this year or in early 2025, targeting to manufacture chips using Intel’s next-generation Angstrom-era process technology, including the 18A node.

The company is slated to receive USD 8.5 billion in grants and USD 11 billion in loans under the 2022 Chips and Science Act, but this funding is contingent on meeting key milestones and undergoing extensive due diligence. However, an official cited by CNBC said that disbursements are anticipated by the end of the year.

(Photo credit: Intel)

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(Photo credit: Intel)