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)

Ahead of Intel’s upcoming board meeting in mid-September, rumors have been circulating that the struggling giant may be mulling to selling its FPGA unit Altera, with AMD and Marvell being potential buyers. However, according to an interview with Altera’s CEO by CRN, Altera’s plan for an initial public offering (IPO) remains unchanged, as it pursues to be listed by 2026.

The information is confirmed by Sandra Rivera, Altera’s CEO. Citing her remarks, CRN notes that the FPGA unit is working on its plan, which involves selling a stake in Altera, not the entire company. Rivera further stated that this has been Altera’s communicated strategy for over a year, with an IPO planned for 2026.

Citing Rivera, the report pointed out that though Altera began operating independently from Intel at the start of 2024, it is still in the process of separating from many of the general and administrative functions of its parent company, with a target completion date of January 1, 2025.

Intel acquired Altera in 2015 for USD 16.7 billion, and the latter dropped its name afterwards, known as the Programmable Solution Group under the U.S. semiconductor giant.

It was not until 2023 that Intel announced its intention to spin off the Programmable Solutions Group into a separate, wholly-owned company. In February, 2024, the FPGA unit announced that it would revive the Altera brand, CRN reported.

The spin-off of the FPGA business is intended to achieve two goals: providing Intel with additional liquidity to fund CEO Pat Gelsinger’s costly revitalization strategy and enhancing the business opportunities for the FPGA company, according to CRN.

Intel’s board is set to meet this week to discuss restructuring plans, which may include separating its design division from its foundry operations. Citing Intel CFO David Zinsner’s comments at an investor meeting last week, a report by CNBC notes that dividing the two businesses would be a logical move, as the company is trying to create more separation between these two businesses.

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• [News] AMD Could Emerge as a Prospective Buyer for Intel’s Potential Sale of Altera
• [News] Intel Reportedly Considering Foundry Spin-Off or Merger to Mitigate Losses

(Photo credit: Intel)

Reuters previously reported that Intel is considering selling its stake in Altera, a FPGA (Field-Programmable Gate Array) manufacturer, as part of its business restructuring and cost-cutting efforts, as AMD and Marvell are said to be potential buyers.

As per a report from Economic Daily News citing sources, it’s believed that if the sale goes through, a significant portion of Altera’s orders could be redirected to TSMC, which would be highly beneficial for the Taiwanese foundry giant.

The same report indicated that Altera used to be a major customer of TSMC. However, after Intel acquired Altera in 2015, the orders were redirected to Intel. TSMC’s rapid growth, bolstered by orders from clients like Apple, AMD, and NVIDIA, helped mitigate the impact of losing Altera’s business though.

If Altera is no longer part of Intel, as it might be is acquired by companies like AMD or Marvell, which are currently key clients of TSMC, it is likely that Altera’s orders may return to TSMC in significant volumes.

Intel acquired Altera for USD 16.7 billion in 2015, and has previously indicated plans to sell a portion of its stake through an initial public offering (IPO), though no specific date has been set.

Citing sources familiar with the matter, Reuter’s report suggested that Intel’s plan does not currently include splitting up the company or selling its foundry business to buyers like TSMC, Reuters notes.

Intel had already begun segregating its wafer foundry business into an independent division and financials, starting from the first quarter of this year.

Per Reuters, the company has established a wall between its foundry and IC design business to ensure that the design division’s potential customers cannot access the confidential technologies of Intel’s foundry clients.

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• [News] AMD Could Emerge as a Prospective Buyer for Intel’s Potential Sale of Altera
• [News] Intel Reportedly Mulls to Sell FPGA Unit Altera and Freeze USD 32 Billion German Project amid Crisis

(Photo credit: Intel)

Rumors have been circulating that Intel has been working with investment bankers on options to navigate the company through difficulties, which may include selling off its Field Programmable Gate Array (FPGA) unit Altera and halt its investment project in Germany, according to the report by Reuters.

Regarding the status quo of the FPGA market, a report by TechNews states that its applications have been concentrated in small-scale sectors such as communications, defense, and chip prototyping, with Xilinx and Altera dominating the field. As a result, rumors have emerged that Intel might sell its entire Altera division to another chip company looking to expand its product portfolio.

Notably, per industry sources cited in the report from TechNews, it’s further suggested that AMD could be a potential buyer, as it would help the US chip giant expand its FPGA product lineup, which would be more effectively ingrated with its current porfolio.

Altera generated USD 342 million in revenue in the first quarter of 2024, a significant decrease of 58% compared to USD 816 million in the same period last year.

On the other hand, AMD’s Embedded Solutions Division, which includes products acquired from Xilinx in 2022, reported a 46% year-over-year decline in sales to USD 846 million for the first quarter, falling short of Wall Street expectations. Both companies’ recent financial reports have been underwhelming.

In addition to AMD, Marvell, a company specialized in network IC design, has also been reported as a potential buyer for Altera.

Previously revealed in a report by Bloomberg on August 29 citing sources, Intel is said to be considering several potential strategies, including spinning off its product design and foundry businesses, canceling some of its regional facility construction plans, or pursuing mergers. These options are expected to be discussed at the board meeting scheduled for September.

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• [News] Intel Reportedly Mulls to Sell FPGA Unit Altera and Freeze USD 32 Billion German Project amid Crisis
• [News] Lip-Bu Tan Resigns from Intel Board Amid Reported Disagreements

(Photo credit: AMD)

Last week, rumors have been circulating that Intel has been working with investment bankers on options to navigate the company through potholes. Latest update: options may include selling off its FPGA unit Altera and putting a halt to its USD 32 billion investment project in Germany, according to the reports by Reuters and Wccftech.

Citing sources familiar with the matter, the reports suggests that Intel CEO Pat Gelsinger and senior executives are expected to present a plan to the board later this month to revitalize the company.

Their proposal, according to the reports, includes divesting non-essential businesses and cutting down capital expenditures, such as selling off Altera and freezing the construction of the fab project in Magdeburg, Germany.

As Intel would be now unable to allocate funds from its once substantial profits to support Altera, a major producer of field-programmable gate arrays (FPGA) it acquired in 2015 for USD 16.7 billion, the sale of the company has reportedly been brought to the table. In 2023, Intel is said to be planning to spin Altera out through an IPO in three years and sell a portion of its stake through the process, but no date has been set.

Reuters indicates that Altera could also be sold entirely to another chip company interested in expanding its business portfolio, and Intel has quietly started exploring the possibility of such a sale.

On the other hand, due to delays of subsidy approvals. Intel has already been said to postpone its construction of Fab 29.1 and 29.2 in Magdeburg, Germany, as the new timeline now pushes the start of construction to May 2025. The proposal to put a halt to the project would also align with the company’s plan to reduce its capital spending by 17 percent to USD 21.5 billion in 2025, Wccftech notes.

Sources familiar with the matter said that Intel’s plan does not currently include splitting up the company or selling its foundry business to buyers like TSMC, Reuters notes.

An Intel spokesperson declined to comment Sunday, Reuters notes.

Intel is currently facing significant challenges. On August 1, the company announced financial results that fell short of Wall Street expectations and revealed plans to cut over 15% of its workforce.

Shortly after, former Intel board member Lip-Bu Tan has stepped down after just two years. Tan served as the CEO and executive chairman of electronic design automation (EDA) software company Cadence Design Systems Inc.

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• [News] Lip-Bu Tan Resigns from Intel Board Amid Reported Disagreements
• [News] Intel Reportedly Considering Foundry Spin-Off or Merger to Mitigate Losses

(Photo credit: Intel)