Intel announced the spin-off of its AI chip-making business into an independent subsidiary, a move that could change the market position of the firm, which is experiencing losses and a stock price decline.
Independence of Intel Foundry
In a memo to employees on September 16, Intel CEO Patrick Gelsinger announced that Intel Foundry will become an independent subsidiary with its own board of directors and the ability to raise outside capital. This move marks an escalation in competition with Nvidia, which has profited significantly from creating chips and cards for AI systems.
Production planning and challenges
Next year, Intel plans to start producing chips with its new 18A technology for its partners, including Microsoft and Amazon. Gelsinger noted that the new plan will enhance efficiency, improve profitability, and strengthen market competitiveness. However, a report dated September 4 indicated that early tests of the new technology faced significant setbacks.
Cost-cutting and future steps
Intel also plans to sell part of its stake in programmable chip developer Altera and reduce about two-thirds of its global real estate footprint. The Biden administration has awarded the company up to $3 billion to make chips for the U.S. military. In August, Intel reported operating losses of $7 billion for its chipmaking unit and announced plans to lay off about 15% of its workforce as part of cost-reduction efforts.
The creation of an independent subsidiary for AI chip manufacturing will mark a significant milestone for Intel, allowing the firm to rethink its strategy and improve its position in a highly competitive market.
Comments