https://www.axios.com/2024/08/30/intel-manufacturing-bankers-strategic-options
3 replies (most recent on top)
Fact is stranger than fiction. To assume a CEO, whose demonstrated an inability to forecast his business, can effectively apply $8.5B in tax payer dollars to stand up additional money losing foundries, while addressing concerns around quality will require the hand of God
US is not prepared to do so at the moment. It needs to put down the arrogance and put in all necessary resources and learn from the true master of the art TSMC by copying exact.
Intel's reported discussions with bankers about its future could call into question the company's ambitions to double down on U.S. chip manufacturing.
Why it matters: The company is slated to receive the largest parcel of federal government support to expand domestic manufacturing as part of the CHIPS Act.
Driving the news: Intel is said to be kicking around ideas with Goldman Sachs and Morgan Stanley, including a sale or spinoff of its manufacturing unit, per Bloomberg.
It's also considering smaller moves like reining in project expansion plans, people familiar with the situation told Bloomberg.
"We don't have a comment on this," Intel's director of corporate comms Penny Bruce says in an email to Axios on the reported talks with advisers.
When asked whether the status of its manufacturing projects had changed, she declined to comment beyond an April 15 update.
The big picture: Intel reported a $1.61 billion net loss last quarter, complicating the company's ambitions to spend tens of billions on new factories to make chips for itself and outside customers.
One problem, it's not clear whether any customers have lined up.
Up to $8.5 billion in direct funding and up to $11 billion in loans pledged to the company through the CHIPS Act to advance manufacturing projects is partly dependent on the company hitting production milestones.
Between the lines: Discussions around a new direction reportedly gained more urgency following that earnings report at the start of the month.
Sales for Intel's data center business, once its most profitable, fell 3% to $3 billion as industry demand has shifted to AI processors (Nvidia's wheelhouse).
The company also said it would lay off over 15% of its staff this year to help reduce costs.
Zoom out: Intel has been floundering for over a decade, and some of the larger options reportedly being discussed would unwind core parts of CEO Pat Gelsinger's turnaround plans centered on a recommitment to manufacturing.
Intel's stock's been moving in the wrong direction. It's down nearly 60% this year and 28% just this month — failing to capture the momentum other chip stocks have enjoyed.
It's little surprise that investors cheered today's the news, driving the company's shares up 9.5%.