Intel CEO Pat Gelsinger is set to pitch a comprehensive restructuring plan to the company’s board of directors later this month. The proposal, scheduled for presentation at a mid-September board meeting, aims to streamline Intel’s operations by shedding non-core assets and significantly cutting costs. This move comes as Intel seeks to reverse a period of financial turbulence and restore its competitive edge in the semiconductor industry.
Sources familiar with the plan indicate that Gelsinger and his team will suggest selling off underperforming or non-essential business units, such as the programmable chip unit Altera, which Intel acquired for $16.7 billion in 2015. Despite having previously planned an IPO for Altera, Intel is now exploring the possibility of a complete sale to a strategic buyer, with infrastructure chipmaker Marvell cited as a potential candidate.
Additionally, the plan is expected to address capital spending reductions, including a possible halt or delay in the construction of Intel’s ambitious $32 billion factory in Germany. The company had previously announced a reduction in its capital expenditures, with spending projected to decrease to $21.5 billion in 2025, down 17% from the current year.
Intel’s financial challenges have been exacerbated by a disappointing second-quarter earnings report, which led to the suspension of dividend payments and a 15% workforce reduction aimed at saving $10 billion. The company’s market capitalization has plummeted below $100 billion, a stark contrast to Nvidia’s $3 trillion valuation, highlighting Intel’s struggle to compete in the burgeoning AI sector.
As part of its strategic overhaul, Intel has retained Morgan Stanley and Goldman Sachs to provide advisory services on the potential sale of business units and other strategic decisions. The board is expected to deliberate on these recommendations and make pivotal decisions regarding the company’s future.
In response to recent setbacks, Gelsinger has assured investors that Intel is focused on addressing its issues and is in the second phase of its turnaround strategy. The upcoming board meeting is poised to be a critical juncture for Intel, potentially reshaping its business operations and positioning for future growth in the competitive semiconductor market.
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