Intel CEO Pat Gelsinger is aiming to present a plan this month to sell unviable business units as part of revamping capital spending and cutting cost, Reuters news report said.
Intel is likely to start the process by selling its programmable chip unit Altera. Intel has already told investors that there will be an IPO for Altera to enhance its fortunes. Intel also wants to cut operating expenses to $17.5 billion from the expected $21 billion.
Intel acquired Altera for $16.7 billion in 2015. Intel has already taken steps to spin it out as a separate subsidiary. Infrastructure chipmaker Marvell may show interest in buying Altera from Intel.
Altera has generated revenue of $361 million, up 6 percent sequentially, in Q2 2024 with operating margins improving 4 points in the quarter.
Altera’s second-quarter revenue remains below consumption as inventory positions tied to previous supply constraints are worked down. “We expect double-digit sequential revenue growth through the second half as customers return to more normal buying patterns,” Pat Gelsinger said during the recent earnings report.
The proposal does not include plans to split Intel and sell off its contract manufacturing operation, or foundry, to a buyer such as Taiwan Semiconductor Manufacturing (TSMC).
Intel has broken off its foundry business from its design business, and has started reporting its financial results separately.
Intel has failed to take on Nvidia in the AI business. Nvidia is the dominant AI chipmaker with a $3 trillion market capitalization. Intel’s market capitalization has touched below $100 billion.
Intel will be aiming at reducing the company’s capital spending on factory expansion as part of its Smart Capital strategy. Intel may pause or halt its $32 billion factory in Germany.
In August, Intel said it expects to cut capital spending to $21.5 billion in 2025, down 17 percent from this year, and issued a weaker-than-expected third-quarter forecast.
Intel has retained Morgan Stanley and Goldman Sachs to advise the board on what businesses Intel can sell and what it needs to retain.
Recently, chip industry veteran Lip-Bu Tan resigned from the Intel board after months of debate over the company’s future.
Baburajan Kizhakedath
