Silicon Valley giant Intel is planning to shrink its businesses after a massive internal economic downturn caught the company off-guard.
Intel has faced unprecedented losses in recent times, which have urged the company to drastically reduce its workforce while also withdrawing money from multiple business avenues where its prospects once looked promising.
Sources close to Intel CEO Pat Gelsinger stated that he is preparing a plan to be unveiled to the company’s board of directors. This plan, designed to help the company regain its lost glory, is expected to bring notable changes in Intel’s workings and will also include measures under which the company will “slice off unnecessary businesses” to redirect its capital.
Reportedly, Intel still needs to plan to sell major parts of its business under the new plans, but these plans are still being developed and will be presented at the board’s meeting in mid-September. Recently, rumors circulated that Intel was trying to eliminate its foundry and its major semiconductor manufacturing facilities, which helped the company rise to fame.
Intel previously separated some of its businesses, including the design and manufacturing division, which raised speculations that the company could once again follow the same path and split itself for better economic management. Chip manufacturer Altera, which Intel acquired in 2015, will likely face the heat of the upcoming major changes as the company has previously tried to spin this division out through Initial Public Offerings (IPO).
Some business insiders also speculate that Intel can sell Altera completely to another chip maker, which will help them increase their capital significantly. Intel bought Altera at a whopping $16.7 billion in 2015 for $54 per share.
Gelsinger has tried to regain investors’ trust with no success. Recently, Gelsinger stated that the company had made an effective plan to tackle the crisis, but the markets did not respond accordingly. He went on to say that the company has already implemented numerous cost reduction measures and that it has to take exceptional and urgent steps to remain competitive in the industry.
While Intel’s internal economic problems started last year, the company has managed to find a new rock bottom in 2024. They started 2024 with a share value of nearly $48 which has now been nosedived to a meager $19.43 and is likely to go down further if the company does not find immediate solutions to the crisis.
In the second quarter of 2024, the company that was once known as the sole chip-making authority in the world, reported a net loss of $1.6 billion. Recently, Intel announced to fire 15% of its workforce.