Intel’s stock surged 8% in after-hours trading on Monday following the company’s announcement that it will restructure its foundry business into an independent subsidiary.
This move aims to give the division, which manufactures chips for other customers, more operational autonomy and the potential to raise outside capital. The restructuring is part of CEO Pat Gelsinger’s broader strategy to revitalize the struggling chipmaker.
In a memo to employees, Intel also revealed plans to sell part of its stake in Altera, another step aimed at improving financial flexibility. The foundry business has significantly impacted Intel’s bottom line, with the company spending $25 billion annually on the division over the past two years.
The decision to restructure follows a recent board meeting that assessed Intel’s future direction. Intel is also exploring the possibility of spinning off the foundry business into a publicly traded company, according to an insider familiar with the matter.
This restructuring is designed to simplify the foundry’s operations and make it easier to attract customers, a challenge that has slowed Intel’s progress since Gelsinger took the helm in 2021. The foundry business, which Intel hopes to grow into a major chip manufacturer for external clients, has yet to secure large-scale customers, but Monday’s announcement indicates efforts to change that.
In addition to the foundry restructuring, Intel signed a multi-year deal with Amazon Web Services (AWS) to produce custom AI chips, further expanding its footprint in the artificial intelligence sector. Intel will manufacture AWS’s AI fabric chip using its advanced 18A technology and develop a custom Xeon server chip for AWS data centers.
These developments come amid a broader effort to cut $10 billion in costs by 2025. Intel has laid off approximately 15% of its workforce and will continue trimming its global real estate portfolio. The company also announced it would delay its fabrication efforts in Germany and Poland by about two years due to market demand, though US manufacturing projects remain on track.
CNN, CNBC, and Market Watch contributed to this report.
