Intel CEO Pat Gelsinger and top executives are preparing to present a strategic plan to the company’s board of directors later this month, aimed at cutting costs and shedding non-essential assets, New York Post reports, sighting a source familiar with the situation.
The plan, which will be discussed in a mid-September board meeting, is part of an effort to rejuvenate the chipmaker’s struggling business.
The proposed strategy includes plans to cut costs by selling off certain business units, such as its programmable chip division, Altera, which Intel acquired for $16.7 billion in 2015. The company is seeking to streamline its operations as it grapples with financial difficulties and increased competition in the AI sector.
Intel, which has seen its market value drop below $100 billion following a disappointing second-quarter earnings report, has already separated its foundry and design businesses. This separation was intended to protect the confidentiality of its customers’ technology. However, Gelsinger’s upcoming proposal will focus on further restructuring, including potential reductions in capital expenditures and possibly halting or delaying its $32 billion factory project in Germany.
The company is also working with Morgan Stanley and Goldman Sachs to evaluate which business units might be sold and which should be retained. Although Intel has not yet solicited bids for these units, it is expected to do so following the board’s approval of the plan.
In addition to internal restructuring, the company faces challenges in catching up with rivals like Nvidia, which currently leads the AI chip market. Intel’s financial struggles have been exacerbated by recent leadership changes and the need to cut staff and pause dividend payments to save costs.
As Intel moves forward with its turnaround plan, which Gelsinger describes as a response to investor concerns, decisions made at the upcoming board meeting will be crucial in shaping the company’s future direction.
