According to recent reports, Intel’s CEO Pat Gelsinger, along with other key executives, is set to unveil a plan aimed at restructuring the company and cutting down costs. The primary focus of this meeting will be on shedding non-core assets and reducing expenditures. Among the topics expected for discussion are Intel’s future in Magdeburg, Germany, where a new chip fabrication plant was being built, and the company’s stake in Altera.
Intel recently reported a $1.6 billion loss during its August 1 earnings call, which also disclosed significant layoffs affecting 15% of its workforce and plans to cut $10 billion in spending by 2025. The disappointing earnings were attributed to Intel’s lag in the AI race and ongoing issues with the 13th and 14th generation CPUs. The company’s stock suffered its worst single-day drop in 50 years following the earnings announcement and has continued to decline. Industry veteran Lip-Bu Tan’s resignation from Intel’s board of executives further exacerbated the situation, triggering a 6% drop in stock value and leaving a noticeable gap in industry experience.
Drastic changes at Intel have been anticipated for some time as the company seeks to reverse its downward trajectory. Reports suggest that Gelsinger’s plans may include halting or even canceling construction on the Magdeburg fab, a $32 billion project. Local government officials in Magdeburg have already started preparing contingency plans in case Intel pulls out. Additionally, Intel may look to divest from its programmable chip business, Altera, which it acquired in 2015. Although Altera has played a vital role in Intel’s market strategy over the past decade, sources indicate that the company could be sold to another chip manufacturer in the near future.
However, one division unlikely to be sold is Intel’s Foundry Services, which has been separated from the company’s other operations since the first quarter of 2024. Intel Foundry Services is seen as a key component of the company’s future strategy, and sources have confirmed that Intel has no plans to sell this division to competitors like TSMC, as it remains crucial to Intel’s long-term goals.
Intel’s recent struggles can be attributed to various factors. Lip-Bu Tan’s departure was reportedly tied to concerns over an inflated workforce, while Gelsinger has cited excessive spending across the organization as a core issue. Persistent problems with Intel’s 13th and 14th generation CPUs, including high failure rates, have also damaged the company’s reputation. The company’s sluggish response to these challenges has led to a significant loss of trust among consumers. While selling off non-core assets might help Intel stabilize in the short term, the company still faces a long journey toward regaining its financial footing and restoring public confidence.
