Intel Corp. (INTC) CEO Pat Gelsinger is preparing to present a comprehensive plan to the company’s board, outlining strategies for asset sales and cost reductions. The move signifies a significant effort to revive the struggling chipmaker.
According to Reuters, Gelsinger and other executives will present the plan at a mid-September board meeting. The proposal encompasses the potential sale of various business units, including Altera, Intel’s programmable chip unit. To facilitate these transactions, Intel has engaged Morgan Stanley and Goldman Sachs as advisors. While bids have not yet been solicited, they are likely to follow board approval.
The plan might also involve halting the company’s $32 billion German factory project. This decision reflects a broader strategy to reduce capital expenditures and revitalize Intel’s financial performance.
These initiatives follow Intel’s recent move to separate its foundry business from its design operations. This separation, effective since the first quarter of 2023, aims to safeguard customer technology secrets.
Intel faces significant challenges, including a disappointing second-quarter earnings report and a declining market capitalization, now below $100 billion. The company’s recent struggles have prompted a need for drastic changes.
As part of this restructuring, Intel anticipates reducing headcount by over 15%, with the majority of the cuts expected to be completed by the end of 2024. Additionally, board member Lip-Bu Tan has reportedly resigned following disagreements with Gelsinger and other directors regarding the company’s strategic direction.
Despite the challenges, Gelsinger remains confident in Intel’s ability to overcome them. In a recent fireside chat, he acknowledged market skepticism but expressed his belief in the company’s capacity to succeed.
Intel’s stock closed at $22.04 on Friday, experiencing a 9.49% gain for the day. However, the stock dipped slightly in after-hours trading. Year-to-date, Intel’s stock has seen a significant decline, dropping by 53.89%.
The proposed asset sales and cost reductions represent a crucial step for Intel as it seeks to regain its competitive edge in the dynamic semiconductor industry.
