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Intel Corp.

Intel to Split Chip Development Division from Production Division

Strategic Insights

— 1 min read

Intel Corporation CEO Pat Gelsinger has confirmed that the company's chip development division will be split from its production division. This move, which was agreed upon by investors and the board of directors, aims to establish Intel Foundry as an independent subsidiary. The announcement has sent Intel's share price up nearly 8% in after-hours trading, following a 10% rise last week. Gelsinger recognizes the difficulties involved and plans to suspend several major projects, including those in Poland and Germany, by approximately two years.

Key Takeaways:

  • Intel plans to establish Intel Foundry as an independent subsidiary, with the chip development division separating from the production division.
  • Several major projects, including those in Poland and Germany, will be suspended by approximately two years.
  • The construction of a new advanced packaging factory in Malaysia will be completed, but its startup will be aligned with market conditions and increased utilization of existing capacity.
  • The spin-off is subject to regulatory scrutiny, with concerns about the potential benefits to US chip manufacture and the implications for the Chinese regulator.
  • Intel's production division, including the Kiryat Gat fab, may experience changes following the spin-off.
  • New investors may be brought in as a minority, similar to Intel's floatation of Mobileye, with Intel retaining 88% of shares.
  • The split could benefit Intel's 4,000 production workers in Kiryat Gat, potentially allowing them to hold shares with better prospects.

Statistics:

  • Intel's share price rose nearly 8% in after-hours trading.
  • The share price had risen 10% last week.
  • Intel's revenue from the Chinese market is 27%.
  • Intel's shares have fallen by 56% so far this year.
  • The new advanced packaging factory in Malaysia will be constructed with existing capacity utilization in mind.

Sources:

  • [1] Gelsinger: "We plan to establish Intel Foundry as an independent subsidiary inside of Intel."
  • [2] Globes, Israel business news: "Intel Corporation CEO Pat Gelsinger all but said the word he has not been able to bring himself to utter in his three years in the job: spin-off."
  • [3] Globes, Israel business news: "Intel's share price up nearly 8% in after-hours trading, after a rise of nearly 10% last week."

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