Gelsinger to Present Plan to Board in Mid-September – Intel CEO Pat Gelsinger and his team are gearing up to present a restructuring plan to the company’s board of directors in mid-September.
This plan aims to revitalize the chipmaker by cutting unnecessary businesses and reducing capital spending.
Selling Off Non-Core Businesses
A key part of the plan involves selling off non-core businesses. One notable unit on the chopping block is Altera, Intel’s programmable chip division. Intel has struggled to maintain profitability in recent years, making it difficult to justify funding Altera. Selling this division could help streamline Intel’s operations and allow the company to focus on its core competencies.
Reduced Capital Spending Plans
Gelsinger’s proposal will also include plans to cut back on capital spending for factory expansion. Intel may pause or even halt the $32 billion factory project in Germany, which has faced significant delays. The company is projected to reduce its capital spending by 17%, bringing it down to $21.5 billion in 2025.
Gelsinger to Present Plan to Board in Mid-September – Board Advisors and the Future of Altera
To assist in this process, Intel has brought in Morgan Stanley and Goldman Sachs as advisors. They will help the board assess which businesses to keep and which to sell.
Although Intel has not yet sought bids for Altera, it is likely to do so once the restructuring plan is approved. There’s speculation that Marvell, a chipmaker, could be a potential buyer for Altera.
Intel’s Historical Context and Industry Challenges
This restructuring comes at a challenging time for Intel. The company is facing its worst period in recent history. It has struggled to keep pace with rivals like Nvidia, which leads the AI chip market.
As a result, Intel’s market capitalization has dropped below $100 billion after a disappointing second-quarter earnings report.
Gelsinger to Present Plan to Board in Mid-September – Part of a Two-Phase Turnaround Plan
Gelsinger’s plans are part of a two-phase strategy to turn Intel around. The company has already made moves to cut costs, including laying off 15% of its workforce and suspending dividend payments. Important decisions regarding the future of Intel’s various businesses will be made during the mid-September board meeting.
The Future of Altera
Altera, Intel’s programmable chip business, has been the subject of much speculation. Intel acquired Altera in 2015 for $16.7 billion, but integrating it into Intel’s operations has been challenging. Recently, Intel spun out Altera as a separate subsidiary and expressed intentions for an initial public offering (IPO).
However, a sale remains a strong possibility.
Gelsinger to Present Plan to Board in Mid-September – Conclusion
Intel’s planned overhaul marks a significant shift for the company as it attempts to navigate a difficult market landscape. By focusing on core businesses and reducing spending, Intel aims to regain its competitive edge in the semiconductor industry. The upcoming board meeting in mid-September will be crucial for determining the company’s future direction.
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