Strategic Shakeup for Intel that Brings Morgan Stanley and Goldman Sachs to Advise the Board – CEO Pat Gelsinger Present New Plan

Intel is preparing to unveil a comprehensive strategy aimed at streamlining its operations and curbing capital expenditure, according to sources close to the company. CEO Pat Gelsinger, along with top executives, is expected to present the plan to the board of directors later this month as they seek to revitalize the fortunes of the once-dominant chipmaker.

The proposal reportedly involves reducing overall costs by divesting non-core businesses, including the potential sale of its programmable chip division, Altera. The company, facing financial strain, can no longer support these units solely through its dwindling profits. The plan is set to be discussed at a mid-September board meeting, and this is the first public report on Gelsinger’s proposal. Intel has declined to comment on the details.

While the proposal does not currently include selling off its contract manufacturing arm or foundry to a buyer like Taiwan Semiconductor Manufacturing Co., the plans concerning Intel’s manufacturing operations are still in flux and may evolve before the meeting.

Intel has already separated its foundry business from its design division, with both units now reporting their financial results independently. This restructuring ensures that customers of the design arm have no access to sensitive information belonging to clients using Intel’s factories, or fabs, to manufacture their chips.

The company is navigating one of its most challenging periods, struggling to keep pace with competitors like Nvidia, which leads the AI chip market with a staggering $3 trillion valuation, while Intel’s own market cap has plummeted below $100 billion following a poor second-quarter earnings report in August.

Gelsinger’s proposal is expected to outline plans for further cuts to capital spending on factory expansion, which may include pausing or even halting its $32 billion factory project in Germany, which is currently facing delays. Intel announced in August that it plans to reduce capital spending to $21.5 billion in 2025, a 17% decrease from this year, along with issuing a disappointing third-quarter forecast.

In parallel with the executives’ efforts, Intel has brought in Morgan Stanley and Goldman Sachs to advise the board on which business units could be sold or retained. According to insiders, the company has not yet requested bids for these units but may do so once a strategy is endorsed by the board.

This mid-September board meeting is critical for Intel, following a dire second-quarter report in August that included suspended dividend payments and a 15% reduction in workforce aimed at saving $10 billion. In the aftermath, board member and chip industry veteran Lip-Bu Tan resigned, leaving a void in semiconductor expertise at the top level.

Last week, Gelsinger sought to reassure investors at a Deutsche Bank conference, acknowledging the recent challenges and emphasizing that the company is “taking seriously” the feedback from stakeholders while focusing on the second phase of its turnaround plan. Key decisions on which businesses to retain or divest are expected at the upcoming meeting.

Among the units likely under consideration for sale is Altera, a programmable chip business Intel acquired for $16.7 billion in 2015. Intel has already taken steps to spin off Altera as a separate subsidiary and had plans for a partial public offering, though no timeline was set. However, discussions are reportedly underway about selling the unit entirely, with companies like Marvell potentially interested in acquiring it, according to sources familiar with Intel’s plans.

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