Intel Embarks on Restructuring Journey as it Signs Multi-Billion-Dollar Deal with Amazon

Intel has embarked on a major restructuring plan aimed at turning around its financial losses and recovering its faltering stock price. As part of this plan, Intel is spinning off its chipmaking business into an independent subsidiary known as Intel Foundry, which will operate with its own board and report financial earnings separately. Work on factories in Poland and Germany will also be halted for two years based on anticipated market needs, while other plants in Arizona, Oregon, New Mexico, and Ohio will continue construction. This is prepared by SSP.

A significant move involves selling a portion of its stake in Altera, a programmable chip company Intel acquired in 2015. Additionally, Intel is planning to cut around two-thirds of its global real estate footprint. This strategic overhaul includes reducing its workforce by 15,000 employees, a goal that Intel claims is more than halfway complete.

Adding to the restructuring news, Intel also announced it will receive up to $3 billion in funding from the Biden administration to manufacture chips for the US military. Furthermore, Intel entered into a multi-year, multi-billion-dollar agreement with Amazon Web Services (AWS) to co-invest in a custom chip design. Specifically, Intel Foundry will produce an AI fabric chip for AWS using Intel's cutting-edge 18A process.

Despite these efforts, early tests of the 18A process for producing Broadcom silicon wafers have not yielded successful results. However, Intel plans to start manufacturing chips with the 18A process for partners like Microsoft and Amazon starting next year.

In response to these announcements, Intel shares jumped 6% in after-hours trading. The company is also focusing on becoming a leading global chip manufacturer to rival Taiwan’s TSMC, buoyed by strategic partnerships and significant governmental support. Intel CEO Pat Gelsinger stated that this is the company’s most significant transformation in over four decades, pointing to a robust future for Intel.