A Bloomberg report suggests that Intel is now looking for various options to come out of the slump.
The reason behind this could be the company’s recent earnings report, which has been disappointing.
One possible solution to this can be the separation or sale of Intel’s foundry division.
There was a time that Intel Corp was leading the industry, and almost had a monopoly of its own. But now the company is struggling. Reports suggest that it is facing one of the most challenging times in 56 years of its existence. The situation is pretty critical and it is now figuring out ways to come out of this slump.
What is Intel considering?
A Bloomberg report suggests that the company is now looking for various options, this includes splitting its product design and manufacturing businesses and reassessing factory projects. Morgan Stanley and Goldman Sachs, who are Intel’s longtime bankers, are now looking at potential scenarios which include mergers and acquisitions.
There is an urgency that can be felt behind all of this. The reason behind this could be the company’s recent earnings report, which has been disappointing, to say the least. In September, during the board meeting, all the possible solutions will be presented and then a decision will be taken.
One possible solution to this can be the separation or sale of Intel’s foundry division. This division manufactures chips for outside customers. This will be a big move, particularly for CEO Pat Gelsinger. He considers the foundry business crucial to Intel’s revival. In the past, Gelsinger wanted to make Intel compete with the likes of leading chip manufacturers like Taiwan Semiconductor Manufacturing Co. (TSMC).
But now it seems that he will have to put a pause on that as Intel has already engaged in project financing deals with Brookfield Infrastructure Partners and Apollo Global Management.
Cutbacks and Financial Pressure
Move over that, Gelsinger is facing intense pressure from different sectors to turn the fate of the company around. Under him, Intel reported a net loss of $1.61 billion last quarter. And this does not end here, more losses are expected in the coming year. A major reason behind these losses is linked to the company’s dual strategy of expanding its factory network while facing declining sales.
In addition to this, Intel is also planning to cut down on its workforce. The company just recently announced that it plans to cut about 15,000 jobs and slash capital spending. The company also suspended its long-prized dividend. More such moves are expected in the future.
And finally, there might be changes in the leadership too. Intel’s Director Lip-Bu Tan just resigned last week. So there’s a gap in the board there. Even the stocks are dropping.
Intel’s stock has dropped 60% this year, and its market value has fallen to $86 billion. It is the second-worst performer on the Philadelphia Semiconductor Index.
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Mustafa Khan
Mustafa is new on the block and is a tech geek who is currently working with Digit as a News Writer. He tests the new gadgets that come on board and writes for the news desk. He has found his way with words and you can count on him when in need of tech advice. No judgement. He is based out of Delhi, he’s your person for good photos, good food recommendations, and to know about anything GenZ. View Full Profile
