Chip maker also postpones multi-billion euro plans to build factories in Poland and Germany for at least two years to focus on US market
Intel is to split its foundry business into a separate business unit with its own governance structure within the group.
The Intel Foundry will primarily be semiconductor manufacturing plant based with headquarters at Santa Clara. Intel’s CEO is looking to the Foundry business for growth but it faces the powerful duopoly of Taiwan’s TSMC and Japan’s Samsung.
It has also been totally eclipsed by the hoo-ha surround NVIDIA which dominates the markets for AI chips and has a $2.9 trillion market cap.
Intel Foundry signs up AWS
Intel’s thinking is that by splitting the foundry business from the rest of the company, it will attract some large clients. On which note, Intel also announced that it is to produce AI chips for Amazon Web Services (AWS) as part of a multi-year, multi-billion-dollar partnership. It will use Intel’s 18A process, an advanced chipmaking technology
Poor performance
Intel, once the world’s leading chip maker, has fallen behind because it has been slow to adopt the new manufacturing technologies despite being the beneficiary of billions in subsidies from the US government, under the CHIPS Act. The company is also hoping to attract government funding to make chips for military purposes.
The chip maker is implementing cost-cutting measures, shedding 15,000 jobs in a bid to save $10 billion. Intel has also decided to delay investment in Germany and Poland, instead expanding its presence in the US. Construction is underway in several states.
Europe is put on hold
In Germany, it was planning to build two chip factories in Saxony-Anhalt near Berlin, an investment of about €30 billion that was expected to create some 3,000 jobs. Now that investment will be put on hold for at least two years.
It will also delay building a new chip factory in the Polish city of Wroclaw for at least two years. The €4.2 billion project had been described as the “largest investment in Polish history.” Some €1.7 billion of the cost would have been met by state aid.
After announcing the plan regarding its foundry business, Intel’s stock rose 8% increase, a small comfort for its share price dropping 58% throughout the year.
In August, it was reported that Intel had brought in advisors to explore options to restore its declining business operations.