What you need to know
- Intel is expected to make a new business proposal to its board of directors in mid-September, highlighting budget cuts and the sale of assets.
- The chipmaker has struggled to exploit the AI wave, prompting layoffs affecting up to 15,000 people.
- The company might be forced to cancel its Magdeburg chip fab project and sell Altera to keep its operations running.
Aside from the inevitable 15,000 layoffs in devastating cost cuts and missed partnership and investment with OpenAI in the AI landscape, Intel can’t seem to free itself from the tangled web of drastic operational cost cuts.
According to a new report by Reuters, top executives at the firm, including Intel CEO Pat Gelsinger, are slated to present a new plan to the board of directors. The said plan will include a new expenditure roadmap, with significant budget cuts allocated to businesses and departments that aren’t necessarily thriving.
In a surprising turn of events, the changes will also impact Intel’s programmable chip unit Altera, which it can no longer support due to budget constraints. The Magdeburg chip fab project set Intel back up to $32 billion. But as it now seems, the project might be canceled or put on pause as Intel restrategizes. Reports indicate that Magdeburg’s local government might decide to take on the project if Intel pulls out.
This comes after the company reported a 1.6 billion loss during its latest earnings call. It can be attributed to Intel’s slow adjustment and adoption of the AI trend that other major tech corporations like Microsoft and NVIDIA continue to report significant success. It’s unclear how radical Intel’s changes will be, but the company plans to cut costs and spending by $10 billion.
Shortly after Intel’s earnings call, investors began pulling their investments from the company with its share price at -27%, marking the biggest slide in the firm’s market valuation in over 24 years. Consequently, Lip-Bu Tan departed from the company’s board of directors, prompting a further 6% drop in stock.
The strategic plan may also include the proposal to sell Intel’s programmable chip business, Altera. The chipmaker acquired Altera in 2015 and has been part of its market strategy since. However, it’s possible that the company is struggling to profit from its ventures, and could potentially place it on sale to interested parties.
Intel reorganized its business earlier this year by splitting the foundry business from its design ventures. This is part of its bid to assure potential clients of the design business won’t have access to the tech secrets of customers using Intel’s factories.
The chipmaker is expected to present its proposed plan to the board of directors in a meeting slated for mid-September, where we’d likely learn more about the measures it intends to take to keep the business afloat.
