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Intel Announces Major Transformation: Foundry Independence, Altera Stake Sale, and Delayed Fab Projects

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Intel has announced sweeping changes to its business as part of efforts to reverse billions in losses and a sharp stock decline. CEO Pat Gelsinger revealed that Intel Foundry will become an independent subsidiary with its own operating board and separate financial reporting, marking a clearer structural divide from Intel’s core business.

As part of this restructuring:

  • Intel will delay construction of new fabs in Poland and Germany for two years, citing market conditions, while continuing projects in Arizona, Oregon, New Mexico, and Ohio.
  • The company plans to sell part of its stake in Altera, the programmable chip company it acquired in 2015.
  • Intel will shrink its global real estate footprint by two-thirds.
  • The U.S. government has awarded Intel up to $3 billion under the CHIPS and Science Act to produce chips for the Department of Defense.

These moves underscore Intel’s bid to return to profitability and reclaim leadership in semiconductor manufacturing. The company reported a $1.6 billion loss in Q1 2024, while its manufacturing arm alone posted a $7 billion operating loss in 2023. In August, Intel announced 15,000 job cuts, and Gelsinger now says “more than half” of that target has been achieved.

“This is the most important transformation Intel has undertaken in over four decades—since the pivot from memory to microprocessors,” said Gelsinger. “We succeeded then, and we will seize this opportunity to build a stronger Intel for decades to come.”


Strategic Setbacks and Competitive Pressures
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While Intel is banking on its 18A process to regain ground, Reuters reported that early tests with Broadcom silicon have failed. Intel still plans to manufacture 18A-based chips for Microsoft and, beginning next year, for Amazon as well.

However, the company reportedly lost a $30 billion contract to design and manufacture Sony’s upcoming PlayStation 6 processor. According to industry sources, Intel and AMD were the final contenders, but AMD, with TSMC as its manufacturing partner, secured the win. Intel’s dispute with Sony over chip profit margins is believed to have cost it the deal—a major blow to its foundry ambitions.

Intel disputed the report, saying it “strongly disagrees” with the characterization, while AMD and Sony declined to comment.


A Letter from the CEO: Intel’s Next Chapter
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In an internal message to employees, Gelsinger outlined three priorities discussed during the latest board meeting:

  1. Strengthening Intel Foundry: Improve capital efficiency and accelerate 18A adoption.
  2. Achieving $10 billion in cost savings: Build a leaner, more competitive cost structure.
  3. Refocusing on x86 leadership: Streamline the product portfolio while advancing AI strategy.

AWS Partnership Expansion
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Intel announced an expanded partnership with Amazon Web Services (AWS), including a multi-billion-dollar, multi-year framework. Intel Foundry will produce AI architecture chips on Intel 18A and custom Xeon 6 chips on Intel 3 for AWS, alongside broader collaboration on 18A, 18AP, and 14A designs.

U.S. Government Funding
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Intel has secured $3 billion in federal funding under the CHIPS Act to support the Secure Enclave program, strengthening domestic semiconductor manufacturing for national security.

Intel Foundry Independence
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Intel Foundry will be reorganized as an independent subsidiary with its own operating board (including independent directors) and financials. This structure increases transparency for external customers, creates flexibility for future funding, and preserves Intel’s competitive edge in design plus manufacturing.

Global Manufacturing Adjustments
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Intel is optimizing fab expansion:

  • Poland and Germany projects paused for ~2 years.
  • Ireland remains Intel’s primary European hub.
  • Malaysia continues as a design and packaging center, with a new advanced packaging plant to be completed but activated based on demand.
  • U.S. fab projects in Arizona, Oregon, New Mexico, and Ohio remain on track.

Sharpened Product Focus
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Intel will streamline its portfolio to focus on x86 strength and AI acceleration. Changes include:

  • Moving edge and automotive into CCG to leverage AI PC leadership.
  • Refocusing NEX on networking and telecom.
  • Shifting integrated photonics into DCAI for targeted R&D alignment.
  • Consolidating software and incubation units into core businesses for efficiency.

Financial Discipline
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Intel is aggressively managing costs:

  • Over half of the planned 15,000 layoffs have been executed.
  • Plans to reduce global real estate by two-thirds are underway.
  • Intel will sell part of its Altera stake, aligning with the strategy to unlock value during its IPO.

Looking Ahead
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Intel is positioning itself for its boldest transformation in decades. With stronger partnerships, streamlined operations, and a renewed focus on foundry independence and x86 leadership, Gelsinger says the company is determined to “fight for every inch” of market share.

As Intel transitions, all eyes remain on whether these moves will be enough to restore its place as a leading force in the semiconductor industry.

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