Intel CEO Pat Gelsinger provided updates to employees on September 16, 2024, following the announcement of Q2 earnings, previously announced layoffs, and subsequent speculation. The company’s Board of Directors recently held a meeting to discuss strategy, portfolio, and progress against the plan announced on August 1. Three key takeaways were highlighted: advancing Intel Foundry’s momentum, creating a competitive cost structure to achieve $10 billion in savings, and focusing on the x86 franchise while streamlining the product portfolio.
Intel announced an expanded collaboration with Amazon Web Services (AWS), including a co-investment in custom chip designs and a multi-year, multi-billion-dollar framework for products and wafers. Intel Foundry will produce an AI fabric chip for AWS on Intel 18A and a custom Xeon 6 chip on Intel 3. This collaboration underscores Intel’s integrated portfolio strategy and has led to increased interest from foundry customers, particularly in advanced packaging.
Additionally, Intel received up to $3 billion in direct funding under the CHIPS and Science Act for the U.S. government’s Secure Enclave program, aimed at expanding trusted semiconductor manufacturing.
Intel plans to establish Intel Foundry as an independent subsidiary to enhance transparency and governance, providing customers and suppliers with clearer separation from the rest of Intel. This move will also allow future flexibility in funding and capital structure optimization. The leadership team will remain unchanged, and an operating board with independent directors will be established.
To improve capital efficiency, Intel will adjust the scope and pace of its manufacturing expansion. Capacity has been increased in Europe through the Ireland fab, with projects in Poland and Germany paused for two years based on market demand. The new advanced packaging factory in Malaysia will be completed but aligned with market conditions. U.S. manufacturing investments in Arizona, Oregon, New Mexico, and Ohio will continue.
Intel aims to strengthen its product portfolio by focusing on the x86 franchise and AI investments. The Edge and Automotive businesses will be integrated into the Client Computing Group (CCG), and the Networking and Edge Group (NEX) will focus on networking and telco. Integrated Photonics Solutions will move into the Data Center and AI Group (DCAI), and the Software and Incubation business will be integrated into core business units.
For more information, visit Intel’s website here.
