Intel Corp is reportedly considering various strategic options, including splitting its product-design and manufacturing divisions, to cut losses as it navigates one of the most challenging periods in its 56-year history.
The deliberations, which remain confidential, include the possibility of scaling back certain factory projects and even a potential merger or acquisition, according to sources who spoke to Bloomberg.
Intel's longstanding advisors, Morgan Stanley and Goldman Sachs, are said to be guiding the company through the complex decisions, particularly after a disappointing earnings report that saw Intel's shares plummet to their lowest level since 2013.
These options are expected to be presented at Intel's upcoming board meeting in September.
A major move, such as the separation or sale of Intel's foundry division—which was established to manufacture chips for external clients—would represent a significant shift for CEO Pat Gelsinger.
Gelsinger acknowledged publicly on Thursday that the company understood investor skepticism and was working to address it.
"We realize we have to operate efficiently with nimbleness, with urgency," Gelsinger said at Deutsche Bank's Technology Conference.
Gelsinger, who took over in 2021 with a mission to revive Intel's dominance in the semiconductor industry, has considered the foundry business central to Intel's future.
His vision was for Intel to compete with industry leaders like Taiwan Semiconductor Manufacturing Co. However, a more conservative approach, such as postponing expansion plans, seems more likely in the near term.
Intel has already taken steps to manage its financial challenges, including project financing deals with Brookfield Infrastructure Partners and Apollo Global Management.
Yet, Gelsinger faces increasing pressure as the company continues to struggle with declining sales and rising losses.
Intel reported a net loss of $1.61 billion last quarter, and analysts forecast continued losses over the next year.
Since returning to Intel after more than a decade away, Gelsinger has been working to restore the company's technological leadership.
However, his ambitious turnaround plan has faced setbacks, leading to significant cost-cutting measures, including the announcement of approximately 15,000 job cuts and a reduction in capital expenditures.
The company also suspended its dividend, a move that shocked investors.
At the Deutsche Bank Technology Conference on Thursday, Gelsinger said it had "been a difficult few weeks."
He expressed disappointment in the market's reaction to Intel's recent earnings report, in which the company attempted to clarify its future strategy.
"Obviously the market didn't respond positively. We understand that," Gelsinger said.
Intel's stock has dropped 60% this year, in stark contrast to the 20% gain seen by the Philadelphia Stock Exchange Semiconductor Index.
The company, once a titan in the chip industry, now finds itself trailing significantly behind competitors like Nvidia Corp, which is on track to double Intel's revenue in 2024 as its chips power today's prominent AI models.
Just three years ago, Intel's revenue was three times that of Nvidia.
