Intel CEO: Increase the separation of the company's chip design and manufacturing business decisions

Intel Corp. plans to create a greater separation of decision-making between its chip designers and chip manufacturing plants, as part of Chief Executive Pat Gelsinger's revamp of the company, The Wall Street Journal reported Oct. 12.

The new structural change, disclosed by the CEO in a letter to employees on Tuesday, is designed to allow Intel's factory network to function like a contract chip-making business, treating orders from Intel engineers internally as well as those from outside chip companies.

Intel has historically used its in-house factories almost exclusively to make its own chips, but CEO Pat Gelsinger changed that when he launched the foundry business last year.

The latest adjustments "will allow us to achieve real-time feedback on accountability and costs, allowing policymakers to better address the structural inefficiencies that exist in the current model," Gelsinger said.

Analysts say Intel's traditionally close link between chip design and production operations can sometimes lead to choices that make financial priorities for a particular part of the company, affecting overall returns.

Intel is one of the few companies that designs and manufactures chips in-house. The company's main chip rivals, including Nvidia, rely on other companies to make chips. AMD spun off its chip manufacturing plant more than a decade ago.

Still, the effort to turn things around comes with challenges. Intel said in July that the company's latest chip lineup had been delayed. In addition, the company has been hit by a sharp slowdown in PC shipments this year.