Intel Faces Toughest Times in 56 Years, Eyes Possible Split

Intel Corporation, facing one of the most challenging periods in its 56-year history, is collaborating with investment bankers to explore strategic options. Sources close to the matter reveal that the company is considering various scenarios, including the potential separation of its product design and manufacturing units and evaluating which factory projects may be scaled back or canceled.

Investment banks Morgan Stanley and Goldman Sachs Group Inc., long-time advisors to Intel, are providing guidance on multiple possibilities, including potential mergers and acquisitions. These discussions have gained urgency following a disappointing earnings report that caused Intel's stock to fall to its lowest point since 2013. The strategies under consideration are expected to be reviewed at a board meeting in September.

Currently, discussions are still in the early stages, and no major decisions have been finalized. Intel representatives declined to comment, while Morgan Stanley and Goldman Sachs have not immediately responded to requests for comments.

One option being evaluated is the possible sale or spinoff of Intel's foundry services, which produce chips for external customers. Such a move would mark a significant shift for CEO Pat Gelsinger, who has championed this business as a critical element of Intel's strategy to regain its standing among leading chip manufacturers. He envisions it eventually competing with industry giants like TSMC. However, before reaching such a conclusion, Intel might consider more conservative measures, such as postponing certain expansion plans. The company has already secured financing deals with Brookfield Infrastructure Partners and Apollo Global Management for ongoing projects.

CEO Pat Gelsinger is under pressure to reverse Intel's financial downturn. His strategy to expand the company's chip production facilities has come at a time of declining sales, resulting in a net loss of $1.61 billion last quarter, with analysts predicting further losses next year.

A seasoned veteran of Intel, Gelsinger returned to lead the company in 2021 after more than a decade away, with a promise to restore its technological edge. Under prior leadership, Intel lost market share and its reputation for innovation. However, Gelsinger's aggressive plan has faced challenges, forcing Intel to reduce its scale. Earlier this month, the company announced plans to cut approximately 15,000 jobs and reduce capital expenditures. Intel has also suspended its long-standing dividend payments to conserve cash.