Intel is spinning off its AI-focused foundry business into an independent subsidiary to address multiple challenges facing the company, which lost billions of dollars last year and saw its stock price fall by nearly 45%, Cointelegraph reported.
Intel CEO Patrick Gelsinger said in a September 16 employee memo that Intel Foundry will become an independent subsidiary with its own board of directors and the ability to raise outside funding.
The move by Intel, one of the world's largest producers of semiconductors and computing processors, marks an escalation in its battle with rival Nvidia, which has made a lucrative fortune in AI system chips and cards.
Intel said its foundry business will start producing chips using the new 18A process for partners including Microsoft and Amazon starting next year.
Gelsinger said the new plan will increase efficiency, improve profitability and enhance market competitiveness, marking Intel's most important transformation in more than 40 years.
Intel shares rose 6.4% following the announcement, from an opening price of $19.86 to $23.30 in after-hours trading.
Still, Intel faces challenges, with a Sept. 4 Reuters report saying early testing had suffered a major setback.
In addition, Intel plans to sell part of its stake in Altera and cut two-thirds of its global real estate. The Biden administration has offered the company up to $3 billion to make chips for the U.S. military.
On August 1, Intel reported an operating loss of $7 billion for its chipmaking division and quarterly earnings that fell well short of investor expectations, causing its stock price to plunge more than 30% in two days.
The company plans to cut about 15% of its workforce, with the goal of reducing its total workforce to 15,000 by the end of the year.
