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Intel has announced plans to establish a new Intel Foundry Services (IFS) spinoff – with the foundry business set to become its own standalone subsidiary.
The announcement, made by company CEO Pat Gelsinger, is said to align with three of Intel’s main goals, enhancing its foundry operations, cutting costs and focusing on its core x86 technology.
Gelsinger’s news also serves as confirmation of decisive action made by the company following its second-quarter earnings call.
Intel Foundry Services subsidiary
In its most recent three-month period, Intel reports $12.8 billion in revenue, marking a minor 1% decrease over the same period of the preceding year.
Announcing a major $10 billion cost-reduction plan, Gelsinger stated: “Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones.”
Splitting off its foundry business will enable the newly formed IFS to have greater financial transparency as well as more flexibility. Gelsinger summarized the change, “provides our external foundry customers and suppliers with clearer separation and independence from the rest of Intel.”
No changes have been made to the leadership team, who continue to report to Intel’s CEO, however a separate operating board will be established.
In the announcement, Gelsinger also touched upon further changes that will apply to Intel in order to address many of the concerns raise following the most recent quarter.
Despite pausing facility projects in Germany and Poland, Intel will continue to build in Arizona, Oregon, New Mexico and Ohio in order to expand its US manufacturing footprint. These projects are backed by billions of US dollars as part of the CHIPS Act.
Gelsinger thanked Intel’s workers for their understanding, revealing the true scale of the change: “As I’ve said before, this is the most significant transformation of Intel in over four decades. Not since the memory to microprocessor transition have we attempted something so essential.”
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