Intel, facing its biggest crisis in 56 years, is reportedly considering selling or spinning off its foundry business, a move that underscores the severity of the company’s current struggles.

Bloomberg reported on August 29 (local time) that Intel is discussing various measures to navigate this challenging period, including the potential divestiture of its foundry operations. These options will be presented at the board meeting next month, although sources noted that no decision is imminent.

Intel’s foundry business, which began in 2012 with the establishment of the Intel Custom Foundry Group, was initially seen as a bold move to diversify and compete with industry giants like TSMC and Samsung Electronics. However, consecutive setbacks led to Intel’s withdrawal from the foundry market in 2018. The company re-entered the foundry business in 2021 under the leadership of CEO Pat Gelsinger, who returned to Intel with a vision to restore its dominance in the semiconductor industry. Gelsinger, who started at Intel as an engineer at 18 and rose to become the Chief Technology Officer before leaving in 2009, set ambitious goals to reach the 1-2 nanometer ultra-fine process ahead of competitors.

Despite these aspirations, Intel has faced significant financial challenges. The company recently laid off 15,000 employees and suspended dividend payments. Intel’s stock price has plummeted nearly 60% this year, a stark contrast to the soaring values of other major semiconductor stocks. In the second quarter of this year, Intel recorded a net loss of $1.611 billion, marking its worst performance to date.

Bloomberg’s report highlighted that Intel is considering not only spinning off the foundry business but also selling it. The company has sought advice on the possibility of mergers and acquisitions (M&A) for the foundry business from long-time partners Morgan Stanley and Goldman Sachs. This move would completely overturn CEO Gelsinger’s strategy to revive the glory of Intel’s past ‘semiconductor empire’ through the foundry business.

Intel’s historical significance in the semiconductor industry cannot be overstated. Founded in 1968, the company has been a pioneer in the development of microprocessors, which are the brains of computers and many other electronic devices. Intel’s innovations have historically set industry standards and driven technological progress, making it a key player in the global tech landscape.

The semiconductor foundry business, where companies fabricate silicon wafers used to produce integrated circuits or microchips, operates on a contract basis. Major players in this space include TSMC and Samsung Electronics, both of which have established themselves as leaders in the market. Intel’s struggle to keep up with these giants has exacerbated its financial woes.

In response to its financial difficulties, Intel has undertaken drastic restructuring measures. The potential sale or spin-off of its foundry business is seen as a more drastic step than the recent layoffs, indicating the depth of Intel’s current crisis. The global semiconductor market, critical to the global economy, is influenced by geopolitical factors, supply chain disruptions, and technological advancements, all of which add to the competitive landscape Intel is navigating.

As Intel prepares to present its options at the upcoming board meeting, the industry will be watching closely. The decisions made in the coming months will likely shape the future of the company and its position in the semiconductor market.

Source: Businesskorea