Intel has announced plans to establish a new Intel Foundry Services (IFS) spinoff – in which the foundry business will become its own standalone subsidiary.
AnnouncementThe project, created by company CEO Pat Gelsinger, is in line with Intel’s three main goals – expanding its foundry operations, cutting costs, and focusing on its core x86 technology.
Gelsinger’s news also confirms the decisive action the company took following its second-quarter earnings.
Intel Foundry Services Subsidiary
In its most recent three-month period, Intel reported revenue of $12.8 billion, a slight decrease of 1% compared to the same period last year.
In announcing a $10 billion cost-cutting plan, Gelsinger said: “Our second quarter financial performance was disappointing, even though we achieved key product and process technology milestones.”
Separating its foundry business will help the newly formed IFS achieve greater financial transparency as well as greater flexibility. “Our external foundry provides customers and suppliers with a clear separation and independence from the rest of Intel,” Gelsinger said, summarizing the change.
There are no changes to the leadership team, which will continue to report to Intel’s CEO, though a separate operating board will be established.
In the announcement, Gelsinger also highlighted other changes Intel will implement to address a number of concerns that arose following the most recent quarter.
Despite halting facility projects in Germany and Poland, Intel will continue to build in Arizona, Oregon, New Mexico and Ohio to expand its US manufacturing footprint. These projects are supported by billions of US dollars. CHIPS Act,
Gelsinger thanked Intel employees for their understanding, and revealed the true scale of the change: “As I have said before, this is Intel’s most significant transformation in four decades. We have never undertaken an effort of this magnitude since the shift from memory to microprocessors.”