Semiconductors

Intel May Spin Off Manufacturing Division

Ken Metral

13 Dec 2024 — 2 min read

The Robert Noyce Building in Santa Clara, California, is the headquarters for the Intel Corporation. (Credit: Intel Corporation)

Following the unexpected removal of former CEO Pat Gelsinger, Intel now faces a crossroads that could reshape its future. At a recent Barclays investment conference, Intel’s temporary co-CEOs hinted at a possible manufacturing spinoff, sparking significant industry interest and speculation.

Manufacturing Business in Focus

Intel’s manufacturing operations are already being restructured into a standalone subsidiary, according to Intel CFO David Zinsner. While confirming the operational separation, Zinsner left the door open regarding a full spinoff:

“Does it ever fully separate? That’s an open question for another day,” he said.

Michelle Johnston Holthaus, Intel’s Products CEO, shared a similar perspective, stating that a total split might not be practical:

“Do I think it makes sense that they’re completely separated and there’s no tie? I don’t think so. But someone will decide that.”

Challenges Ahead

The debate comes at a critical moment for Intel. The company faced notable setbacks this year, including outsourcing its Lunar Lake laptop chips to competitor TSMC, a move that turned into a financial misstep. Intel’s struggles extend to product delays, underperforming 13th and 14th Gen desktop CPUs, and increasing pressure from rivals like AMD.

A full manufacturing split wouldn’t be simple. Intel receives nearly $8 billion in CHIPS and Science Act funding, which comes with government oversight on major control changes. Any decision to separate its foundries would need approval from the U.S. Department of Commerce.

Future of Intel

The incoming CEO will inherit the complex task of determining Intel’s path forward. Much hinges on Intel’s “18A” process, its next-gen chip manufacturing technology expected next year. Success is crucial to reestablish Intel’s competitive edge against industry leader TSMC and rivals like AMD.

If Intel’s manufacturing arm does spin off, the company would shift to a pure chip design model, mirroring the operations of competitors like AMD and NVIDIA. This transformation could be a turning point—but it won’t come without risks.

As Intel’s leadership remains in flux, the industry will be watching closely to see whether the company can overcome recent challenges and chart a stable course for the future.

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