Intel Chief Executive Officer Pat Gelsinger and key executives plan to present a plan to the company's board later this month to cut nonessential businesses and restructure capital spending in an effort to revive the chipmaker's once-dominant position, according to people familiar with the matter.
The plan also includes ideas about how to cut overall costs by selling businesses such as its programmable chip division, Altera, that were once hugely profitable but that Intel can no longer raise money from.
The source said Gelsinger and other senior Intel executives are scheduled to announce the plan at a board meeting in mid-September.
The details of Gelsinger's proposal are being reported here for the first time.
Intel declined to comment.
The proposal does not yet include plans to break up Intel and sell its contract manufacturing businesses, known as foundries, to a buyer such as Taiwan Semiconductor Manufacturing Co., according to the people and another person familiar with the matter.
The presentation, which will include plans for manufacturing operations, has not yet been finalized and may be subject to change before the meeting.
Intel has already separated its foundry business from its design business and has been reporting them separately since the first quarter of this year.
The company has erected walls between its design and manufacturing divisions, denying the design division's potential customers access to the technical secrets of customers whose chips are made in Intel's factories, known as fabs.
Intel is going through one of its worst periods as it tries to catch up in the AI era to companies like Nvidia Inc NVDA.O, the world's largest AI chipmaker with a market capitalization of $3 trillion.
In contrast, Intel's revenue has now fallen below $100 billion after reporting dismal second-quarter earnings in August.
The proposal submitted by Gelsinger and others could also include plans to further reduce the company's capital spending on factory expansion.
The proposal could also include plans to temporarily halt or even cancel altogether a $32 billion factory in Germany that has reportedly been delayed, the sources said.
Intel said in August it planned to cut capital spending in 2025 to $21.5 billion, down 17% from this year, and issued a weaker-than-expected third-quarter outlook.
In addition to planning for its CEO and executives, Intel has hired Morgan Stanley and Goldman Sachs to advise its board on which businesses Intel could sell and which it should keep, according to two sources familiar with the company's advisory plans.
Intel has not yet solicited bids for the product division but is likely to do so if its board approves the plan, two sources familiar with the company's advisory plans said.
Altera spin-out
The board meeting in mid-September will be crucial for the former chip-making magnate, which in August reported dismal second-quarter results that included suspending dividend payments and cutting 15% of its workforce in an effort to save $10 billion.
Reuters reported a few weeks later that semiconductor industry veteran Lip Vu Thanh had resigned from the board after months of discussions about the company's future, leaving the board lacking someone with deep experience in the semiconductor business.
Last Thursday, following the Reuters report, Gelsinger sought to reassure investors about the company's weak financial performance.
“The last few weeks have been challenging,” Gelsinger said at a Deutsche Bank conference. “We've been working hard to resolve the issues.”
Gelsinger said the company was “taking investor feedback seriously” and that Intel was focused on the second phase of its restructuring plan.
Some of those plans remain open until a mid-September meeting, when the company's directors are expected to make key decisions about which businesses Intel will keep and which it will sell.
One business the company may consider selling is Altera, the programmable chip business that Intel bought in 2015 for $16.7 billion.
Intel has already taken steps to separate the company into a standalone, wholly owned subsidiary and has said it plans to sell some of its shares in an initial public offering in the future, but has not yet set a timetable.
But Altera could also be sold outright to another chipmaker interested in expanding its portfolio, and the company has quietly begun considering whether a sale is possible, said a person familiar with the company's advisory plans and one of the sources familiar with the downsizing plans.
Infrastructure chipmaker Marvell is one potential buyer in such a deal, one of the sources said.
Bloomberg had previously reported on various options for Intel, including a possible spin-off of its product design and manufacturing business, which would be discussed at the board meeting.
