Grappling with Losses and Leadership Changes, What Will Be Intel's Path Forward?

Compared to the high-flying NVIDIA, Intel seems to have taken an opposite path.

Unlike NVIDIA, which is strongly supported by Wall Street and is constantly climbing to new heights in market value with the development of artificial intelligence, Intel is frequently embroiled in various troubles. Even though its long-standing leading position still allows it to catch its breath for the time being, it cannot hide its declining situation.

Intel CEO Pat Gelsinger admitted at the Deutsche Bank Technology Conference on Thursday that the company has had a very difficult few weeks, and the company is trying to clearly outline the next steps in the financial report, but the market does not buy it.

What makes the market even more suspicious is that the highly anticipated director Lip-Bu Tan suddenly resigned from the board of directors last week, which means that Intel has lost another top semiconductor industry elite.

According to informed sources, Intel is now working with investment banks to discuss various plans, including splitting product design and manufacturing business, as well as suspending or canceling some projects, to save the company's financial performance. They emphasized that the negotiations are still in the early stages, and Intel has not taken any major measures.

It is reported that Intel's long-term partners, Morgan Stanley, and Goldman Sachs, are providing consulting services for the company, and the discussions among investment banks have become urgent after Intel's tragic financial report.

Intel reported that the company had a net loss of $1.61 billion in the last quarter, and analysts pessimistically believe there will be more losses in the future. Earlier this month, Intel also announced plans to lay off about 15,000 people and cut capital expenditure significantly.

Insiders say that Intel's reform plan may be proposed at the board of directors meeting in September. Intel refused to comment, and Morgan Stanley and Goldman Sachs did not respond.

One possibility is that Intel may split or sell its foundry department, which has always been regarded by Gelsinger as a key business of Intel. He also hoped to develop it into a global leading chip department that can compete with TSMC.

This also means that Intel may have to accept a thorough restructuring from architecture to concept. However, insiders pointed out that before this major option, Intel will first make more moderate adjustments, such as postponing the expansion of some projects.

In addition, Intel has reached project financing agreements with Brookfield Infrastructure Partners and Apollo Global Management, which has relieved the company's urgent needs.

Even so, Intel's business is still full of thorns. The industry said that unless its foundry business can find more external customers, it is difficult to continue to survive.

At present, this company, which is regarded as one of the gems of the American chip industry, has already fallen out of the top ten global chip manufacturers, and it is one of the worst-performing companies in the Philadelphia Semiconductor Index this year. So far this year, Intel's stock price has fallen by nearly 60%.