Intel's Make-or-Break Moment: Tough Choices Loom as Board Mulls Factory Cuts and Subsidiary Sales

Intel is at a pivotal moment this week as its board of directors considers a series of strategic options, including scaling back multi-billion-dollar factory projects, selling off parts of its subsidiaries, or even splitting its core business into separate entities. After years of losing market favor, the company is now facing a critical juncture.

The board has been holding a three-day meeting to address the company's prolonged financial struggles and reposition the once-dominant chip giant. No consensus has been reached yet on a specific path forward, but several options are on the table, and all come with their respective challenges.

One possible move to improve Intel's financial health could involve selling divisions acquired before CEO Pat Gelsinger took over, such as Mobileye and Altera. Mobileye, an autonomous driving technology firm, has been hit by a downturn in the automotive industry, while Altera has underperformed due to reduced telecom spending.

Another option might involve scaling back Intel's semiconductor factory network. Financial pressures have forced the company to re-evaluate its global factory construction plans, including significant projects in Arizona and Ohio, which are key components of the Biden administration's chip initiatives. However, these projects could face delays or reductions. Factories in Germany, Poland, and Malaysia are also at risk of being halted.

Gelsinger's ambitious plans to regain dominance in the semiconductor industry by competing with Nvidia in chip design and TSMC in contract manufacturing seem increasingly far-fetched. Intel's recent financial reports have shown some of the company's worst-ever earnings, leading to mass layoffs and a suspension of dividends.

The company’s challenges are a setback not only for itself but also for the U.S. government's effort to revitalize domestic semiconductor manufacturing. Intel's struggles could undermine Biden's strategy, which sees the company as a central partner, offering it billions in support.

Given this context, Intel's decision at this critical juncture will not only determine its future but also impact the global semiconductor landscape. For Gelsinger and Intel, there appears to be no easy way out.