Intel's Strategic Shift: Spinning Off Venture Capital Arm to Cut Costs

Intel, the world's largest semiconductor chipmaker, has announced its plans to spin off its venture capital arm, Intel Capital, into a standalone fund. This strategic move, aimed at reducing costs and streamlining operations, comes as the company faces intense competition and a challenging market landscape. The spin-off is expected to be completed in the second half of 2025, with Intel remaining an anchor investor.

Intel Capital, established in 1991, has been a crucial component of Intel's ecosystem, investing in strategic companies across various sectors such as silicon, 5G, devices, and cloud. With over $5 billion in assets under management, the fund has invested in more than 1,800 companies worldwide, deploying over $20 billion in cash. Some of its notable portfolio companies include AI chip startup SambaNova, Israeli AI company AI21 Labs, humanoid robotics firm Figure, and AI developer platform Anyscale.

The spin-off of Intel Capital will enable the fund to attract external capital, providing it with greater autonomy and flexibility to expand its franchise while maintaining a productive long-term strategic partnership with Intel. This move supports Intel's broader strategy to maximize the value of its assets and drive greater focus and efficiency across the business.



Intel's decision to spin out Intel Capital comes after the company's board of directors appointed David Zinsner and Michelle Johnston Holthaus as interim co-CEOs, replacing Pat Gelsinger. Holthaus is also CEO of Intel Products, a recently created division spanning the chipmaker's consumer-focused org as well as its data center, AI, network, and edge businesses. This change in leadership signals a shift in Intel's strategy, focusing on cost-cutting and streamlining operations to improve long-term competitiveness.

Intel's cost-cutting measures, including the spin-off of Intel Capital, aim to realign its cost structure with its new operating model and address the fact that its revenues have not grown as expected. By reducing its headcount by approximately 15,000 roles (15% of its workforce), Intel plans to deliver $10 billion in cost savings by 2025. This action is part of the company's plan to simplify its portfolio, eliminate complexity, reduce capital and other costs, and suspend its stock dividend to prioritize investments in the business.

Intel's strategic shift, including the spin-off of Intel Capital, is designed to improve the company's long-term competitiveness by realigning its cost structure, simplifying its portfolio, and providing Intel Capital with greater autonomy and flexibility to attract external capital. These changes aim to make Intel a leaner, more agile, and better-positioned company to capitalize on future technological trends.

In conclusion, Intel's decision to spin off its venture capital arm, Intel Capital, into a standalone fund is a strategic move aimed at reducing costs and streamlining operations. This change, along with other cost-cutting measures, is expected to improve Intel's long-term competitiveness and enable the company to better navigate the challenging market landscape.