Intel CEO to Present Major Cost-Cutting Plan and Asset Sales to Board

Key Takeaways

Intel's CEO is preparing to propose cost-cutting measures and asset sales to the board.

The plan may include selling the Altera chip unit.

Capital cuts could lead to pausing a $32 billion factory project in Germany.

Intel's CEO, Pat Gelsinger, is getting ready to present a strategic plan to the company's board that focuses on cutting costs and selling off non-essential business units. This move, reported by Reuters, is part of Intel's broader effort to improve its standing in the competitive semiconductor industry.

The plan, which will be discussed at a board meeting in mid-September, includes the potential sale of certain business segments, such as the programmable chip unit Altera. Intel purchased Altera for $16.7 billion in 2015, but it’s now being considered for divestiture as Intel aims to focus more on its core operations. Intel has already begun to separate Altera as a subsidiary, and may consider a partial public offering or a sale to another chipmaker, with Marvell being a potential buyer.

Gelsinger’s proposal also includes reducing capital spending, which could mean pausing or even halting the construction of a $32 billion factory in Germany.

These steps are part of Intel’s response to the financial challenges it’s currently facing, including a tough second quarter and the need to catch up with industry leaders like Nvidia and AMD in the AI chip market.

To help determine which business units to keep or sell, Intel has hired financial advisors, including Morgan Stanley and Goldman Sachs. The company has already gone through rounds of layoffs and suspended dividend payments as part of its goal to save $10 billion.

The upcoming board meeting is a critical moment for Intel as it tries to chart a course for the future. The decisions made during this meeting could significantly influence the company's direction and its ability to stay competitive in the fast-changing chip industry.