Shares of Intel are on the rise as the chipmaker announced a new partnership with Amazon Web Services in the realm of custom artificial intelligence chips. This collaboration is a strategic move by Intel to breathe new life into its foundry business, as CEO Pat Gelsinger shared in a message to employees on Monday.
Gelsinger revealed that Intel will be developing an AI fabric chip for Amazon’s cloud services division through its foundry business, which he plans to restructure as a subsidiary of Intel. This change is aimed at providing clearer separation and independence for external foundry customers and suppliers, while also optimizing capital structure to maximize growth and shareholder value.
Analyst Harlan Sur of JP Morgan sees the move to make the foundry business a subsidiary as a logical progression for better transparency and decision-making efficiency. He even speculates that this shift could eventually lead to a spinoff of the business in the coming years.
To oversee the planned subsidiary, a new board with independent directors will be established. Additionally, Gelsinger updated employees on Intel’s ongoing cost-cutting efforts, noting that the company is already halfway towards its workforce reduction target of 15,000 by year-end through voluntary early retirement and separation offerings.
Looking ahead, Intel aims to reduce or exit approximately two-thirds of its real estate holdings globally by the end of the year. The market responded positively to these developments, with Intel’s stock surging nearly 7% in premarket trading.
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