The resignation of Intel CEO Pat Gelsinger, an opponent of dividing the company’s business, frees the hands of Intel’s board of directors. Now he has the opportunity to return to discuss previously rejected proposals, including selling assets, attracting private investment and dividing Intel divisions, which could radically change the company’s development trajectory. This step opens up new ways to bring Intel out of a protracted crisis.
Image source: Intel
Gelsinger’s resignation, the result of pressure from the board of directors and shareholders, marks the beginning of a new era for Intel. During his leadership, which began in 2021, the company failed to achieve its goals of regaining technological leadership. Gelsinger, who was strongly opposed to breaking up the company, intended to turn the company into a contract chip manufacturer, displacing TSMC and Samsung. In fact, under the now former leader, the company focused on production rather than its own products. But financial setbacks—including billions in losses and lower sales forecasts for the most recent quarter—have undermined confidence in that vision for the company’s future.
Large banks Morgan Stanley and Goldman Sachs are key advisors to Intel in analyzing possible trajectories for its future development. Among the options being considered are the sale of individual divisions, attracting large private investments and restructuring the company. Qualcomm previously explored the possibility of a deal with Intel, but the complexity of integrating the businesses and the scale of the operation cooled its interest. Broadcom was also exploring an acquisition option, but was focused on completing its acquisition of VMware, making negotiations with Intel a secondary concern.
One of the most radical restructuring options discussed by the board of directors is the separation of the company’s production facilities and product business. Such a move could allow it to focus on product development and reduce the financial burden on Intel’s factory segment. However, the division of the company now seems unlikely – it is hampered by the allocated $7.9 billion in government subsidies under the CHIPS & Science Act, intended to support domestic chip production in the United States. In addition, competition with TSMC may become significantly more difficult without the integration of manufacturing and design resources.
Intel’s programmable chips, produced by its Altera division, are a promising asset that could attract the attention of investors. This business, acquired by Intel back in 2015 for $17 billion, is seen as a potential candidate for an initial public offering (IPO) or partial sale. Lattice Semiconductor, working in partnership with financial advisors, has expressed interest in purchasing Altera’s assets. Francisco Partners, Bain Capital and Silver Lake Management have expressed similar interest.
Mobileye’s autonomous driving technology division could also be subject to a partial or complete sale. Intel, which acquired Mobileye for $15 billion in 2017, still retains an 88% stake in the company. Mobileye’s market value now stands at $14.1 billion, making it unlikely that Intel will fully recover its investment. The new CEO may consider selling his stake in Mobileye to raise additional funds for other strategic initiatives.
Apollo Global Management remains a strategic partner of Intel and is actively exploring opportunities to expand cooperation. In 2023, the company proposed investing up to $5 billion in Intel. Earlier, in June, Apollo acquired a significant stake in Intel’s Irish factory for $11 billion, strengthening its position in joint projects. Renewed discussions with Apollo could be critical to strengthening Intel’s financial strength and supporting its long-term strategic plans.
What the future of Intel will be is a question that remains open, but it is obvious that the first steps of the new CEO will determine not only the fate of the company, but also its role in the global technology market. The interim leadership sees Intel’s future in returning its focus to processors, while manufacturing development will take a back seat. “We will build a compact, simple and flexible Intel,” said Frank Yeary, who was temporarily appointed to the post of chairman of the board of directors.