Intel has announced plans to create a new spin-off, Intel Foundry Services (IFS), which will see its foundry business become a standalone subsidiary.
The announcementcreated by CEO Pat Gelsinger, would align with three of Intel’s key goals: improving its foundry operations, lowering costs and focusing on its core x86 technology.
Gelsinger’s news also confirms that the company has acted decisively following its second-quarter earnings report.
Subsidiary of Intel Foundry Services
In the past three months, Intel reported revenue of $12.8 billion, down just 1% from the same period last year.
Announcing a major $10 billion cost-savings plan, Gelsinger said, “Our financial performance in the second quarter was disappointing, even as we achieved significant product and process technology milestones.”
By spinning off the foundry business, the newly formed IFS will gain greater financial transparency and flexibility. Gelsinger summarized the change as “providing our external foundry customers and suppliers with clearer separation and independence from the rest of Intel.”
There have been no changes to the leadership team, which will continue to report to Intel’s CEO, but a separate operating board will be established.
In the announcement, Gelsinger also addressed further changes that will apply to Intel, in an effort to address the many concerns that have arisen following the most recent quarter.
Despite halting facility projects in Germany and Poland, Intel will continue construction in Arizona, Oregon, New Mexico and Ohio to expand its U.S. manufacturing footprint. These projects are supported by billions of U.S. dollars as part of the CHIPS Act.
Gelsinger thanked Intel employees for their understanding and revealed the true scope of the change: “As I’ve said before, this is the most significant transformation Intel has done in more than four decades. Not since we moved from memory to microprocessors have we attempted something this fundamental.”