Intel's foundry business to become a subsidiary and allow for outside funding leads to a rise in stock price.

• Intel announced on Monday that it is establishing a separate entity for its foundry business, which could enable it to secure external funding.
• Over the past two years, the foundry business has received approximately $25 billion in funding from the chipmaker.
• In 2024, the company's stock value decreased by almost 60%.

On Monday, the company's shares experienced a nearly 10% increase in extended trading after it announced plans to transform its foundry business into a separate entity with its own board and the possibility of securing external funding.

Intel announced that it will sell off a portion of its stake in Altera as part of CEO Pat Gelsinger's plan to revive the struggling chipmaker.

Intel plans to restructure its foundry business to evaluate independent sources of funding, following a recent assessment of the company's direction and future by its board. The foundry business, which has been a significant financial burden for Intel, has cost the company approximately $25 billion over the past two years.

Intel is considering spinning off its foundry business into a separate publicly traded company, according to a source who requested anonymity to disclose confidential information.

A standalone "operating board" and a cleaner corporate structure make separating a fully-integrated unit into a separate company much simpler.

Intel has experienced a significant decline in value, losing nearly 60% of its worth this year. The company has lost market share in its core PC and data center markets, while Nvidia has seized the market for AI-powered chip workloads. Intel reported disappointing quarterly results last month, causing a sharp selloff and prompting the company to announce a $10 billion cost-reduction plan, including layoffs of over 15% of its workforce.

Gelsinger announced that Intel will pause its fab efforts in Poland and Germany for approximately two years based on anticipated market demand. Additionally, the company will pull back on its plans for its Malaysian factory. However, U.S. manufacturing projects will remain unaffected, the company said.

Gelsinger stated that the company is approximately halfway through the layoffs that were announced in August.

On Monday, Intel revealed a partnership with Amazon Web Services to create bespoke chips for artificial intelligence.

Intel's decision to manufacture custom chips for other companies through its foundry business is a vote of confidence in its ability to produce high-quality chips.

Intel and Amazon have extended their long-standing partnership, with Amazon being a major customer of Intel chips for its AWS servers and purchasing a custom Xeon processor from Intel.

Nvidia has dominated the AI server chip market, but Intel has an opportunity to gain a foothold with its Gaudi 3 product.

For more than five years, Amazon has been developing its own AI chips, including Trainium, in an effort to improve the efficiency and cost-effectiveness of running AI compared to Nvidia's general-purpose GPUs. Along with Amazon, companies such as Microsoft and Google have also invested heavily in custom chips for AI, hoping to gain a competitive advantage.

The company announced that the chips will be produced using the company's 18A process, which is predicted to be utilized in production in 2025. It is anticipated that the manufacturing technology will be comparable to TSMC's upcoming 2nm process. (Apple's iPhone is currently shipping with the first chips made using TSMC's 3nm process.)

Intel announced that it will execute its most advanced manufacturing processes, including the AI chip for AWS, at its Ohio plant, which is currently under construction.

Gelsinger stated that we must fight for every inch and execute better than ever before in order to quiet our critics and achieve the results we know we're capable of.

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