Intel considers selling production if new chip technology fails

Intel, one of the largest technology companies in the world, is facing a difficult situation. Following the recent dismissal of CEO Pat Gelsinger, the company's new management has openly stated that if the new manufacturing technology to be launched next year does not succeed, Intel will likely be forced to sell its manufacturing division. The move would mark a fundamental change in the nature of the entire company, which has long combined chip design and manufacturing, making it unique in the market. With a drop in value of more than $100 billion and the loss of its technology lead, Intel is entering a crucial phase.

Intel, a company known for its ability to not only design but also manufacture chips, is in a difficult position. This combination of both roles has long set it apart from most competitors that specialize in only one part of the process. In recent years, however, Intel $INTC has faced increasing challenges. The company has lost its technology leadership in chip manufacturing and lost a significant portion of its market value. This was compounded by a missed opportunity in artificial intelligence, which is now the domain of Nvidia.

As a result of these issues, former CEO Pat Gelsinger was removed and two new co-CEOs, Michelle Johnston Holthaus and David Zinsner, were appointed to take over the company. Speaking at a Barclays Investment Banking conference in San Francisco, the two execs addressed the question of whether Intel will continue to maintain the link between chip manufacturing and chip design. The move is seen as crucial, as the company's future is heavily dependent on the success of its new 18A-branded manufacturing technology, which is scheduled to launch in 2025.

The 18A technology is intended to allow production of flagship PC chips that Intel used to make in its own plants to return to its factories. Until now, the production of these chips has been outsourced to Taiwan Semiconductor Manufacturing Company (TSMC), causing Intel to lose not only control over the manufacturing process, but also the technical edge that TSMC and other competitors such as Samsung have been able to use to dominate the market.

Michelle Holthaus was pragmatic on this issue: "I don't think it's realistic for Intel's product and manufacturing divisions to be completely separate without any relationship between them. But of course that's a question for the future and a final decision." She said. This comment suggests that while Intel currently remains strongly linked to both of these components, it will have to rethink its strategy if the new technology fails.

David Zinsner, who is also the company's CFO, further outlined the steps Intel is already taking to separate its manufacturing division - Intel Foundry - from its other business operations. This division is now managed as a separate entity with its own board of directors and separate business processes. However, Zinsner acknowledged that the question of completely separating this division from the rest of the company remains open. While Intel Foundry will operate independently, there may still be obstacles that could complicate the process.

For Intel, this means a key choice between maintaining its current model of manufacturing and design under one roof, or moving to a model more in line with industry trends where chip manufacturing processes are being taken over by specialist companies such as TSMC. If Intel were not to meet this technological challenge, it would mean not only a sale of manufacturing capacity, but perhaps a fundamental change in its strategic focus.

Investors reacted positively to the new management's comments. Following the announcement that Intel was preparing to split its operations, the company's share price rose by approximately 2.3%. However, this increase may be temporary if the new 18A manufacturing technology proves unable to compete with the highly advanced processes of competitors.

Intel therefore faces an important challenge that will determine its future. The success of the 18A technology is key to keeping manufacturing capacity in Intel's hands, but if this step proves to be a failure, the company will have to rethink its strategy and consider selling its manufacturing division. Any such move could have far-reaching implications for Intel's position in the global technology market.

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Source: Yahoo, Reuters.