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Intel splits Foundry from Design

Daniel Payne

Daniel Payne

Moderator
Intel said Monday that it will turn its factories into an “independent subsidiary” with its own board of directors, a historic step that opens the door to severing the company into two pieces, a semiconductor manufacturing business and a separate organization to design computer chips.

It’s a profound development that could fundamentally change the way Intel operates — a step aimed at rescuing the company from technological malaise and years of faltering sales.

www.oregonlive.com

Intel to split factories into ‘independent subsidiary,’ a historic shift for the struggling chipmaker

“We still have difficult decisions to make," CEO Pat Gelsinger told employees.
www.oregonlive.com www.oregonlive.com
 
The article mentions that the foundry would have its own Board of Directors, and Intel still owns 88% of Mobileye shares.
 
Daniel Payne said:
www.oregonlive.com

Intel to split factories into ‘independent subsidiary,’ a historic shift for the struggling chipmaker

“We still have difficult decisions to make," CEO Pat Gelsinger told employees.
www.oregonlive.com www.oregonlive.com
Click to expand...

"Greater independence for Intel Foundry

To build on our progress, we plan to establish Intel Foundry as an independent subsidiary inside of Intel. This governance structure will complete the process we initiated earlier this year when we separated the P&L and financial reporting for Intel Foundry and Intel Products.

A subsidiary structure will unlock important benefits. It provides our external foundry customers and suppliers with clearer separation and independence from the rest of Intel. Importantly, it also gives us future flexibility to evaluate independent sources of funding and optimize the capital structure of each business to maximize growth and shareholder value creation.

There is no change to our Intel Foundry leadership team, which continues to report to me. We will also establish an operating board that includes independent directors to govern the subsidiary. This supports our continued focus on driving greater transparency, optimization and accountability across the business.

A more focused and efficient Intel Foundry will further enhance collaboration with Intel Products. And our capabilities across design and manufacturing will remain a source of competitive differentiation and strength."

Source: https://www.intel.com/content/www/us/en/newsroom/news/foundry-momentum-progress-plan.html#gs.f9tdzh
 
hist78 said:
"Greater independence for Intel Foundry

To build on our progress, we plan to establish Intel Foundry as an independent subsidiary inside of Intel. This governance structure will complete the process we initiated earlier this year when we separated the P&L and financial reporting for Intel Foundry and Intel Products.

A subsidiary structure will unlock important benefits. It provides our external foundry customers and suppliers with clearer separation and independence from the rest of Intel. Importantly, it also gives us future flexibility to evaluate independent sources of funding and optimize the capital structure of each business to maximize growth and shareholder value creation.

There is no change to our Intel Foundry leadership team, which continues to report to me. We will also establish an operating board that includes independent directors to govern the subsidiary. This supports our continued focus on driving greater transparency, optimization and accountability across the business.

A more focused and efficient Intel Foundry will further enhance collaboration with Intel Products. And our capabilities across design and manufacturing will remain a source of competitive differentiation and strength."

Source: https://www.intel.com/content/www/us/en/newsroom/news/foundry-momentum-progress-plan.html#gs.f9tdzh
Click to expand...

Pat Gelsinger and Intel’s Board of Directors still believe the IDM business model is both wonderful and competitive. They seem to think that switching to a new slogan, a new company name, or a fresh talking point will smooth everything out and lead to success.
 
blueone said:
This looks mostly for show to me. They still report to PG.
Click to expand...
It has an independent board, an important move forward towards the eventual split up.

The most important thing is still to regain the technical leadership in IFS, let's wait and see.
 
Isn't IFS living off the lifeblood of intel design. Obviously they will get all of intel's design business, but they are deeply unprofitable.
 
It's all about the funding:

it also gives us future flexibility to evaluate independent sources of funding and optimize the capital structure of each business to maximize growth and shareholder value creation.

And yes it will be easier to spin off. Gives PG more staying power too?

Intel Foundry is starting to stack up the wins.
 
What exactly is changing? Intel was independent and supposedly had a firewall. The leader report to Pat. What authority would the board have (Its not elected.... is it an advisory board?)

I have seen this before.... how independent is the board?

If Intel product group decides to not use Internal Fabs, does Pat instruct them to use IFS? He is not supposed to ...... but....

TBH, this and Amazon (we will do a part someday for foundry and have custom Xeons) and trusted factory is far less than I expected.

question: When will Fab 52 Ship production wafers? Obviously they know, why not tell people?
 
MKWVentures said:
What exactly is changing? Intel was independent and supposedly had a firewall. The leader report to Pat. What authority would the board have (Its not elected.... is it an advisory board?)

I have seen this before.... how independent is the board?

If Intel product group decides to not use Internal Fabs, does Pat instruct them to use IFS? He is not supposed to ...... but....

TBH, this and Amazon (we will do a part someday for foundry and have custom Xeons) and trusted factory is far less than I expected.

question: When will Fab 52 Ship production wafers? Obviously they know, why not tell people?
Click to expand...

See my analysis in another thread listed below. The volume and impact on fabs between Amazon-Intel and AMD-Sony are very different.

Intel foundry business to make custom chip for Amazon, chipmaker's shares jump

"Sept 16 (Reuters) - Intel's (INTC.O), opens new tab foundry, or contract manufacturing business, has signed up Amazon's (AMZN.O), opens new tab cloud services unit as a customer for making custom artificial intelligence chips, the companies said on Monday, a deal that gives the chip maker a...
semiwiki.com
 
I have trouble seeing how this isn't just preparation to sell / spin-off Intel Foundry.

What are the tangible benefits of "greater independence for Intel Foundry"? What "independent sources of funding" would they be eligible for that Intel as a whole isn't already eligible for today? Wouldn't this diminish Intel's deal making power (e.g., like a unified PS6 design & manufacturing deal)?

And this may be me being pessimistic, but how does this in any way "enhance collaboration with Intel Products"?
 
MKWVentures said:
which win?
Click to expand...

Stay tuned, they are coming. I do not believe they are full chips, mostly chiplets or AI Fabrics (whatever that is :ROFLMAO:). The NOT TSMC business is getting anxious without Samsung.

I have not heard anything about the Tower and UMC relationships. I wonder if those are going to help IFS?
 
hist78 said:
See my analysis in another thread listed below. The volume and impact on fabs between Amazon-Intel and AMD-Sony are very different.

Intel foundry business to make custom chip for Amazon, chipmaker's shares jump

"Sept 16 (Reuters) - Intel's (INTC.O), opens new tab foundry, or contract manufacturing business, has signed up Amazon's (AMZN.O), opens new tab cloud services unit as a customer for making custom artificial intelligence chips, the companies said on Monday, a deal that gives the chip maker a...
semiwiki.com
Click to expand...
The news might have come from the sell side to dampen the buying pressure in the morning.

We all know the leading-edge capacity from Intel is limited. The capacity should be used for strategic purposes, i.e., data center-related and maintaining market share.

We also know the custom console chip business is a very low margin business. Sony might have just used Intel for negotiations with AMD.

I think the Amazon relationship is much more important and strategic than Sony's as it could convince other CSPs to start looking at IFS.
 
Daniel Nenni said:
Stay tuned, they are coming. I do not believe they are full chips, mostly chiplets or AI Fabrics (whatever that is :ROFLMAO:). The NOT TSMC business is getting anxious without Samsung.

I have not heard anything about the Tower and UMC relationships. I wonder if those are going to help IFS?
Click to expand...
Tower and UMC are the most Rational reasons to be optimistic.... very good partnerships from a strategic point of view. but those are long term strategies.

I'll assume you are correct on wins. So the questions will be what is the volume and when. Intel does not have planned volume today to load even one 18A/20A fab in 2026. we have plugged the numbers into the spreadsheet and a lot of work is needed to make 2027 even close to breakeven ... (as predicted).

Who are Samsungs top 5 customers? If Intel stole 50% from all of them instantaneously (other than Samsung). Would that add up to one fab? (it doesnt on my spreadsheet).
 
Independent board of directors is pretty critical. They can appoint key people from customers to be directors, like imagine if Intel could get Hock Tan or Jensen Huang as a director.
 
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