If a new processor technology fails to catch on next year, Intel may spin off its processor manufacturing operations within Intel Foundry Services (IFS) into a separate company. This was announced by current co-CEOs, Michelle Johnston Holthaus and David Zinsner, at an investor event.
Intel is one of the few chip giants that fully owns both the design and production of chips. However, the company has been struggling with disappointing performance for some time, with Pat Gelsinger also leaving as CEO this month.
Meanwhile, Johnston Holthaus and Zinsner are at the helm as co-CEOs with the task of getting the chip giant back on track. Still, this appears to be a challenging process that may result in a spinoff of the design and manufacturing operations.
At the recent event, the co-CEOs stated, Reuters reports, that if a new chip technology proves unsuccessful, Intel may be forced to spin off Intel Foundry Services manufacturing operations.
New chip technology essential
The possible spinoff revolves around a crucial new chip technology, code-named 18A, that is due to hit the market next year. Although few details are known yet, this technology should allow Intel to once again manufacture chips for PCs in-house.
Currently, Intel lets TSMC handle the manufacturing of some of its PC processors, which is not ideal for a company that wants to keep its manufacturing in-house.
Preparations already underway
Although a spinoff of Intel Foundry Services is not preferred, the co-CEOs acknowledge that they may have no choice in the matter. In anticipation of a possible spinoff, the finances and operational work of the design and manufacturing departments have already been separated. This is a first step in the process of making Intel Foundry Services an independent subsidiary.
In addition, Intel Foundry will soon have its own management team and a separate BPM software system to further support independence.
Co-CEO David Zinsner called the seperation an “open question for another time.” However, the CEOs’ comments were well received on the U.S. stock market, with Intel shares rising 2.3 percent.
Also read: Intel CEO Pat Gelsinger gone effective immediately