Intel Restructures Manufacturing Business, Shares Slide


During investor update, Intel confirms manufacturing business will work like a separate unit as part of Pat Gelsinger’s foundry plan

Chipmaker Intel has confirmed a restructuring of its manufacturing business, as it seeks to offer foundry services similar to that of Taiwan Semiconductor Manufacturing Company (TSMC).

In an investor update on Wednesday, Chief Financial Officer (CFO) David Zinsner explained how Intel would soon restructure the way it reports its financial results to give its foundry business, (known as Intel Foundry Services or IFS), its own profit-and-loss statement, which would reveal the company’s manufacturing margins, CNBC reported.

But at the same time Intel’s Zinsner reportedly gave no clear timeline on when it will start scaling up, sending the chipmaker’s shares down about 6 percent on Wednesday, amid an overall decline in tech stocks.


IFS changes

Intel did not also identity any new customers for the IFS division that will take advantage of its foundry services offering to other companies.

Meanwhile CFO Zinsner on Wednesday’s call reportedly said Intel’s internal business units will now have a customer-supplier relationship with the IFS manufacturing business.

Based on that model, Intel will be the second largest foundry next year with manufacturing revenue of more than $20 billion, he reportedly said.

This forecast is a long way from reaching parity with leading foundry service provider TSMC, which is expected to post revenues of roughly $85 billion in 2024.

CNBC reported that Intel’s new reporting structure could also help control costs at the chipmaker, which is seeking to trim as much as $10 billion from its costs over the next three years.

Intel turnaround

Intel had at one stage been facing investor questions as to whether the firm should keep its own chip design capabilities and manufacturing fabs under one roof, after it experienced well documented setbacks in the development of 10nm and 7nm processors, which in turn hindered its competitiveness in the market.

Soon after CEO Pat Gelsinger took charge of the chip giant in 2021, he unveiled a turnaround plan (called IDM 2.0) that doubled down on its inhouse chip manufacturing capabilities when he opened Intel’s chip plants to outside customers via Intel Foundry Services.

In April this year Intel Foundry Services signed an agreement with British chip designer ARM Holding to ensure mobile phone chips etc can be made in its chip fabs.

Intel has previously said that firms such as Qualcomm are planning to use its factories for future chip designs.