Intel confirms it plans to switch its foundry business into an independent subsidiary

Earlier this year, Intel announced its current financial situation was not looking good. Among other things, the company announced mass layoffs of 15,000 team members in early August. Today, as previously rumored, Intel announced more details of its plan to make major change to get things back on track.

In a blog post, Intel CEO Pat Gelsinger announced it would be making changes to its foundry business. That division will now become an independent subsidiary of the company. Gelsinger stated:

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.

Intel will also put the construction of two foundry plants, one in Poland and one in Germany, on hold for at least two years. It still plans to complete the construction of its packaging plant in Malaysia but added that it will "align the startup with market conditions and increased utilization of our existing capacity."

Intel also announced a new collaboration with Amazon Web Services. That will include Intel making an "AI fabric chip" for AWS. The company said it will put its focus on its own x86 chip portfolio. It added:

Our top priority is to maximize the value of our x86 franchise across client, edge and data center markets, including with a broader range of custom chiplets and other customized offerings that meet emerging customer needs, as demonstrated by today’s AWS announcement.

Intel said that it is currently over halfway through the process of cutting its previously announced 15,000 workers, either through layoffs or early retirement. The rest of the job cuts will happen before the end of October.

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