“We have long argued that if Intel is truly going to pursue an external foundry model — which at this point would be hard to backpedal from given its pending acceptance of significant amounts of Chips Act money — it needs to cleave the manufacturing assets from the product businesses,” Arcuri said.

“Essentially, we argue Intel likely splits into a foundry business and a fabless product business, and the segment P&L is a big first step,” Arcuri said.

“Such a separation is necessary because there is not a single potentially significant customer that tells us they would make a big commitment to Intel foundry as long as it competes with Intel for the best wafers, highest yielding lots, etc.”

Intel uses its own foundries — or fabs, those high-tech plants that create the silicon wafers onto which transistors are etched to make microchips — unlike other chip makers that are “fabless” like Nvidia, AMD, and ARM. Those companies use third-party fabs like Taiwan Semiconductor Manufacturing Co. TSM, -0.56% for their chips.

Since Chief Executive Pat [kicking] Gelsinger took over the reins of Intel back in 2021, one of his aims has been to build out fab capacity and take some share from TSMC in third-party foundry work through IFS.

Intel is expected to make some announcements later today. Last week its share price took a serious kicking as investors started to have concerns that the news might not be that good.