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Analyst claims Intel is about to split

by on21 June 2023

Manufacturing and design into two different companies

UBS analyst Timothy Arcuri said he expects Intel to provide an update on its product roadmap and customer adoption of its foundry services business, and his theory is that the company is going to split itself into two.

“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.


Last modified on 21 June 2023
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