Intel’s making waves with a major shift in its business model and a critical alliance with Amazon Web Services (AWS). This collaboration aims to rejuvenate the chip giant’s fortunes. Intel plans to spin off its chip foundry division into an independent subsidiary. It will keep its current leadership but gain its own operating board with independent directors.
Expecting market changes, Intel is postponing its chip fabrication projects in Poland and Germany for two years. Additionally, it’s considering scaling back packaging and testing operations in Malaysia. These ventures had hefty investments, exceeding $47.6 billion.
In a game-changing move, Intel signed a multi-year, multi-billion-dollar deal with AWS to co-develop an artificial intelligence (AI) chip using Intel’s advanced 18A chip fabrication process. On top of that, Intel will produce a custom Xeon 6 processor for AWS, strengthening the two companies’ collaboration.
Even with a tough fiscal year, including significant net losses and potentially losing a major deal with Sony, Intel’s new partnership with AWS and a $3.5 billion Pentagon contract have boosted its stock price by more than 6%. Part of Intel’s strategy includes a $10 billion cost-reduction plan, which involves significant layoffs and the possible sale of its autonomous driving and enterprise networking divisions.
This restructuring shows Intel’s response to shifting market dynamics and its bold attempt to regain a competitive edge in the semiconductor industry.
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