Intel has announced plans to launch its AI chip-making division, Intel Foundry, into a completely separate company. This is part of a larger plan to deal with financial issues and improve its standing as it faces a drop in market position.
CEO Pat Gelsinger said this step would allow Intel Foundry to have its board and report its finances independently, possibly becoming a fully independent company.
As part of the changes, Intel will stop working on two factories in Germany and Poland for now, only continuing when there’s enough market demand. However, the company will keep building new plants in Arizona, Ohio, Oregon, and New Mexico, supported by recent government funding.
Additionally, Intel has made a multi-year deal with Amazon Web Services (AWS) to make custom AI chips using its latest 18A process. This partnership is seen as important for Intel’s efforts to grow in the AI chip market, which Nvidia leads. The deal with AWS, described as a “multi-billion-dollar” agreement, may include more chip designs in the future.
Intel received up to $3 billion in direct funding from the U.S. government through the CHIPS and Science Act. This money is part of a program called Secure Enclave, which aims to help make advanced semiconductors (chips) that are trusted and secure for government use.
“As the only American company that both designs and manufactures leading-edge logic chips, we will help secure the domestic chip supply chain”, the CEO said.
Intel’s recent moves aim to cut costs and strengthen its position in the semiconductor industry, facing stiff competition from AMD and Nvidia. Following these announcements, Intel’s stock rose over 8%.
In other news, the African Union has welcomed AI, rolling out a Pan-African Artificial Intelligence Initiative.
The CEO acknowledged that both he and the board are aware of the substantial work required to make the company more efficient, profitable, and competitive. He emphasized three key points from their latest meeting:
First, they need to maintain momentum in their Foundry business as they gear up to launch Intel 18A, while also optimizing spending in that area.
Second, it’s crucial to establish a more competitive cost structure, aligning with their previously announced goal of saving $10 billion.
Third, they need to refocus on their core x86 business, advance their AI strategy, and streamline product offerings to better serve customers and partners.
