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In the most difficult situation in 56 years! Split, financing, mergers and acquisitions, Intel seeks
Chip giant Intel is facing unprecedented challenges in history.
According to Bloomberg, citing people familiar with the matter, Intel is seeking emergency assistance from investment bankers to help it through the most difficult period in its 56-year history.
According to the person familiar with the matter, the company is discussing various schemes, including splitting its product design and manufacturing business and cutting factory investment projects, with a view to turning the tide. Morgan Stanley and Goldman Sachs are long-term partners of Intel, and they are providing them with all-round strategic advice, including potential mergers and acquisitions.
This may become the most significant strategic adjustment of Intel since its founding. At present, Intel's market value is $86 billion, which has fallen out of the top ten chip manufacturers in the world, and it has also become the second-worst company in Philadelphia's semiconductor index, in sharp contrast with NVIDIA. In 2024, NVIDIA's revenue is expected to double that of Intel.
Strategic adjustment, foundry business may be sold or split.
Surprisingly, Intel may sell or split its wafer foundry business, which marks a major adjustment of CEO Pat Gelsinger's strategy.
Gelsinger once regarded the foundry business as the key to restore Intel's position as a chip manufacturer, and hoped that it could finally compete with TSMC.
However, people familiar with the matter said that Intel will not take major actions at present, and the discussion is still in its early stage. Before making more important decisions, Intel may take some conservative measures, such as delaying some expansion projects. The company has reached financing agreements with Brookfield Infrastructure Partners and Apollo Global Management. The plan is expected to be put forward at the board meeting in September.
Last week, director Chen Liwu announced his resignation, which added insult to injury to the company that is in the critical period of revival. Tan has rich experience in the semiconductor industry, and his departure will undoubtedly have an adverse impact on the company's future development.
Earlier this month, Intel released dismal Q2 profit data, and its revenue status went back to the mid-2010s. The company also announced that it will lay off about 15% of its employees and completely suspend dividend distribution.
Can you still make a comeback?
It used to lead the trend, but Intel is gradually being abandoned by the times.
Intel's misjudgment of the future has made it miss opportunities in emerging fields such as mobile Internet and AI. Over-reliance on x86 architecture makes it passive in the face of technological changes.
Doug OLaughlin, an analyst, believes that Intel has missed the mobile platform and DCAI, and is now a "walking corpse".
In the past year, Intel's revenue per share and earnings per share plummeted by 34% and 54% respectively, and the company's share price plummeted to the lowest level since 2013, down nearly 58% this year.
Some analysts believe that Intel needs two products to succeed in the next 12 months: Lunar/Panther Lake and Gaudi 3.
Lunar Lake and Panther Lake are key products of the client business, which will accelerate the performance of AI and greatly improve the graphics performance of consumer and commercial laptops. Among them, Panther Lake is scheduled to be released in the second half of 2025, and company executives said that it will be "a processor with better performance and energy efficiency than AMD products".
Market Watch columnist Ryan Shrout said:
However, if Intel's leadership can't work out a cohesive sales and marketing strategy for the latest two products, there may not be much time left for Intel.
Despite the recent poor performance, Trefis expects Intel's business to improve in the future, with revenue expected to reach $59 billion in fiscal year 2024 and adjusted earnings per share to reach $1.34.
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