Intel CEO Pat Gelsinger is set to present a significant cost-cutting plan to the company’s board of directors later this month, aiming to streamline operations and improve financial stability. According to sources familiar with the matter, the plan will focus on reducing expenses by selling off non-core businesses and revising capital expenditures. One of the major components of this strategy includes potentially divesting Intel’s programmable chip unit, Altera, which could no longer be sustained by the company’s diminishing profits.
The board meeting, scheduled for mid-September, will be a critical juncture for Intel as it seeks to recover from a challenging period marked by financial instability and increased competition in the AI sector. The proposal will detail strategies to cut costs and may include plans to halt or delay the $32 billion factory expansion project in Germany, which has faced delays. This follows Intel’s August announcement of a 17% reduction in capital spending for 2025, coupled with a disappointing earnings forecast.
Intel’s financial difficulties are highlighted by its recent second-quarter earnings report, which resulted in the suspension of dividend payments and a 15% reduction in staff. The company’s market capitalization has plummeted below $100 billion, a stark contrast to rival Nvidia’s $3 trillion valuation. Intel CEO Pat Gelsinger and other senior executives are expected to address these challenges by proposing measures to optimize the company’s operations and financial management.
In addition to the proposed cost-cutting measures, Intel has engaged Morgan Stanley and Goldman Sachs to provide advisory services on potential asset sales and strategic decisions. While the specifics of the proposal are not yet finalized, the board is anticipated to make crucial decisions regarding which business units to retain or divest. One key unit under consideration for sale is the Altera programmable chip business, which Intel acquired for $16.7 billion in 2015. The company has been exploring options for spinning off or selling Altera, with potential buyers including infrastructure chipmaker Marvell.
Intel’s strategic review comes at a time of significant upheaval for the company, following the recent resignation of board member Lip-Bu Tan and ongoing discussions about the company’s future direction. Intel CEO Pat Gelsinger has acknowledged the challenges facing Intel and emphasized the company’s commitment to addressing investor concerns and implementing necessary changes.
The upcoming board meeting will be pivotal in shaping Intel’s path forward, with decisions expected to impact the company’s operations and market positioning in the coming years.
