Intel CEO to unveil restructuring plan to cut costs and streamline operations

Intel CEO Pat Gelsinger and senior executives are set to present a major restructuring plan to the company’s board later this month, aimed at cutting costs and refocusing its business strategy. The plan, expected to be unveiled at a mid-September board meeting, will propose shedding non-core businesses and reassessing capital spending to rejuvenate the struggling chipmaker’s fortunes.

Key elements of the plan include divesting certain business units, such as the programmable chip division Altera, to streamline operations and reduce expenses. The proposed changes reflect Intel’s need to adapt its strategy in response to mounting competitive pressures, particularly from Nvidia, which has become a dominant player in the AI chip market. Intel’s market capitalization has dropped below $100 billion following a disappointing second-quarter earnings report.

Although the proposal will not address a potential sale of Intel’s contract manufacturing operation, or foundry, to companies like Taiwan Semiconductor Manufacturing Co., it will focus on cost-cutting measures. The company has already separated its design and manufacturing divisions to protect confidential technology and streamline operations, and is now considering further reductions in capital spending. This may include halting or postponing the $32 billion factory project in Germany, which has faced delays.

Intel’s capital spending is projected to decrease to $21.5 billion in 2025, down 17% from this year, according to recent statements from the company. The planned cutbacks follow a weaker-than-expected third-quarter forecast and an ongoing effort to address its competitive positioning in the rapidly evolving semiconductor industry.

To support the restructuring effort, Intel has engaged Morgan Stanley and Goldman Sachs as advisors to assess which business units to sell and which to retain. While no formal bids have been solicited yet, Intel is expected to seek offers once the board approves the restructuring plan.

Intel declined to comment on the specifics of the proposal, but the upcoming presentation underscores the company’s commitment to addressing its financial challenges and realigning its business strategy amid fierce industry competition. Intel reported a disastrous second quarter in August, which included pausing the company’s dividend payments and a 15% staff cut, aimed at saving $10 billion which also made their share price tank to their lowest in the last two decades.