Intel CEO Gelsinger to Advocate for Altera Sale in Board Meeting, Report Reveals

Recent reports indicate that Intel's CEO, Pat Gelsinger, is not currently planning to propose the sale of the company's manufacturing operations. However, plans regarding these operations are still in flux and have not been finalized. This decision comes as part of cost-cutting measures, with Intel likely to signal a retreat from its commitment to invest US$32 billion in building two cutting-edge wafer fabs in Magdeburg, Germany. Delays in the project have pushed the start of construction to 2025, with manufacturing not expected to commence until several years after that.

Following disappointing financial results for the second quarter of 2024, Gelsinger and other key executives are expected to unveil new plans aimed at bolstering investor confidence in Intel. In response to the poor performance, Gelsinger had previously announced the need to reduce the workforce by 15,000 employees, constituting about 15 percent of the total workforce. Throughout 2024, Intel has seen a significant decline in its market capitalization, losing as much as 60 percent.

Altera, a company previously earmarked for gradual disposal through an IPO, may now be subject to a more immediate and complete sale by Intel. Separate financial reporting for Altera began in April 2024, with the original plan being to bring in a private equity partner to prepare for an IPO in the near future. However, recent developments suggest that Intel is exploring the possibility of a trade sale for Altera, with potential buyers such as Marvell and AMD being mentioned in reports.

Earlier reports from Bloomberg indicated that Intel was seeking strategic advice from Morgan Stanley and Goldman Sachs, including the radical option of divesting its manufacturing operations and transitioning to a fabless model. In August, CNBC reported that Intel was working with advisors to fend off activist investors, with Lip-Bu Tan resigning as a director of Intel amid disagreements with CEO Gelsinger and other board members over the company's management.

Intel's future hinges on its ability to deliver cutting-edge chips and attract a substantial customer base for its Intel Foundry. If the manufacturing business is sold, legacy contracts guaranteeing supply to Intel could be phased out over time. The creation of Intel Foundry, based on advanced semiconductor technology, is a crucial component of Gelsinger's strategy to revitalize the company and position it for long-term success.