Intel Corp. is working with investment bankers to help navigate the most difficult period in its 56-year history, according to people familiar with the matter.
The company is discussing various scenarios, including a split of its product-design and manufacturing businesses, as well as which factory projects might potentially be scrapped, said the people, who asked not to be identified because the deliberations are private.
Morgan Stanley and Goldman Sachs Group Inc., Intel’s longtime bankers, have been providing advice on the possibilities, which could also include potential M&A, the people said. The discussions have only grown more urgent since the Santa Clara, California-based company delivered a grim earnings report, which sent the shares plunging to their lowest level since 2013.
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The various options are expected to be presented during a board meeting in September, the people said.
No major move is imminent and discussions are still in early stages, the people cautioned. A representative for Intel declined to comment, while Morgan Stanley and Goldman Sachs didn’t immediately respond to requests for comment.
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A potential separation or sale of Intel’s foundry division, which is aimed at manufacturing chips for outside customers, would be an about-face for Chief Executive Officer Pat Gelsinger. Gelsinger has viewed the business as key to restoring Intel’s standing among chipmakers and had hoped it would eventually compete with the likes of Taiwan Semiconductor Manufacturing Co., which pioneered the foundry industry.
{{/usCountry}}A potential separation or sale of Intel’s foundry division, which is aimed at manufacturing chips for outside customers, would be an about-face for Chief Executive Officer Pat Gelsinger. Gelsinger has viewed the business as key to restoring Intel’s standing among chipmakers and had hoped it would eventually compete with the likes of Taiwan Semiconductor Manufacturing Co., which pioneered the foundry industry.
{{/usCountry}}But it’s more likely that Intel takes a less dramatic step before it reaches that point, such as holding off on some of its expansion plans, the people said. The company has already done project financing deals with Brookfield Infrastructure Partners and Apollo Global Management.
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Intel’s Gelsinger is running out of time to pull off a much-needed turnaround. He’s been attempting to expand the chipmaker’s factory network at the same time that sales are shrinking — a money-losing proposition. The company suffered a net loss of $1.61 billion last quarter, and analysts are predicting more red ink for the next year.
“It’s been a difficult few weeks,” Gelsinger told investors at the Deutsche Bank Technology Conference on Thursday. The company tried to lay out a “clear view” of its next steps during its earnings report, he said. “Obviously the market didn’t respond positively. We understand that.”