Intel has announced a sweeping transformation of its global operations as it seeks to recover from steep losses and reposition itself in an increasingly competitive semiconductor landscape. CEO Pat Gelsinger confirmed that Intel Foundry will be reorganized into an independent subsidiary with its own operating board and financial disclosures—a move designed to increase transparency for external customers and create a clearer separation from Intel’s core product groups.
The changes follow significant financial strain. Intel posted a $1.6 billion loss in Q1 2024, while its manufacturing division recorded a $7 billion operating loss in 2023. The company has already implemented 15,000 job cuts, and Gelsinger says more than half of that reduction has now been completed.
Intel is simultaneously restructuring its global footprint:
- Fab projects in Poland and Germany are delayed by two years, citing softened market demand.
- Intel will sell part of its ownership stake in Altera during the programmable logic company’s IPO process.
- The company will reduce its global office real estate by two-thirds.
- Intel has secured up to $3 billion from the U.S. CHIPS and Science Act to expand domestic chip production, including work for the Department of Defense.
Calling the initiative Intel’s “most important transformation in four decades”, Gelsinger compared it to the company’s historic pivot from memory to microprocessors.
Strategic Pressures and Setbacks #
Even as Intel ramps up investment in advanced manufacturing, competitive pressures remain intense.
Intel continues to develop its 18A process technology, but early industry reports suggest testing issues with Broadcom’s initial silicon. Intel maintains plans to produce 18A chips for Microsoft and—starting next year—Amazon.
Meanwhile, Intel reportedly lost a $30 billion PlayStation 6 processor contract after competing with AMD in the final round. Industry insiders say profit margin disagreements between Intel and Sony contributed to AMD’s win, with Sony opting for AMD architectures produced at TSMC. Intel disputed the characterization but provided no detailed response.
CEO Strategic Priorities #
In an internal message, Gelsinger highlighted three directives that will guide Intel’s next phase:
- Strengthen Intel Foundry: Improve capital efficiency and accelerate high-volume 18A readiness.
- Achieve $10B in cost reductions: Streamline operations across facilities, product lines, and support functions.
- Refocus on x86 leadership: Prioritize core CPU innovation while aligning the platform strategy around AI acceleration.
Expanded AWS Partnership #
Intel and Amazon Web Services (AWS) have announced a multi-billion-dollar, multi-year collaboration. Under the agreement:
- Intel Foundry will produce AI accelerator chips on Intel 18A.
- Custom Xeon 6 processors on Intel 3 will be manufactured for AWS.
- Both companies will co-develop next-generation designs on 18A, 18AP, and 14A nodes.
This partnership is one of the strongest industry endorsements Intel has received for its foundry roadmap.
U.S. Government Support #
Intel has secured $3 billion in CHIPS Act funding to support the Secure Enclave program, reinforcing America’s domestic semiconductor capability for sensitive defense and national security workloads.
Fab Strategy and Global Adjustments #
Intel’s updated global manufacturing plan includes:
- Poland and Germany: Expansion projects paused for ~2 years.
- Ireland: Continues as Intel’s main European hub.
- Malaysia: New advanced packaging plant completed but will scale based on demand.
- United States: Ongoing projects in Arizona, Oregon, New Mexico, and Ohio remain on track, with Intel emphasizing a long-term commitment to domestic capacity.
Product and Organization Realignment #
Intel is narrowing its focus to core strengths while enhancing AI integration across its portfolio. Changes include:
- Shifting edge computing and automotive under the Client Computing Group (CCG) to leverage AI PC momentum.
- Refocusing NEX on networking and telecom markets.
- Moving integrated photonics under DCAI for targeted research investment.
- Consolidating software, incubation units, and smaller initiatives into primary business groups.
Intel will also proceed with the partial sale of its Altera stake, aligning with its strategy to unlock value as Altera continues toward full independence.
Looking Ahead #
Intel is executing its boldest strategic reset since the early 1980s. With foundry independence, streamlined operations, renewed U.S. partnerships, and a targeted product roadmap, the company aims to rebuild competitiveness and reassert itself as a leader in advanced process technology.
Whether these changes will be sufficient to reclaim long-term market leadership remains an open question—but Intel is preparing to “fight for every inch,” as Gelsinger puts it, in the rapidly evolving semiconductor landscape.