Michelle Johnston Holthaus, currently serving as Intel’s interim co-CEO, expressed skepticism about the idea of separating the Intel Foundry division into an independent company. She hinted that the decision regarding the future of Intel’s manufacturing sector would ultimately be made by ‘someone’, possibly referring to Intel’s board or the next permanent CEO. David Zinsner, her fellow interim co-CEO, also commented on the matter, stating that the possibility of spinning off or maintaining the manufacturing operations as an independent unit remains an open discussion.
“The businesses operate quite autonomously as it is,” Michelle Johnston Holthaus remarked at the Barclays 22nd Annual Global Technology Conference. “Each division makes its own decisions. We benefit from first-hand access to excellent products and leading-edge technology, which sets us apart. So, from a practical standpoint, I don’t see the benefit of a complete separation without any connection. Ultimately, however, it will be up to someone else to make that call.”
Following the unexpected retirement of Pat Gelsinger earlier in the month, David Zinsner emphasized at a conference that Intel’s primary strategy for revitalization remains unchanged. The company continues to aim at being a top CPU provider and a leading foundry, which generally rules out the option of spinning off Intel Foundry as a standalone entity.
Nevertheless, during the Barclays Conference, Zinsner did not completely rule out the idea of divesting the manufacturing segment. He further noted that Intel Foundry might evolve into a distinct company within the broader Intel corporation, similar to what Mobileye and Altera have become. This indicates a desire from Intel to increasingly distance itself from the foundry operations. Steps toward this include setting up a dedicated operational board for Intel Foundry and establishing a unique enterprise resource planning (ERP) system. These changes are already being implemented, and completion of these steps is on the horizon.
“We already manage the businesses independently, but we are in the process of establishing a subsidiary for Intel Foundry under the Intel umbrella,” Zinsner stated. “A separate board for operations at Intel Foundry is being established, and it will have its own ERP system. These plans are already underway and will be realized. Whether it becomes fully independent is a question for the future.”
Once Intel Foundry becomes an independent entity, Intel could potentially offer it as an initial public offering (IPO) while still maintaining complete control. However, the rationale behind spinning off a foundry that does not lead the market in product offerings remains unclear.
At present, Intel is concentrating on advancing its 18A (1.8nm-class) process technology. The company is working diligently to decrease defect density in the 18A process, thus improving yield and reducing performance variability. Intel has already received several requests for proposals (RFPs) from potential clients, although it is too soon to determine if these will convert into firm orders. Updates on the 18A technology are expected to be shared during Intel’s earnings call at the end of January.
“We are approaching some key milestones soon, which we plan to discuss with our investors towards the end of January,” Zinsner mentioned. “We are currently reviewing several RFPs and anticipate providing an update by January.”
