Intel Corporation has revealed its plan to restructure its manufacturing business, treating it as a separate unit capable of generating a margin. The chipmaker, however, has not provided a specific timeline for the scaling up of this operation, which led to a 5% drop in Intel's shares.
The restructuring forms part of Intel's broader turnaround strategy, in which the company aims to offer manufacturing services to other firms, including competitors. The new structure would establish a customer-supplier relationship between Intel's internal business units and its manufacturing business. Unfortunately, no new external customer has been announced as part of this change.
Intel's CFO, David Zinsner, in an investor call, suggested that Intel would become the second-largest foundry by next year, with manufacturing revenue exceeding $20 billion. However, these projections are dwarfed by Taiwan Semiconductor Manufacturing Co's expected sales of around $85 billion in 2024. This comparison, according to Summit Insights Group analyst Kinngai Chan, implies that Intel's current manufacturing might remain sub-scale for some time.
In summary, Intel is taking a significant step in restructuring its manufacturing business to operate as a separate entity and plans to provide manufacturing services to other firms. Nevertheless, the lack of clarity on the scaling timeline and the absence of an announced external customer have led to a decline in Intel's shares. Also, the projected revenues seem modest when compared to competitors, indicating that Intel's manufacturing might remain sub-scale in the near future.
