Intel's missed AI opportunity might prompt it to pump the brakes on its $32 billion Magdeburg project and sell Altera to keep the lights on

What you need to know

Intel is expected to make a new business proposal to its board of directors in mid-September, highlighting budget cuts and the sale of assets.
The chipmaker has struggled to exploit the AI wave, prompting layoffs affecting up to 15,000 people.
The company might be forced to cancel its Magdeburg chip fab project and sell Altera to keep its operations running.

As a tech enthusiast with over two decades of experience in the industry, I’ve seen my fair share of ups and downs, but Intel’s current situation feels like a rollercoaster ride I’d rather not be on. The prospect of 15,000 layoffs, the cancellation or pause of the Magdeburg chip fab project, and potential sale of Altera are moves that make me question Intel’s strategic direction in the AI landscape.

Beyond the unavoidable 15,000 job losses due to severe cost reductions and lost collaborations with OpenAI in the artificial intelligence sector, Intel appears unable to escape the complex entanglement of extensive cost-cutting measures in its operations.

Based on a recent report by Reuters, high-ranking officials at the company, including Intel CEO Pat Gelsinger, are set to propose a fresh strategy to the board. This strategy will feature a revised spending plan, with substantial reductions in budget for underperforming businesses and departments.

In an unexpected twist of circumstances, the modifications will likewise influence Intel’s programmable chip division Altera, which they can no longer sustain due to financial limitations stemming from the $32 billion Magdeburg chip fabrication project. However, it appears that the project could be discontinued or postponed as Intel reconsiders its strategy. Reports suggest that the local government of Magdeburg may consider assuming control over the project if Intel decides to withdraw.

Following their recent earnings call, the company has announced a loss of 1.6 billion dollars. This can be linked to Intel’s gradual adaptation to the AI trend that tech giants such as Microsoft and NVIDIA are consistently thriving in. The extent of Intel’s transformations is yet undetermined, but they aim to trim costs and reduce spending by a substantial $10 billion.

Following Intel’s earnings report, investors started selling off their shares in the company, causing its stock price to plummet by 27%. This marked the steepest decline in Intel’s market value in more than two decades. As a result of these financial struggles, Lip-Bu Tan resigned from the board of directors, which led to an additional 6% drop in the company’s share price.

One possibility for paraphrasing the given text might be: The strategic plan under consideration could involve offloading Intel’s programmable chip division, Altera. Intel bought Altera in 2015 and has been utilizing it within its overall business strategy since then. It’s speculated that Intel may find it difficult to turn a profit with its current ventures, which could lead them to entertain offers from potential buyers interested in acquiring the division.

Earlier this year, Intel made a change in its structure by separating its factory business from its design projects. This move aims to guarantee clients of the design sector that they will not have access to the confidential technology information of customers who utilize Intel’s manufacturing facilities.

In mid-September, the semiconductor company will probably discuss their proposed strategy with their board, which may include details on actions they plan to take to ensure the company’s continuity.

2024-09-04 12:12

Intel’s missed AI opportunity might prompt it to pump the brakes on its $32 billion Magdeburg project and sell Altera to keep the lights on

What you need to know

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