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Intel’s Future Hinges on New Chipmaking Technology

(Reuters) – Following the recent removal of its CEO, Intel’s interim leadership has indicated that the company might have to consider divesting its manufacturing segment if its upcoming chipmaking innovation does not meet expectations. The executives, Michelle Johnston Holthaus and David Zinsner, who have stepped in as co-CEOs, acknowledged the stakes associated with the new technology.

As a distinctive player in the semiconductor industry, Intel manages both the design and fabrication of its chips. However, the company has faced significant challenges, including a staggering loss of over $100 billion in market capitalization, as it strives to reclaim its competitive position in manufacturing. Furthermore, Intel has lagged in capitalizing on the recent surge in artificial intelligence, which has been largely dominated by competitors like Nvidia.

In response to the executives’ remarks, Intel’s stock saw a modest uptick of approximately 2.3%

Challenges Ahead

During their appearance at a Barclays investment conference held in San Francisco, Holthaus and Zinsner were queried about the integration of manufacturing and design in relation to the success of their upcoming technology, dubbed “18A,” slated for release next year. This new approach is intended to facilitate the in-house production of a key PC chip, after the company had been compelled to outsource this crucial product to Taiwan Semiconductor Manufacturing Company (TSMC).

Holthaus expressed skepticism about fully decoupling the design and manufacturing arms of Intel, suggesting that a complete separation may not be practical. “Pragmatically, do I think it makes sense that they’re completely separated and there’s no tie? I don’t think so. But someone will decide that,” she noted.

Zinsner, who also fulfills the role of chief financial officer, shared insights on the restructuring of Intel’s operations, revealing that the company is in the process of establishing a standalone subsidiary for its manufacturing division. He remarked, “That’s going to happen. Does it ever fully separate? That’s an open question for another day.”

The future of Intel hangs in the balance as it navigates these complex challenges and seeks to reestablish its foothold in a rapidly evolving tech landscape. The outcome of the 18A technology could fundamentally reshape the company’s operational strategy and influence its path forward.

Source
finance.yahoo.com