Intel, long known for its acquisition misadventures, has finally reached a reality check. Its new CEO, Lip-Bu Tan, has announced spinning off the company’s non-core businesses to focus on core operations: CPU design and contract chip manufacturing. “These parts of Intel are no longer central to its future,” he said during his keynote at the Intel Vision conference in Las Vegas, Nevada.
It’s important to note that Intel has already been on this path since the final days of former CEO Pat Gelsinger. The Santa Clara, California-based semiconductor firm has already spun off FPGA maker Altera. Even before Gelsinger took charge of the top job at Intel in February 2021, the company had sold its NAND memory business to SK hynix for $8.85 billion in 2020.
Tan didn’t indicate whether Intel will divest or sell its non-core businesses. Source: Intel
The company also turned Intel Capital into a standalone investment fund early this year before Tan took the CEO job. While Intel will remain an anchor investor, the fund will help the company to reduce costs and streamline operations.
So, what does this mean when Tan vows to shed the company’s non-core businesses? Apparently, Intel will pursue this endeavor more aggressively now to focus its CPUs on artificial intelligence (AI) and data center applications, along with what Tan calls a Software 2.0 strategy. But will Intel’s rush to shed non-core assets lower their market value? Or will Intel divest these units instead of seeking buyouts? Time will tell.
Intel’s non-core businesses
Now let’s discuss Intel’s non-core businesses. Start with Mobileye, a developer of automotive driver-assist systems, which was listed on Nasdaq in 2022. Though Intel has denied the plan to divest a majority stake in Mobileye in the past, it will now be one of the easiest targets for Intel to handle.
Intel’s networking division could also be up for grabs. However, many industry watchers consider Intel’s Network and Edge (NEX) group a core business of Intel. It focuses on edge computing, networking, and AI solutions while developing modified versions of consumer and data center CPUs for telecom companies and similar entities.
It’s worth noting that Altera and Mobileye are worth approximately $17 billion to 20 billion. Intel can generate a huge amount of cash from those two entities, which, in turn, will bring financial stability to this once-mighty semiconductor outfit now attempting to reclaim its past glory.
Still, the elephant in the room is not the non-core assets but whether Intel will remain whole or split up its CPU and contract manufacturing businesses. At the same time, however, Intel’s decision to shed non-core assets will bring much-needed stability during the turnaround that Tan envisions for this chip industry pioneer.
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