More details are emerging about Intel’s (INTC) strategic shake-up. According to an exclusive Reuters report, the chip major’s CEO Pat Gelsinger is expected to present a strategic plan to the company’s board of directors later this month. This plan aims to streamline the company’s operations through a potential sell-off of Altera and a revamp of its capital spending.
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Details of Intel’s Strategic Plan
According to the report, the proposal will outline strategies to cut costs, including the potential sale of its programmable chip unit Altera. The company is planning to sell off businesses that Intel can no longer sustain, given its reduced profits.
The plan is slated to be presented at a board meeting in the middle of this month. Notably, the proposal does not currently include a plan to split off Intel’s contract manufacturing arm or its foundry business, and sell it to a buyer such as Taiwan Semiconductor Manufacturing Co. (TSM).
Intel Could Reduce Its Capex
Furthermore, Intel’s upcoming proposal is expected to include plans to reduce its capex, particularly on factory expansion. This could result in the chipmaker potentially hitting a pause or halting its factory project in Germany worth $32 billion, which has reportedly faced delays. Earlier this year, Intel announced plans to reduce its capex to $21.5 billion in 2025, a 17% decline from this year, and issued a weaker-than-expected forecast for the third quarter.
While Intel has not yet solicited bids for the business units it may sell, this will likely occur once the board approves the plan.
Could Intel’s Altera be Sold Off?
Intel’s programmable chip business, Altera, which could be potentially up for sale, was acquired by the company for $16.7 billion in 2015. According to the report, the company has already initiated steps to spin off Altera as a separate subsidiary. Additionally, the company has plans for a partial sale through an initial public offering, though no date has been set.
However, Intel is also exploring the possibility of selling Altera entirely to another chipmaker, potentially Marvell Technology (MRVL).
Is Intel a Buy, Sell, or Hold?
Analysts remain sidelined about INTC stock, with a Hold consensus rating based on one Buy, 26 Holds, and five Sells. Year-to-date, INTC has more than halved in value, and the average INTC price target of $27.32 implies an upside potential of 23.9% from current levels.
