Key points:

  • Despite a long period of decline, Intel shares showed significant gains after the report.
  • The company plans to reduce capital expenditures and optimize costs.
  • Intel faces increasing competition in the AI ​​space from companies such as Nvidia and AMD.

Intel shares have been on a strong run since the start of trading on Friday, up more than 3%, after the company released a report that mentioned exploring various strategic options. Both a merger and a spin-off are among the possibilities. The announcement has been met with positive reaction from investors after one of the longest periods of decline in the company’s stock price in a decade.

Intel is currently working with investment bankers to analyze possible scenarios in detail, including separating its core product line from a unit that is currently losing money.

Restructuring could help recover losses

Intel is investing heavily in expanding its manufacturing capacity, aiming to transform itself into a major contract chipmaker for third-party companies. This ambitious project requires significant capital investments, which puts significant pressure on the corporation’s financial condition. Despite this, the company continues to implement its plans to restructure its business.

Intel’s market capitalization is showing signs of stabilization after a significant decline. In early August, the company’s value fell below the $100 billion mark for the first time in three decades. However, the published report caused a positive reaction from investors, which led to an increase in the company’s market value by more than $4 billion. Many analysts view the separation of the business as the optimal solution for Intel in the face of increasing competition in the field of artificial intelligence and lagging behind market leaders such as Nvidia and AMD.

Intel shares have seen a significant decline in value this year, losing about 60% of their price. At the same time, the shares of competitors have shown more stable dynamics: AMD has fallen by less than 2%, and Nvidia has demonstrated significant growth, exceeding 100%.

Intel’s quarterly report published in early August, accompanied by a dividend suspension and a 15% staff reduction, exacerbated the decline in the company’s shares. These events have caused investors to worry about the prospects for Intel’s business.

Intel’s grand plans

Intel is preparing a large-scale restructuring plan aimed at optimizing costs and improving business efficiency. According to available information, the company is considering the possibility of selling a number of assets, including the Altera programmable microcircuit division. This decision is explained by the need to reduce overall costs and concentrate resources on priority areas of development.

Details of the restructuring plan will be presented at a board meeting in mid-September. CEO Pat Gelsinger and other senior executives are expected to present a detailed action plan aimed at improving the company’s financial health.

It is important to note that at present, the option of a complete separation of the business or the sale of contract manufacturing is not being considered. However, as part of the restructuring plan, decisions may be made to suspend or even completely stop some major investment projects, such as the construction of a $32 billion plant in Germany.

Intel has engaged leading investment banks Morgan Stanley and Goldman Sachs to develop an optimal restructuring strategy. The experts from these companies will assist the board of directors in assessing the value of assets and identifying the most profitable transaction options.

In August, the company already announced a reduction in capital expenditures for 2025 and published a forecast that was below market expectations. These steps demonstrate the determination of Intel’s management to take the necessary measures to improve financial performance and increase competitiveness in the semiconductor market.