Intel Corporation, once a titan in the semiconductor industry, is facing what could be its most challenging period in over half a century. In response to declining revenues, disappointing earnings, and fierce competition, the company is preparing a comprehensive cost-cutting plan that may redefine its future. According to reports, Intel’s CEO, Pat Gelsinger, and other senior executives are gearing up to present these plans to the board of directors at a mid-September meeting.

A Desperate Move in a Challenging Landscape

Intel’s recent struggles are well documented. The company’s shares plummeted to an 11-year low following a dismal earnings report last quarter, which underscored its inability to keep pace in the rapidly evolving AI era. As Reuters reported, Intel is now considering several drastic measures to stabilize its finances and reposition itself in the competitive semiconductor market.

One of the most significant options on the table is the potential sale of Altera, Intel’s programmable chip unit. Acquired in 2015 for $16.7 billion, Altera was initially seen as a strategic asset to help Intel diversify its offerings. However, with the company’s current financial woes, selling Altera could provide much-needed capital. Woz Ahmed, a senior executive in the semiconductor industry, remarked, “It’s generally easier to jettison something that was not an organic Intel development—like Altera—and to some extent, it postpones the inevitable reckoning of addressing Intel’s real woes.”

Splitting the Business: A Radical Approach

Another scenario Intel is reportedly considering is splitting its product design and manufacturing businesses. This move would involve separating Intel’s foundry division, which produces chips for other companies, from its design operations. Such a split could be an attempt to streamline operations and focus on core competencies. However, it also represents a significant departure from Intel’s traditional business model, where vertical integration has been a key competitive advantage.

Pat Gelsinger has been vocal about his commitment to expanding Intel’s foundry business, viewing it as essential to restoring the company’s standing among chipmakers. Yet, as Bloomberg notes, this strategy has become increasingly untenable as sales continue to shrink. “Intel’s Gelsinger is running out of time to pull off a much-needed turnaround,” writes Bloomberg. “He’s been attempting to expand the chipmaker’s factory network at the same time that sales are shrinking—a money-losing proposition.”

The Role of Investment Banks

To navigate these turbulent waters, Intel has enlisted the help of Morgan Stanley and Goldman Sachs. These investment banks are advising the company on potential asset sales, mergers, and other strategic moves. The involvement of such high-profile advisors underscores the seriousness of Intel’s situation. As one source familiar with the matter told Reuters, “The company is discussing various scenarios, including a split of its product-design and manufacturing businesses, as well as which factory projects might potentially be scrapped.”

One of the most significant projects at risk is Intel’s $32 billion factory in Germany, which has already faced delays. The company may decide to pause or even halt this expansion to conserve capital, a move that would have significant implications for its long-term strategy in the semiconductor industry.

Employee Layoffs and Leadership Challenges

In addition to potential asset sales and project cancellations, Intel has also announced plans to cut approximately 15,000 jobs, representing about 15% of its workforce. This reduction is part of a broader effort to save $10 billion and streamline operations. However, these layoffs have also created a sense of uncertainty and instability within the company. Lynn Coffin, a Senior Software Program Manager at Intel, commented, “Hang in there my Intel friends. More changes to recent plans on the horizon.”

Intel’s leadership has also seen significant turnover. In August, Lip-Bu Tan, a veteran of the semiconductor industry, resigned from Intel’s board after months of debate over the company’s future. His departure leaves a vacuum of deep semiconductor business experience on the board, adding to the challenges facing the company.

A Critical Meeting and Uncertain Future

The upcoming mid-September board meeting will be pivotal for Intel’s future. The decisions made during this meeting could determine whether the company can reverse its fortunes or continue its downward trajectory. As Pat Gelsinger noted at a recent Deutsche Bank conference, “It’s been a difficult few weeks… And we’ve been working hard to address the issues.”

The stakes are high for Intel. With its stock price down 60% this year and fierce competition from rivals like Nvidia, the company must make bold and effective moves to regain its footing. However, as one industry insider noted, “Maybe Intel just needs to be patient and carefully plan its emergence to be gradual. Intel’s woes didn’t happen overnight, hence there is no overnight fix.”

All Eyes On Mid-September Board Meeting

Intel’s cost-cutting plans, while necessary, are a stark reminder of the challenges facing legacy companies in a rapidly evolving technological landscape. The potential sale of Altera, the splitting of its business, and the reduction in capital spending are all measures that reflect a company under immense pressure to adapt or risk becoming obsolete. As the semiconductor industry continues to evolve, Intel’s ability to navigate these changes will determine whether it can once again rise to the top or fade into the background.

For now, all eyes are on the mid-September board meeting, where the fate of one of the world’s most iconic technology companies will be decided. As Intel embarks on this critical phase, the decisions made in the coming weeks will likely shape the future of the semiconductor industry for years to come.