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Intel CEO Pat Gelsinger.
Key Points
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Intel shares rose in extended trading Monday after CEO Pat Gelsinger provided an update on the company’s restructuring plans.
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Gelsinger said Intel has made progress in cutting costs, including through layoffs, reducing real estate occupancy and selling part of its stake in Altera.
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The company also plans to spin off its chip manufacturing arm into a separate subsidiary and said it would produce chips for Amazon and the U.S. military.
Intel (INTC) rose in extended trading Monday after CEO Pat Gelsinger provided an update on the chipmaker’s plans to cut costs and strengthen the business. Investors are now waiting for signs of a turnaround in the stock.
Shares rose more than 8% shortly after the closing bell, after gaining 6% during the regular trading session. But even with those gains, Intel shares have lost more than half their value since the beginning of the year.
Intel plans to spin off Intel Foundry into a separate subsidiary
Gelsinger said Intel has made progress in cutting costs through measures including layoffs, reducing real estate and selling part of its stake in programmable chip unit Altera.
The company also said it plans to spin off Intel Foundry, which makes chips for other companies, into a separate subsidiary. Intel said this will give the company more independence, allow it to seek financing independently and help Intel “optimize the capital structure of each business.” Recent reports have suggested that Intel could sell the business.
Intel to make chips for Amazon and the US military
Intel also announced multibillion-dollar agreements to produce custom chips for Amazon (AMZN), and the U.S. military. The Pentagon news was first reported by Bloomberg.
“This news, combined with our [Amazon Web Services] “This announcement demonstrates our continued progress in building a world-class foundry business,” Gelsinger said in a press release.
Gelsinger added that the chipmaker will still move forward with projects in Arizona, Oregon, New Mexico and Ohio, adding that Intel “remains well-positioned to scale production around the world based on market demand.”
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