Intel to Restructure Chip Design and Manufacturing Divisions

Intel is fine-tuning its corporate reporting as it gears up a foundry operations that will see the longtime manufacturer and designer of its own chips extend services to third-parties. The idea is to create greater separation between its concept and creation divisions. The change comes as Intel deals with a rapidly shifting global market, where demand for chips has increased in sectors like automotive and AI data centers while the PC business that has been the company’s bedrock suffered a major decline in global shipments of nearly 20 percent in Q3.

Year over year, PC shipments declined by 19.5 percent in the three-month period ending in September, “marking the steepest decline in more than two decades,” reports The Wall Street Journal, citing Gartner’s tally of “68 million PCs in the recent quarter, down from 84.5 million units the year prior” because “elevated [COVID-19]-related sales were followed by a slowdown in consumer spending on electronics.”

The PC sales plummet plus an increase in capital expenditures sees Intel poised for layoffs, according to Bloomberg, which says the company could be cutting “in the thousands” against its workforce of roughly 113,700.

In a Tuesday letter to staff, Intel CEO Pat Gelsinger shared the new organizational structure, “designed to let Intel’s network of factories operate like a contract chip-making operation, taking orders from both Intel engineers and external chip companies on an equal footing,” WSJ reports, explaining that “Intel has historically used its factories almost exclusively to make its own chips.”

Gelsinger expanded the scope by launching a contract chipmaking division last year.

The adjustment is intended to “allow us to identify and address structural inefficiencies that exist in our current model by driving accountability and costs back to decision makers in real time,” WSJ reports Gelsinger said in the letter.

Intel’s chief rivals — Nvidia and AMD — don’t manufacture their own chips. Gelsinger “has been trying to fast-track Intel’s chip-making effort since he became CEO last year,” WSJ writes.

In addition to U.S. government funding to flow from the recent CHIPS and Science Act for a new plant in Ohio, Intel is investing in foreign expansion.

This year, Gelsinger announced Intel will purchase Israel’s Tower Semiconductor in a deal valued at $5.4 billion, and plans to invest $19 billion to build new plants in EU territories as a result of the EU Chips Act, an initiative whose goal is to nearly double the EU’s share of global chip production to 20 percent by 2030.

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