Intel continues to struggle, and rumours now suggest that plans are in motion to sell its chip-manufacturing facilities

Intel's struggles had been going on so long, that this was almost inevitable. It's still notable that this has happened. The first rumour of substance that the company seriously considers spinning off its chip production facilities has surfaced.

Bloomberg, a business news outlet, is not a fountain of infallible knowledge. Not everything that Bloomberg reports is true. It's a big news outlet and has a lot of connections.

Bloomberg reports that Intel has been weighing the pros and cons to spin off its fabs. Intel is weighing up whether to sell the factories which make all its CPUs.

Intel would then become more like Nvidia or AMD, companies who only design chips but do not manufacture them. It would be similar to AMD, as AMD used to have its own fabs, but sold them to a separate company called GlobalFoundries.

GlobalFoundries continued to be a major manufacturing partner of AMD for some time after the spin-off. GlobalFoundaries quickly fell behind in chip manufacturing technology. TSMC makes the two chiplets that make up a Ryzen 9000 processor. GlobalFoundries, on the other hand, has a 12nm node and is largely limited to cheaper legacy chips for non-performance-critical applications.

Bloomberg reports that Intel's bankers Morgan Stanley, Goldman Sachs are working on various spin-off scenarios to be presented to Intel's board in September.

This is all rumour, and even if true, these are just options being considered. They are not a fait accompli for the fabs. If we believe Bloomberg, Intel could have decided to dump its fabs within a month.

Will it happen? Who knows? The most interesting thing about this is that it shows how serious Intel's troubles have become, if the idea of spinning off the fabs has become a serious subject of speculation.

Pat Gelsinger, a long-time Intel employee, returned to lead the chip maker in 2021. One of the key pillars to his plan to turn Intel round was to reinvent Intel’s manufacturing facilities into customer fabs, which would produce chips for customers other than Intel.

The fabs have been separated into a new business unit, Intel Foundry. Their mandate is to be a viable company in their own rights. Intel has been talking a good talk about gaining new customers for its fabs and has had success with customers like Arm. The foundry unit, however, has been losing billions each quarter. The most recent quarterly loss increased to $2.8 billion, from $2.5 billion during the first quarter 2024.

Intel claims that it is in an investment phase, as it works to make its upcoming 18A production node a major competitor for Taiwan's TSMC, the dominant player in advanced chip production. But the losses cannot continue forever.

Nobody knows what will happen. If Intel sells its fabs it will be a very different company. It's hard to say if this will be good for Intel or the PC gaming industry. If it happens, you can put a pin into this story and say that it all began here.