Intel CEO’s Turnaround Plan to Compete with Nvidia, AMD: AI

A month after reporting a $1.6 billion net loss, saying layoffs that affected 15,000 people, and stating that it needs to reduce costs by $10 billion, Intel has a plan to show issues round.

Intel CEO Pat Gelsinger wrote in a Monday message to employees that Intel shall be taking concrete steps to change into worthwhile and aggressive. The letter arrived after Gelsinger met with Intel’s board final week for 3 days to determine a path ahead.

“There was no scarcity of rumors and hypothesis concerning the firm, together with final week’s Board of Administrators assembly, so I am writing at the moment to supply some updates and description what comes subsequent,” Gelsinger wrote.

^{Intel CEO Pat Gelsinger. Picture by Kira Hofmann/Photothek through Getty Photos}

The primary change is making Intel Foundry, Intel’s chipmaking enterprise, a subsidiary and separating it from the remainder of the corporate.

Associated: ‘Tough Day For All of Us:’ Intel CEO Announces Layoffs Affecting 15,000 People

The transfer will permit Intel Foundry to be extra impartial, have separate funding sources, and report earnings by itself exterior of Intel’s bigger group.

Intel moreover plans to chop the true property it holds by two-thirds by the top of the yr and promote a part of its stake in semiconductor firm Altera to chop prices. Intel can be specializing in AI technique and introduced a partnership with Amazon Web Services to develop new AI chips. Intel shares jumped 8% on Monday after the information.

“All eyes will stay on us,” Gelsinger wrote within the letter. “We have to battle for each inch and execute higher than ever earlier than. As a result of that is the one solution to quiet our critics and ship the outcomes we all know we’re able to reaching.”

Associated: How Nvidia CEO Jensen Huang Transformed a Graphics Card Company Into an AI Giant: ‘One of the Most Remarkable Business Pivots in History’

Intel faces rising competitors from the likes of Nvidia, which has pushed it out of the graphics playing cards area. Intel’s GPU market share went from 4% in the first quarter of 2023 to effectively 0% within the first quarter of 2024.

Bloomberg analysts predict that Intel will make $52 billion in income this yr, or 70% of what it introduced in two years in the past. They are saying Intel misplaced floor by not having the ability to capitalize shortly on the AI increase.

Intel was down over 53% year-to-date on the time of writing, however up over 16% prior to now 5 days.