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The Key Takeaways
- Intel could be more likely to split its operations now that CEO Pat Gelsinger's unexpected retirement was announced, Bank of America analysts wrote Monday.
- Gelsinger was a proponent of keeping Intel's own manufacturing and contract foundry businesses together as part of his turnaround effort.
- According to the analysts, a split of Intel faces several obstacles. These include conditions created by funding from federal CHIPS Act announced last week.
Bank of America analyst says that Intel’s (INTC), following the sudden announcement of CEO Pat Gelsinger’s retirement, could split its operation.
They wrote that Intel’s internal production business, and its foundry that produces chips for others companies will now be more likely separated. The outgoing CEO was an advocate of keeping both together.
A shake-up of this magnitude would face many obstacles, including the conditions attached to funding from the federal CHIPS Act announced last week. According to the BofA analyst, Intel must retain a minimum of 35% in its foundry.
“Both businesses are undergoing their own strategic, structural, financial, and competitive issues, with no near term solution in sight,” Analysts wrote in maintaining their “underperform” Shares are rated at $21 and the price target is set to that amount. Intel shares closed Monday’s trading slightly lower.
Intel’s shares rose by a multiple this year due to potential breakups and Takeovers.
Intel’s shares are down more than 50% since January. However, there have been some bright spots, such as reports about potential acquisitions or investments, or when the chipmaker has sold some assets.
Bloomberg and Reuters reported Monday that Gelsinger met with the chipmaker’s board last week over its concerns about the company’s turnaround effort and its progress in catching up to competitors like Nvidia (NVDA)—and allegedly was given the choice to retire or be fired.
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