If the production of 18A chips fails next year, Intel may spin off its chip manufacturing business

Intel's chip manufacturing business may be at risk.

On December 12, at a Barclays investment bank conference in San Francisco, two executives from Intel admitted that if the new 18A manufacturing technology planned for release next year fails, the company may be forced to sell its chip manufacturing business.

Acting CEO David Zinsner stated, Intel is separating the financial and operational aspects of its manufacturing division into an independent subsidiary, with the foundry business already operating separately from Intel's other businesses, and is establishing a separate operational committee and business process software system. Zinsner said:

"This is something that will definitely happen... As for whether there will be a complete separation? That is an open question that needs to be discussed at some point in the future."

Following the announcement, Intel's stock rose 3.28% to $20.78 per share yesterday. So far this year, Intel has fallen over 56%.

In the chip industry, Intel is a very unique company—designing chips as well as manufacturing them. However, due to losing its leading position in manufacturing and missing out on the AI wave dominated by Nvidia, Intel's market value has evaporated by over $100 billion.

Wall Street Journal has detailed that in 2021, Intel's 40-year veteran Pat Gelsinger was appointed as CEO in a crisis, formulating an ambitious plan—going all in on advanced processes. Gelsinger was determined to help Intel revitalize its foundry business and regain its position as the "leader" in chip manufacturing.

To this end, over four years, Intel invested billions of dollars, betting the entire company on the 18A process.

However, although Intel's technology has made significant progress under Gelsinger's leadership, it has struggled with securing subsidies, sales performance, and stock price performance. In the second quarter, Intel reported unexpected losses and poor sales forecasts, and also announced plans to lay off more than 15% of its workforce.

Analysts believe that the Intel board has lost confidence in Gelsinger's plan to turn the company around, and after Gelsinger's departure, "product priority" has become the company's focus. The recent revelation by Intel executives that the 18A manufacturing technology may lead to the sale of the chip manufacturing business if unsuccessful further confirms this