Change may be in the wind at chipmaker Intel (INTC), as a new report from Reuters suggests that Intel may be looking to spin off its foundry operations after all. Though the reports are still very early-stage, there is every possibility that Intel may be a leaner, meaner company in the months ahead. The news was welcome to shareholders, and they sent shares up over 3% in Thursday afternoon’s trading.
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Intel’s co-CEOs, Michelle Johnston Holthaus and David Zinsner, turned out for a Barclays investment banking conference in San Francisco. There, they noted that there was a possibility that Intel may have to spin off its chipmaking operations. Moreover, the report noted, they may be “forced” to sell, if it turns out the new chipmaking technology that will go into play next year fails to deliver results.
The duo was asked if keeping both design and fabrication in-house was “…tied to the success of a new chipmaking technology called 18A due next year.” Zinsner revealed that Intel actually is already separating design and fabrication, though the two may never “fully” separate. Holthaus said something similar, noting she finds it makes little sense that “…they’re completely separated and there’s no tie.” But she also noted that “someone will decide that.” Which, theoretically, would be her as CEO unless she knows she is being replaced in short order.
A Big New Investment
So, knowing what we know about Intel so far—especially how dire its straits are as represented by the huge number of layoffs it has engaged in lately—it may be a surprise to find that Intel is funneling cash into completely different companies. But it is. In fact, Intel, along with two of its biggest rivals, Nvidia (NVDA) and AMD (AMD), are putting cash into Ayar Labs, a startup working on moving data via light.
The three firms accounted for $155 million total, noted a Bloomberg UK report, and should Ayar Labs succeed, it could be a game changer in processors. Ayar Labs’ play will use photonic transmission to send data, which could be a major play for artificial intelligence (AI) applications. Early reports suggest it is doing quite well, and Ayar Labs hopes to have chips in mass production by the middle of 2026.
Is Intel a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 22 Holds, and six Sells assigned in the past three months, as indicated by the graphic below. After a 52.75% loss in its share price over the past year, the average INTC price target of $24.43 per share implies 18.1% upside potential.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
