Intel embraces its biggest transformation in more than 40 years

Recently, Intel has been plagued by negative news. To stabilize market sentiment, Intel CEO Pat Gelsinger sent a letter to all employees on Monday (16th) announcing several major decisions. Gelsinger said, "This is Intel's biggest transformation in more than 40 years. Since the transition from memory to microprocessors, we have never attempted such an important transformation. At that time, we succeeded, and in the decades to come, we will embrace this moment and build a stronger Intel."

Relevant decisions and transformations are as follows:

Organizational restructuring: Intel plans to spin off its chip foundry division into an independent subsidiary called Intel Foundry and establish a new operating board for it to enhance service transparency and flexibility.

Global manufacturing layout adjustment: Intel will suspend its chip manufacturing projects in Poland and Germany for about two years, while the construction of a new advanced packaging factory in Malaysia will adjust its launch time based on market conditions and existing capacity utilization rates.

Cost reduction and asset optimization: Intel plans to sell about two-thirds of its global real estate assets by the end of the year. At the same time, it plans to gradually achieve the goal of the largest-ever layoff of 15,000 employees by the end of the year through voluntary early retirement and departure programs, with more than half of the layoffs currently in progress.

Product and R&D priorities: Intel is strengthening and simplifying its product portfolio to improve focus, speed, and efficiency. This includes transferring its edge and automotive businesses to CCG and transferring integrated photonics solutions to DCAI.

Partnership with Amazon AWS: Intel has signed a multi-year cooperation framework with Amazon AWS involving billions of dollars in investment, including the supply of AI chips and server CPUs customized for AWS.

Financial and investment strategy: Intel plans to reduce capital expenditures to $21.5 billion by 2025, a reduction of about 17% from the current level, and to continue to prioritize the x86 franchise while driving the AI strategy.

The 'franchise' of the x86 architecture refers to Intel's control over its x86 instruction set architecture (ISA). Intel is the founder of the x86 architecture and has long been a major promoter of it. However, Intel also faces competition from other architectures such as ARM and RISC-V, so Intel has adopted measures such as opening up x86 licensing to respond to market changes.

Opening up x86 licensing: Intel plans to license its x86 architecture externally, allowing customers to develop custom chips that include x86, ARM, and RISC-V CPU cores. This is the first time in Intel's history that it has done so, aimed at attracting customers by offering more customization options and flexibility.

AI PC Acceleration Program: Intel announced the expansion of its 'AI PC Acceleration Program', including the addition of the 'AI PC Developer Program' and the inclusion of independent hardware vendors (IHVs) in the program to accelerate the introduction of AI features to over 100 million Intel-based PCs by 2025.

Green and sustainable development: Intel has committed to achieving net-zero greenhouse gas emissions by 2040 and promoting green and sustainable development in production operations, technology products, and industrial linkages.