Intel stock jumps on plan to turn foundry business into subsidiary and allow for outside funding

Intel shares jumped 8% in extended trading Monday after the company said it plans to turn its foundry business into an independent unit with its own board and the potential to raise outside capital.

As part of CEO Pat Gelsinger's effort to turn around the struggling chipmaker, Intel said in a memo to employees that it will also sell off part of its stake in Altera.

Gelsinger said the restructuring would allow the foundry business to "evaluate independent sources of funding," and comes days after Intel's board met to assess the direction and future of the company. The foundry business, which Intel plans to use to manufacture chips for other customers, has been a big drag on its bottom line, with the company spending roughly $25 billion on it in each of the last two years.

Beyond just considering outside funding, Intel is weighing whether to spin off the foundry business, possibly into a separate publicly traded company, according to a person with knowledge of the matter who declined to be named in order to discuss confidential information.

With a standalone "operating board" and a cleaner corporate structure, the mechanics of a separation become far easier than trying to turn a fully integrated unit into a separate company.

Prior to the postmarket pop, Intel had lost almost 60% of its value this year. The company has given up market share in its core PC and data center business and watched Nvidia run away with the market for chips that power artificial intelligence workloads. In August, Intel reported disappointing quarterly results, sparking the sharpest sell-off in 50 years, and said it would lay off more than 15% of its workforce as part of a $10 billion cost-reduction plan. Gelsinger said the company is about halfway