Intel should consider exiting foundry business due to Gelsinger's departure, potential value at risk.

From Investing.com: 2024-12-02 23:00:36

Intel Corporation is facing potential near-term gains by exiting its foundry business, according to Citi analysts. However, the recent resignation of CEO Pat Gelsinger poses risks to long-term value. Gelsinger was a key player in improving Intel’s manufacturing but also championed selling off the ailing foundry unit.

With the departure of Gelsinger, Intel announced interim co-CEOs David Zinsner and Michelle Holthaus. The chipmaker’s shares, which have declined in 2024, dipped slightly following the news. Intel has struggled to keep up with competitors like TSMC and NVIDIA in releasing advanced silicon, particularly in the AI sector.

Gelsinger’s exit came as a surprise, signaling the board’s lack of confidence in his turnaround strategy. Despite plans to spin off the foundry business, recent government subsidies may limit Intel’s ability to divest. Citi analysts believe that divesting the foundry unit could significantly boost Intel’s gross margins.

Citi analysts remain neutral on Intel’s stock, with a price target of $22.0. They suggest that Intel’s chances of success in the foundry business are slim, and the company could benefit from improved margins if it decides to sell off the unit.



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