Intel Corp (NASDAQ:INTC, ETR:INL) could well be looking at a split of its design and manufacturing businesses in the wake of chief executive Pat Gelsinger’s hasty departure on Monday.
According to Bank of America analysts, the separation of the two divisions was now “a greater possibility” to give both “much-needed operational and financial independence”.
Wedbush analysts echoed the view, highlighting a “better probability” of “a larger strategic shift” and even a full separation.
Key hurdles remain though, both noted, not least in conditions under the Chips Act requiring Intel to maintain a 35% to 50.1% stake in its foundry wing.
Intel had been awarded $8 billion last week under the act, but in turn committed to the requirements.
“While in the (unexpected) scenario that Chips Act is revamped under the incoming US administration [...] we still highlight both businesses are undergoing their [...] issues, with no near term solution in sight,” Bank of America said.
“Net we are unclear as to how significantly this news changes the prospects of a divestiture,” Wedbush added.
“While an Intel separation of its design and manufacturing assets should in our view benefit shareholders, it would not solve Intel's larger issues.”
Both pointed to a continued poor outlook in the PC market, with Bank of America also flagging worsening cost pressures ahead and reiterating an ‘underperform’ rating.
Wedbush argued there was no clear successor to Gelsinger in the meantime, sticking to a ‘hold’ rating.
Shares fell 4.9% to $22.75 on Tuesday.