Intel has decided to spin off their chip fab lines as an independent subsidiary.
The theory is that they will be able to attract investors better that way, but this sounds like Underpants Gnome reasoning to me.
Why would someone be more likely to invest in a failing part of a business that gets hives off into a separate entity is beyond me.
Intel will spin out its Foundry division as an independent subsidiary with its own board, in the hopes of bringing in new sources of capital for the ailing business unit.
The decision, announced in a Monday letter penned by CEO Pat Gelsinger, comes just months after Chipzilla made the Foundry division a separate line item on its financial disclosures.
Gelsinger, who has taken considerable flak for Foundry's mounting losses in recent quarters, claims the decision to establish the division as a subsidiary will offer multiple benefits.
"It provides our external Foundry customers and suppliers with clearer separation and independence from the rest of Intel," he wrote. "It also gives us future flexibility to evaluate independent sources of funding and optimize the capital structure of each business to maximize growth."
The move also provides a more immediate benefit for Intel's shareholders: getting the division's operating losses off Intel's books. In Q2 alone Intel Foundry racked up $2.8 billion in operating losses. That dismal performance has spurred multiple class action lawsuits alleging Gelsinger and CFO David Zinsner misled investors about the health of the business unit.
While Intel Foundry will function more like a standalone business, Gelsinger stressed the subsidiary's leadership who will continue to report directly to him.
So, it's just financial engineering.
Maybe instead of spending time and effort on financial engineering, you would spend time ane effort on actual engineering.
I'm just saying.
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