Intel’s (INTC) stock is up 7% after the maker of microchips and semiconductors announced plans to turn its struggling foundry business into a subsidiary.
In a new release, the company said it plans to turn its nascent foundry business into an independent subsidiary with its own board of directors and the potential to raise outside capital.
Intel also announced plans to sell part of its stake in privately held semiconductor firm Altera. The changes come days after Intel’s board of directors met to assess the company’s future.
The foundry business, which Intel plans to use to manufacture microchips for itself and other customers, has been a drag on its bottom line and share price.
Intel has spent $25 billion U.S. on its foundry business in each of the last two years, but it has been plagued by delays and has yet to generate much in the way of sales for the company.
There are media reports that Intel might eventually spinoff the foundry business into a separate publicly traded company, though the company has not confirmed those reports.
In August of this year, Intel reported disappointing quarterly financial results due, in large part, to its foundry business.
The company also announced that it will layoff 15% of its workforce as part of a $10 billion cost-reduction plan.
Intel also said it will pause its efforts to manufacture chips and processors in Poland and Germany by two years and has scrapped plans for a factory in Malaysia.
U.S. manufacturing projects are unaffected by the company’s changes, said Intel.
Separately, Intel was awarded on Sept. 16 new funding totaling $3 billion U.S. from the administration of President Joe Biden to further projects with the U.S. Department of Defense.
And, Intel said that it has entered a new deal with Amazon Web Services (AWS) to produce custom microchips for use in artificial intelligence (A.I.).
Prior to today (Sept. 17), Intel’s stock had declined 56% and was one of the worst performers in the benchmark S&P 500 index. The company’s shares currently trade at $20.91 U.S. each.