NEW ALBANY, Ohio (WCMH) — The $20 billion computer chip manufacturing facility that Intel is constructing in New Albany, Ohio, will be spun off into a new company as part of a restructuring to restore investor faith and save the company’s sinking stock prices.
Intel CEO Pat Gelsinger made the announcement affecting the Ohio One facility in Licking County late Monday, alongside a project to make artificial intelligence chips for Amazon Web Services. Both will eventually fall under a subsidiary of Intel.
“A subsidiary structure will unlock important benefits,” Gelsinger said. “It provides our external foundry customers and suppliers with clearer separation and independence from the rest of Intel. Importantly, it also gives us future flexibility to evaluate independent sources of funding and optimize the capital structure of each business to maximize growth and shareholder value creation.”
Stockholders responded Tuesday morning by sending Intel’s stock soaring, up 7% in premarket trading.
In 2022, Intel picked New Albany for the site of multiple chip fabrication plants, part of bringing chipmaking to the U.S. from overseas and building a “Silicon Heartland.” Since then, construction delays have been announced even as million-pound super loads have rolled over Ohio roads.
Intel’s strategy of being both a chip designer and a chipmaker, unlike some of its rivals, wasn’t weighing well with investors who were concerned over potential conflicts of interest. Also coming into play were stipulations with Intel receiving federal and state funding for Ohio One.
Analyst Harlan Sur of JP Morgan called Gelsinger’s move logical.
“We believe this move is a natural progression to drive better transparency and decision making/efficiencies and therefore should not be viewed as a surprise,” the analyst wrote in a note to clients that was shared with the Associated Press.
Intel is in the midst of broad cost-cutting efforts, offering voluntary separation and early retirement options to some employees, with the goal of eliminating 15,000 employees by the end of the year, in addition to trimming its real estate portfolio.
The first fabs in New Albany are scheduled to be operational before the end of the decade.