Intel’s billion-dollar cuts threaten Magdeburg chip plant

Intel’s planned chip factory in Magdeburg faces uncertainty due to the company’s billion-dollar cost-cutting measures. The struggling US tech giant is considering major financial cutbacks that could impact its expansion plans.

Intel’s cost-cutting measures may impact Magdeburg factory

According to an insider, Intel’s planned chip factory in Magdeburg could fall victim to the struggling US company’s billion-dollar savings package. The source, familiar with the matter, revealed on Sunday (local time) that CEO Pat Gelsinger will present details of the restructuring at an upcoming board meeting in the coming days. Several business units and various production expansion projects are reportedly under consideration for cuts. Intel declined to comment on this topic.

No plans for company split, but investments may be reduced

Additional insiders noted that a split of Intel, which had been speculated recently, is not currently part of the restructuring concept. However, the plans are not yet set in stone. Intel has already separated its contract manufacturing and product development divisions, reporting them separately in its financial statements. A “Chinese Wall” has also been established between departments to prevent potential buyers of one division from accessing trade secrets of the other.

A cornerstone of the savings program is reportedly the reduction of investments. This could spell the end for the planned 30 billion euro “Megafab” in Magdeburg, a project that is already progressing slowly. Furthermore, Intel has reportedly hired investment banks Morgan Stanley and Goldman Sachs to advise on the potential sale of business units. At the top of the list is Altera, the programmable chip division acquired in 2015 for $16.7 billion. Intel is said to be already sounding out potential buyers, with semiconductor manufacturer Marvell being a possible interested party.

Intel’s struggle in the AI boom

Intel has missed out on the boom in Artificial Intelligence (AI). The Santa Clara, California-based company lacks competitive high-performance chips for these computationally intensive applications. At the same time, demand for classic processors is dwindling. While arch-rival AMD is launching an attack on world market leader Nvidia with various acquisitions, Intel must save more than ten billion dollars and cut every sixth job.