Intel is looking for ways to save its business

After missing earnings expectations and announcing layoffs, chipmaker Intel INTC is reportedly looking for options to fix its faltering business.

Intel is working with its longtime investment bankers at Morgan Stanley MS and Goldman Sachs GS on options, including splitting its foundry division which designs and manufactures chips, cutting factory projects, and M&A, Bloomberg reported, citing unnamed people familiar with the matter. Potential options will reportedly be presented at a company board meeting in September, however, people told Bloomberg the talks with bankers are in early stages.

Intel is more likely to halt expansion projects before splitting its foundry, Bloomberg reported. In March, Intel received $8.5 billion in direct government funding from the CHIPS and Science Act to support the chipmaker’s plans to invest more than $100 billion in the U.S. over the next five years. The company plans to expand its U.S. semiconductor industry footprint with chipmaking sites in Arizona, New Mexico, Ohio, and Oregon. Neither Intel nor Goldman Sachs immediately responded to a request for comment. Morgan Stanley declined to comment.

After Intel missed revenue expectations for its second-quarter earnings earlier this month, the chipmaker’s stock fell 27%. The company reported revenue of $12.8 billion in the second quarter of 2024 — down 1% from the previous year. Wall Street was expecting $12.9 billion, according to FactSet. Intel also announced it is cutting spending, including by laying off more than 15% of employees. The layoffs are part of Intel’s plan to reduce capital expenditures by over $10 billion in 2025. The company’s cost-reduction plan is part of moving “toward a sustainable business model” to support its long-term strategy, Intel said.

“Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,” Intel chief executive Pat Gelsinger wrote in a memo to employees. “Our revenues have not grown as expected — and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low. We need bolder actions to address both – particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected.”

Intel’s shares were up around 7.6% during Friday morning trading, but are down almost 55% so far this year.