The Intel Corporation (NASDAQ: INTC) stock price edged 2.47% higher after announcing plans to operate its programmable chips unit as a standalone entity. The company expects to spin off the unit starting in January 2024 and hold an IPO (initial public offering) for the stock in two to three years.
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Investors reacted positively to the news, as evidenced by its stock rising during premarket trading. However, the move was not as aggressive as it could have been because the IPO plan was at least two years out. Two years is a long time in the IPO world, and a lot can happen.
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Intel entered the programmable chips business in 2015 when it acquired Altera for $16.7 billion. Programmable chips are generally positioned between chips designed for one single task and general-purpose chips, and they can be used for everything from encrypting data to 5G wireless telecommunications equipment.
The company has appointed Sandra Rivera, a long-serving executive, as the CEO of the new business unit. Before her appointment, Sandra headed Intel’s data centre and artificial intelligence chip business, which competes fiercely with Nvidia and Advanced Micro Devices (AMD).
Intel revealed that it had commenced an extensive internal and external search for a replacement for Sandra Rivera. The company is seeking someone with relevant experience to lead the crucial data centre and artificial intelligence (AI) business unit.
During a conference call, Rivera said that the programmable chips unit relied a lot more on Intel’s factories to manufacture its chips than the Taiwanese factories where its chips were manufactured before being acquired by Intel.
Intel’s Sandra Rivera said: “We see enormous customer interest in a more secure, resilient supply chain in North America, and you could just imagine the industrial customers, the aerospace and defence base customers. We're setting this up to really have a unique advantage by leveraging Intel.”
The move to spin off the business comes as Intel seeks to streamline and only focus on its core business. Intel has made other divestitures in the past, including the sale of its NAND flash memory business to SKHynix for $9 billion and the IPO of its Mobileye self-driving technology unit.
Intel (INTC) stock price.
The Intel (INTC) stock price was trading up 2.47% at $36.57, from Tuesday’s closing price of $35.69.
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