Intel’s stock price fell 6% on Wednesday after the company gave investors an update on its turnaround plan to become a chip manufacturing company competing with Taiwan Semiconductor Manufacturing Company (TSMC).
The company’s new reporting structure could also help control costs, as it seeks to trim as much as $10 billion from its costs over the next three years. Intel’s CFO, David Zinsner, explained how the company would soon change the way it reports its financial results to give its foundry business, known as IFS, its own profit-and-loss statement, which would reveal the company’s manufacturing margins.
Other chip stocks also fell on Wednesday amid a down day for tech stocks, with AMD, Intel’s chief rival, falling nearly 6%, while Qualcomm fell over. Intel plans to make use of its bear chips to figure out issues in its manufacturing earlier than opening the factories to third-party companies.
Intel’s internal business units will now have a customer-supplier relationship with the manufacturing business, which will make it the second-largest foundry next year with manufacturing revenue of more than $20 billion.
Despite the stock drop, Intel offered positive news on its foundry business as it continues to build out new facilities to expand the custom chip-making business. However, some analysts predict that Intel’s foundry capacity buildout plans could lead to a company split.