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author: zhou yuan/wall street news

intel(intc.us) stock price has risen sharply for two consecutive days.

before the u.s. stock market opened on september 16, intel's stock price rose by more than 7%, and after the market closed, it rose by 6.36% to us$20.91; before the market opened on september 17, intel's stock price soared again, rising by more than 6.5% to us$22.30 (as of 16:20 on september 17).

intel's stock price rebounded from the bottom, boosted by two pieces of news: first, on september 16, it was reported that intel's contract manufacturing business had signed aws (amazonthe two sides announced the cooperation on september 16; secondly, intel ceo pat gelsinger outlined intel’s planned cost-cutting measures in a memo to employees.

these measures mainly include intel's suspension of factory projects in germany and poland for two years; at the same time, the manufacturing project in malaysia will also be suspended, but kissinger did not specify the suspension period; in addition, intel will also reduce the number of its global office locations. in addition to these measures, the more important move is that intel plans to sell part of its shares in altera, its programmable chip business.

as a core component of intel's cost-cutting measures, the split of intel's ifs (foundry business: intel foundry services) department into an independent subsidiary, with an operating board responsible for overseeing the foundry business operations, but this subsidiary with a new independent status will remain within intel.

on august 30, wall street news learned from the supply chain that intel was considering spinning off its ifs business unit. on september 16, further details of the news were disclosed.

in this year's second quarter financial report, intel listed the ifs business separately and disclosed its relevant financial performance alongside its design business.

the ifs business is an important part of the idm2.0 strategy proposed by kissinger after he became intel ceo in february 2021. in february 2024, ifs was officially upgraded to if (intel foundry).

as a result, intel will be divided into two major businesses: one is intel product, which is responsible for product design, and the other is intel foundry, which is responsible for foundry manufacturing.

among them, if integrates technology development, manufacturing and supply chain, as well as intel's original foundry services, and provides chip manufacturing services equally to intel's internal and external customers.

if’s goal is to become the second largesttsmcthe world's second largest foundry.

but in 2024, intel's plan suffered a major setback. due to the huge investment in the foundry business of ifs, it dragged down the performance of the second quarter financial report this year (the worst quarterly financial report in intel's 56 years of existence). from january 2022 to june 2024, ifs's total losses amounted to approximately us$17.5 billion.

as of the end of june this year, intel's cash reserves amounted to only us$11.29 billion, while its current liabilities were as high as us$32 billion.

kissinger on august 29deutsche bank"the move into contract manufacturing (i.e. intel foundry: if) has been more challenging than expected. i underestimated the amount of heavy lifting that goes beyond producing quality (silicon) wafers. building a foundry business requires adding design assistance and other services that potential customers expect," he said at the conference.

therefore, if if cannot find major customers, does not have financing value, or cannot obtain external financial support, then idm2.0 is at risk of failure.

now, in addition to intel's self-rescue measures and gaining the crucial if core customer amazon, intel has also successfully persuaded the us government to obtain additional financial support.

on september 16, intel announced that under the "secure enclave" program of the chips and science act, the company will receive up to $3 billion in direct financial support from the us government and a loan line of $11 billion.

u.s. commerce secretary gina raimondo even directly stepped in to promote intel's ifs business.

according to market sources, raymondo held a closed-door meeting with investors from several us semiconductor listed companies, includingnvidiaandappleshareholders strongly recommended that they use intel's foundry services to manufacture ai chips.

it is worth noting that intel is working hard to getsonysony’s gaming console business could bring intel about $30 billion in revenue during the contract period, according to intel’s internal forecast. intel’s rival in this business is amd. winning sony’s gaming console business would mean more to intel than winning aws’ ai chip foundry business.