The sudden resignation of Pat Gelsinger, the CEO of Intel, has provided this struggling company with a new opportunity to consider potential trade options, including splitting off its chip manufacturing business and selling to Qualcomm.

In recent months, the Intel board of directors has discussed a series of possibilities, including private equity transactions, splitting off factories and product design businesses, etc. However, Gelsinger has always been against splitting the company and has instead focused on restoring Intel's technological advantage and becoming a leading chip contract manufacturer.

Now, with Gelsinger's departure, Intel has the opportunity to reopen discussions. Meanwhile, Morgan Stanley and Goldman Sachs have also been assisting Intel in finding a way forward.

Furthermore, this is also a new opportunity for potential buyers like Qualcomm to reconsider acquiring parts or all of Intel's business. Previously, Qualcomm had contacted Intel to discuss acquisition matters, but progress has been minimal.

CEO must resign.

Last weekend, the Intel board of directors gave Gelsinger a choice: resign or be fired.

An insider stated that the Intel board of directors has concluded that Gelsinger must resign because his plan to turn losses into profits did not show results quickly enough. At the same time, other challenges have emerged, leading to the company's stock price plummeting by more than 50% this year.

On Monday, intel announced that Ginseng retired on December 1st. At the same time, the 63-year-old intel veteran also resigned from the board of directors. Intel also announced the appointment of executives David Zinsner and Michelle Johnston Holthaus as interim co-CEOs, while the formal CEO candidate is still being sought.

This sudden change is the latest sign that this 56-year-old technology company is falling out of favor. Intel's interim chairman of the board, Frank Yeary, said in a statement: 'We have more work to do and are committed to restoring investor confidence.'

In a statement, Ginseng expressed mixed feelings about this move. He said: 'This has been a challenging year for all of us. In response to the current market dynamics, we have made some difficult but necessary decisions.'

After the news of Ginseng's departure, Intel's stock price rose by 5.8% on Monday.

Five future options

Industry analysts Kunjan Sobhani and Oscar Hernandez Tejada stated: 'Intel's leadership changes increase the possibility of asset divestitures. Ginseng strongly opposed splitting the company, but the lengthy and costly turnaround plan has caused shareholders to lose patience, which may force Intel to reconsider its future path.'

At a meeting in September, Intel's board of directors evaluated various options, including the idea of ​​splitting. However, in the end, Intel opted for less radical reforms, including suspending factory construction in Poland and Germany, cutting about 15,000 jobs, and suspending the dividends that had been maintained for decades.

If the new CEO continues with a larger restructuring, Intel may reconsider the following five major options:

1. Split the manufacturing business.

This will involve completely separating Intel's factory business from the more profitable product development department. Under Kissinger's leadership, Intel has been expanding its manufacturing business to become a chip contract manufacturer, producing components for external customers. The plan is to eventually compete with Taiwan Semiconductor, the pioneer in the contract market.

2. Attract pursuers like Qualcomm.

It has been reported that Qualcomm had considered acquiring Intel. However, as of last week, their interest has waned. Sources at the time stated that the complexity of a full acquisition of Intel reduced the attractiveness of the deal. But Qualcomm could consider acquiring certain Intel businesses, such as the product business.

3. Sell the Altera business.

Altera is a programmable chip company acquired by Intel in 2015 for approximately $17 billion. Intel has negotiated with financial investors to sell a portion of this business, which could be a step towards an IPO for the department.

4. Accept investment from Apollo.

Earlier this year, Apollo Global Management proposed to provide Intel with an investment of up to $5 billion. Currently, Apollo Global Management is already a partner of Intel's Ireland factory.

Sell Mobileye shares.

Intel acquired the autonomous driving technology manufacturer Mobileye in 2017, which went public in 2022, but Intel still holds about 88% of the company's shares. Recent reports suggest that Intel may sell some of the shares on the open market or to third parties.

Splitting is key.

Srini Pajjuri, a semiconductor industry analyst at investment services company Raymond James, believes that Intel's "core issue" now is whether it will be split into two companies, one focusing on chip design and the other on chip manufacturing.

Alvin Nguyen, senior analyst at technology research company Forrester, said that Kissinger's departure may increase the likelihood of Intel divesting its contract manufacturing business. He said, "This is something investors have been pushing for.". However, Nguyen also pointed out that the new government support for manufacturing in the USA could complicate these plans.

Last week, the U.S. Department of Commerce finalized its direct funding for Intel under the Chip Act, totaling $7.865 billion, slightly lower than the initially announced $8.5 billion.

Chris Caso, analyst at research firm Wolfe Research, said, "Intel's move has opened the door to a new strategic direction, which we are happy to see. Although Kissinger has had some success in advancing Intel's process roadmap, we believe that due to Intel's absence in the field of AI, the company lacks sufficient scale to independently pursue leading manufacturing processes."

Logan Purk, senior research analyst at investment research company Edward Jones, said, "The cornerstone of Kissinger's tenure is based on Intel achieving manufacturing process leadership, or at least matching competitors. If they fail to implement 18A (Intel's most advanced chip manufacturing process) smoothly, then everything will be in vain."

Given the slow progress in technology advancement and cost reduction, as well as the rapid development of competitors, the next CEO of Intel may inherit a more challenging job than that of Kissinger.