Intel may be worth more than current valuation if split into pieces – Northland

Intel may be worth more than current valuation if split into pieces – Northland

Investing.com — Intel may be worth more separated into smaller entities than the chipmaker is at its current valuation, according to analysts at Northland Capital Markets.

Shares in Intel (NASDAQ:INTC) have plunged by more than 52% so far this year, as the firm struggles to keep up with rivals like Nvidia (NASDAQ:NVDA) in the race to manufacture artificial intelligence-optimized chips.

“Intel Products continues to lose market share and lacks a competitive AI product,” the Northland analysts said in a note to clients on Tuesday.

In August, Intel said it plans to slash capital expenditures by 17% versus the prior year to $21.5 billion, and unveiled a third-quarter forecast that missed analysts’ estimates. It has also announced cuts to more than 15% of its workforce, or roughly 17,500 people, and said it would suspend its dividend in the fourth quarter as part of a broader turnaround effort.

Chief Executive Pat Gelsinger and key executives, meanwhile, are reportedly mulling a possible split of Intel’s product-design and manufacturing businesses as part of a bid to revive the company’s fortunes, Bloomberg News has reported.

Elsewhere, Qualcomm (NASDAQ:QCOM) has approached Intel over a possible takeover bid, with Chief Executive Cristiano Amon actively examining various options for a deal for the more than five-decade-old group, Reuters reported in September. Qualcomm executives have mulled potentially acquiring parts of Intel’s design business, including its PC design division, Reuters added.

Infrastructure chipmaker Marvell (NASDAQ:MRVL) has also become a possible buyer of Intel’s programmable chip business, Altera, Reuters said.

“While discouraging, we believe Intel, broken up into pieces, is worth more than its current valuation,” the Northland analysts said.

Gelsinger has made Intel’s foundry, or contract manufacturing division, a centerpiece of his plans to turnaround the company.

The foundry division, which recently signed up Amazon (NASDAQ:AMZN)’s cloud services unit as a customer for making custom AI chips, is slated to be established as an independent subsidiary that has its own operating board. It has already been reporting separate financial results since the first calendar quarter of 2024.

(Reuters contributed reporting.)

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