Intel shares powered higher in Wednesday trading, extending a modest gain for the year, after the release of a bullish research report tied to plans for a spinoff of the chipmaker’s money-losing foundry business.
Intel (INTC) , which ousted Pat Gelsinger as chief executive late last year amid the group’s flagging turnaround, posted a mixed set of December-quarter earnings last month but vowed to focus on new AI-focused products for its data-center division.
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The group’s broader focus, now being managed by interim co-CEOs David Zinsner and Michelle Johnston, is aimed at scaling its business across the AI spectrum by making chips that power next-generation laptops and those that support processors for client-based servers.
Related: Intel faces a major threat to its plans
It’s also planning to spin off the business that makes chips for other companies, Intel Foundry Services, into a stand-alone unit with an independent board.
The unit in fact reached a lucrative deal last month with Amazon Web Services (AMZN)  to make high-end chips. And it plans to pause construction of a $32 billion foundry site in Germany for at least two years.Â
Intel ousted former CEO Pat Gelsinger in December and remains without a full-time boss as it looks to separate its money-losing foundry business.Â
Intel also inked a $3 billion contract from the Chips and Science Act to develop highly sensitive components for the Department of Defense and plans to sell its a portion of its Altera chip business, which it purchased for $16.7 billion in 2015.
Taiwan Semi to run new Intel foundry?Â
Baird analyst Tristan Gerra, who reiterated his neutral rating on Intel stock in a note published Wednesday, suggested that “discussions from the Asia supply chain” point to the involvement of Taiwan Semiconductor (TSM)  in the foundry-division spinoff.Â
“TSMC would send engineers to Intel’s 3nm/2nm fab, applying the company’s know-how to ensure that the fab and subsequent manufacturing projects from Intel become viable,” Gerra said of the feedback from Asia suppliers.Â
“The fab could be spun off into a new entity jointly owned by TSMC and Intel, and run by TSMC,” he added, noting that it could receive more Chips Act Funding.
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“While there is no confirmation and potential completion of this project could be lengthy, we think this move makes sense, further building on Intel’s prior CEO’s focus on the company’s core competency, manufacturing,” Gerra said.Â
“Going forward, Intel would benefit from significant cash-flow relief and would focus on design and platform solutions, while a viable fab could finally attract key fabless companies to diversify into a geo-dependable manufacturing model,” he added.
Intel AI head departs
One potential setback beyond the IFS spinoff, however, might stem from the departure of Justin Hotard, who left his role as head of Intel’s Data Center & AI Group to take the CEO’s post at the Finnish tech giant Nokia.
CFRA analyst Angelo Zino argues, however, that Intel’s bigger concern is tied to the selection of its new CEO and the fate of the IFS spinoff.
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“While we all await greater clarity on strategic direction once a new CEO is hired, all eyes will be on whether Intel can execute its foundry expansion plans (18A ramping in [the second half]), ” he said.
He referenced the group’s 1.8 angstrom process, a sophisticated manufacturing technique it hopes can challenge market leaders such as TSMC and Samsung Electronics. (SSNGY) Â
Intel shares were last marked 3.6% higher, against a 0.3% decline for the Nasdaq, and changing hands at $21.72. Such a move would leave the stock down more than 50% over the past year.Â
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