An Intel Break-Up Could Follow Its CEO Shake-Up, Bank of America Says

• Intel could be more likely to split its operations now that CEO Pat Gelsinger’s unexpected retirement was announced, Bank of America analysts wrote Monday.

• Gelsinger was a proponent of keeping Intel’s own manufacturing and contract foundry businesses together as part of his turnaround effort.

• The analysts said an Intel breakup still faces a number of hurdles, including conditions set by the nearly $8 billion in federal CHIPS Act funding announced last week.

Intel (INTC) could break up its operations after CEO Pat Gelsinger’s sudden retirement was announced Monday, according to Bank of America analysts.

The analysts wrote Monday that Intel’s internal manufacturing business and the foundry business that makes chips for other companies are now more likely to be separated, as the outgoing CEO was a proponent of keeping them together.

Such a shake-up would still face a number of hurdles, like the strings attached to the nearly $8 billion in federal CHIPS Act funding announced last week. The BofA analysts said that the funding agreement dictates that Intel needs to retain at least a 35% stake in its foundry business.

“Both businesses are undergoing their own strategic, structural, financial, and competitive issues, with no near term solution in sight,” the analysts wrote, maintaining their “underperform” rating and $21 price target on the shares. Intel’s stock finished Monday slightly lower.

While Intel shares have lost more than half their value since the start of the year, some of the company’s few bright spots have come from reports of potential investments or acquisition offers, or after the chipmaker sold pieces of some assets.

Bloomberg and Reuters reported Monday that Gelsinger met with the chipmaker’s board last week over its concerns about the company’s turnaround effort and its progress in catching up to competitors like Nvidia (NVDA)—and allegedly was given the choice to retire or be fired.