Intel is in dire straits. CEO Pat Gelsinger is making some drastic decisions to get things right.

In a message to all employees, Intel CEO Pat Gelsinger announces some important strategic steps to continue the transformation process. The focus is on closer collaboration with Amazon Web Services (AWS) through customized chips. In addition, Intel is striving for more efficient operations with a stronger focus on its foundry division and cost savings.

Expanding cooperation with AWS

One of the most notable announcements is the expansion of the partnership with AWS. Intel and AWS have signed a multi-year, multi-billion dollar deal that includes the production of a custom AI chip as well as a custom Intel Xeon 6 chip.

These chips will be manufactured on Intel’s latest technology platforms, Intel 18A and Intel 3, respectively. The collaboration builds on the existing relationship between the two companies, with Intel already supplying Xeon Scalable processors to AWS.

This new move fits into Intel’s broader “Better Together” strategy, in which the company sees its integrated offering of foundry services, infrastructure and x86 products as a competitive advantage.

Gelsinger emphasized that Intel currently has a growing number of customers in its foundry division, which he said is evidence that demand for Intel’s advanced packaging technologies is increasing. The deal with AWS is an important step in positioning Intel as a major player in the foundry segment.

Independent Intel Foundry Division

Another important announcement is the creation of Intel Foundry as a standalone subsidiary within the company, with rumors first surfacing in early September. This new structure is designed to drive growth for Intel’s Foundry division by providing customers and suppliers with a clearer distinction between the chip factory and other Intel companies.

At the same time, Intel’s independence provides Foundry with the opportunity to explore future sources of financing and optimize its capital structure to support further growth.

Intel Foundry will continue to be led by CEO Pat Gelsinger, but the division will be run by a separate board of independent directors to increase transparency and accountability within the company.

Intel plans to expand production capacity worldwide, especially in Europe and the US. At the same time, Gelsinger announces that projects in Poland and the chip factory in Germany will be postponed for two years due to expected market demand.

Cost savings and efficiency

A key part of Intel’s broader transformation strategy is creating a more competitive cost structure. The company said it is on track to achieve its goal of $10 billion in cost savings, including by restructuring its global real estate portfolio and reducing its workforce by 15,000 employees by year-end.

Intel has already achieved half of that figure through voluntary early retirement and other severance packages. In addition to workforce reductions, Intel will also divest two-thirds of its real estate worldwide. This is part of a broader strategy to make the company leaner and more efficient.

Intel’s vision for the future

Gelsinger’s announcements underscore Intel’s determination to adapt to the changing market while maintaining its leadership position in the semiconductor industry.

By investing in manufacturing custom chips for companies like AWS and strengthening its commitment to national security programs, Intel is building a future where it is better positioned to compete in an increasingly complex technology world.

With a focus on efficiency, cost savings and technological innovation, Intel expects to strengthen its market share and maximize its growth potential. Gelsinger emphasized that this is Intel’s biggest transformation in more than four decades and that the company is determined to emerge stronger from this period of change.

The sleeping giant has woken up. While we were wondering at the beginning of this month whether things would turn out well for Intel, this seems to us to be a step in the right direction. The crisis mood can now subside. For now, because the company is still in a difficult situation. Intel CEO Pat Gelsinger knows what to do in the coming months and years.