• Intel intends to generate some cash by selling off its stake into the market.
• With the stock price tanking, Intel will find it hard to generare sufficient cash.
• A possible sale of its networking segment is also in the pipeline.

Intel (INTC) is reportedly considering the sale of its substantial 88% stake in Mobileye (MBLY), an Israeli company specializing in autonomous vehicle technology.

This potential divestment is part of a broader strategy to streamline Intel’s operations and refocus its business model.

The tech giant aims to rejuvenate its financial health and operational efficiency, marking a significant shift in its strategy.

How is Mobileye’s business doing?
 

In the past year, Intel has already sold shares of Mobileye worth $1.5 billion.

However, Mobileye’s stock has since plummeted by 74%, underscoring the need for a more impactful sale to meet Intel’s financial goals.

Despite its initial promise, Mobileye has faced challenges, including a downturn in auto production and diminished demand, particularly in the Chinese market.

Mobileye’s business performance has been less than stellar lately.

Once celebrated for its cutting-edge autonomous driving technology, the company has struggled to maintain its competitive edge.

Recent quarterly earnings have revealed weak demand and poor guidance, reflecting broader issues within the automotive sector and impacting Mobileye’s market position.

Why is Intel struggling?
 

Intel’s own struggles are tied to its foundry business.

Despite being a key player in the tech industry, Intel has not maintained its leadership in processor technology.

Although its operating cash flows remain robust and it retains a significant market share in the PC industry, the foundry segment poses a significant challenge.

The US government’s CHIPS Act, aimed at boosting domestic chip manufacturing, has injected billions into the industry, but Intel requires approximately $25 billion annually to sustain its foundry operations.

The company’s foundry challenges have been exacerbated by dissatisfaction with Intel’s manufacturing quality, as noted by Broadcom.

Currently, Intel benefits from using Taiwan Semiconductor Manufacturing Company (TSMC) for its wafer production.

However, reliance on TSMC could undermine the investments made, including those from the US government.

Alternatively, improving its own manufacturing processes could take years to yield results.

What’s next for Intel?
 

In addition to the potential Mobileye sale, Intel is also considering divesting its Network and Edge business, which generated $5.8 billion in revenue last year.

This figure represents a significant decline from previous years, highlighting the segment’s struggles.

The company faces difficulties finding buyers for this business, suggesting that its technology might not be as attractive to potential investors.

The sale of Intel’s stake in Mobileye and its Network and Edge business reflects a strategic effort to address its financial and operational challenges.

As Intel navigates these transitions, the company faces the dual task of improving its manufacturing processes and finding viable paths to profitability.

The outcomes of these efforts will significantly impact Intel’s future trajectory and its role in the tech industry.

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