Exclusive: Advanced Micro Devices mulling breakup, spinoff - sources
Chipmaker Advanced Micro Devices is at the initial stage of reviewing whether to split itself in two or spin off a business, seeking to reverse its fortunes and take on rival Intel Corp, according to three people familiar with the matter.
Context & Ripple Effects
In 2015, AMD was the struggling challenger reviewing whether to split itself in two or spin off a business, explicitly framed as a way to take on Intel. A decade later the question flipped: Intel, after a 50%+ YTD stock decline, was reported to be exploring splitting its product and foundry units among other drastic options.
That reversal is the analytical core here. Intel's foundry business lost $13B+ on $17.5B in revenue in 2024 while TSMC earned $41.1B operating profit on $90B — the foundry-versus-design economics gap that makes separation structurally attractive — and CEO Lip-Bu Tan has since confirmed plans to spin off non-core assets. AMD's early breakup review reads as the first data point in an industry-wide unbundling debate.
First-order effects
- AMD's board faces a concrete fork: divide into separate companies or divest one unit, with the stated goal of sharpening focus against Intel rather than managing a sprawling portfolio.
- Any split decision lands on AMD shareholders first, since the review is at an initial stage and the structure chosen determines what asset base backs each resulting company.
Second-order effects
- Intel cannot treat AMD's restructuring as noise — a slimmer, focused AMD intensifies the competitive pressure that already pushed Intel toward splitting product and foundry operations, scaling back factories, and selling subsidiaries.
- Suppliers and customers around each potential spinoff face re-contracting: whichever unit is separated inherits its own supply commitments, changing who holds the manufacturing relationship.
Third-order effects
- If both AMD and Intel conclude that integration is a liability while pure-play manufacturers like TSMC capture outsized profits, the structural endpoint is an industry where design firms and fabs separate by default, with foundry losses like Intel's cited as the cautionary case.
- Regulators and investors would then treat breakups as a standard turnaround tool for semiconductor companies rather than a last resort, normalizing the AMD-style review across weaker integrated players.
The trend: Integrated semiconductor companies are progressively questioning the design-plus-manufacturing model, with AMD's 2015 breakup review foreshadowing Intel's own split deliberations a decade later.