Intel is set to resume free coffee and tea for employees following substantial layoffs as part of broader cost-cutting measures. According to The Oregonian, the chip giant shared in an internal message that in-office beverages would return to boost employee morale.

“Although Intel still faces cost challenges, we understand that small comforts play a significant role in our daily routines,” the message, seen by The Oregonian, stated. “We know this is a small step, but we hope it is a meaningful one in supporting our workplace culture.”

However, free fruit, a perk employees had come to expect, will not be returning, the report noted.

Intel, once a leader in the tech industry, has faced several setbacks that have affected its position. While it played a major role in the PC boom of the 1990s, its focus on personal computers left it trailing in the mobile chip market, enabling Apple to take the lead with the iPhone.

In 2013, former Intel CEO Paul Otellini admitted to regretting his decision to pass on a deal with Apple to produce chips for the iPhone, as Intel had assumed the volume wouldn’t justify the costs.

Another missed opportunity came in 2017 and 2018, when Intel declined to invest in OpenAI, now a front-runner in artificial intelligence. OpenAI had sought Intel’s backing to reduce dependence on Nvidia’s chips and create its own infrastructure. Former CEO Bob Swan reportedly doubted the market viability of generative AI models, contributing to Intel’s decision to forgo the investment.

Intel has also faced delays in manufacturing, such as setbacks in 2020 with its 7-nanometer chips, which allowed competitors like Samsung and TSMC to pull ahead.

As its valuation dropped, Intel ramped up cost-cutting measures. In August, it announced plans to reduce its workforce by 15,000 through voluntary separations and layoffs. That month, the company shared a presentation detailing cuts to employee benefits, including reductions in reimbursements for internet, phone, and commuting costs.

In September, Intel informed employees in at least one Oregon office that free beverages and fruits would be discontinued.

“That’s petty, right? How much does one piece of fruit per day cost?” a former Intel employee told Business Insider.

 

Intel CEO Pat Gelsinger and key executives are expected to present a plan later this month to the company’s board of directors to slice off unnecessary businesses and revamp capital spending, according to a source familiar with the matter, as they try to revive the once-dominant chipmaker’s fortunes.

The plan will include ideas on how to shave overall costs by selling businesses, including its programmable chip unit Altera, that Intel can no longer afford to fund from the company’s once-sizeable profit.

Gelsinger and other high-ranking executives at Intel are expected to present the plan at a mid-September board meeting, the same source said.

Details of Gelsinger’s proposal are reported here for the first time.

Intel declined to comment.

The proposal does not yet include plans to split Intel and sell off its contract manufacturing operation, or foundry, to a buyer such as Taiwan Semiconductor Manufacturing Co., according to the source and another person familiar with the matter.

The presentation, including the plans around its manufacturing operations, is not yet finalized and could change ahead of the meeting.

Intel has already broken off its foundry business from its design business, and has been reporting its financial results separately since the first calendar quarter of this year.

The company has erected a wall between the design and manufacturing businesses to assure that potential customers of the design division would have no access to the technology secrets of customers using Intel’s factories, known as fabs, to manufacture their chips.

Intel is suffering through one of its worst periods as it attempts to play catchup in the AI era against the likes of Nvidia, the dominant AI chipmaker with a $3 trillion market capitalization. In contrast, Intel has now sunk to below $100 billion after a disastrous second-quarter earnings report in August.

The proposal Gelsinger and others will present is likely to include plans to further reduce the company’s capital spending on factory expansion. The pitch may include plans to pause or altogether halt its $32 billion factory in Germany, a project that has reportedly been delayed, the source said.

In August, Intel said it expects to cut capital spending to $21.5 billion in 2025, down 17% from this year, and issued a weaker-than-expected third-quarter forecast. 

In addition to the CEO and executive plans, Intel has retained Morgan Stanley and Goldman Sachs to advise the board on what businesses Intel can sell and what it needs to retain, according to two sources with knowledge of the company’s advisory plans. 

Intel has not yet asked for bids on the product units, but will likely do so once the board endorses a plan, according to the two sources familiar with the company’s advisory plans.

ALTERA SPIN-OUT

The mid-September board meeting is pivotal for the one-time chipmaking king. Intel reported a disastrous second quarter in August, which included pausing the company’s dividend payments and a 15% staff cut, aimed at saving $10 billion.

Weeks later, chip industry veteran Lip-Bu Tan resigned from the board after months of debate over the company’s future, Reuters reported, creating a vacuum of deep semiconductor business experience on the board.

Last Thursday, after the Reuters report, Gelsinger sought to reassure investors about the company’s weak financial performance.

“It’s been a difficult few weeks,” Gelsinger said at a Deutsche Bank conference. “And we’ve been working hard to address the issues.”

Gelsinger said the company is “taking seriously” what investors have said and that Intel is focused on phase two of the company’s turnaround plan.

Part of those plans will remain unresolved until the mid-September meeting. Then, the company’s directors will likely make crucial decisions about which businesses Intel will keep and which it will shed.

One potential unit the company may look to unload is its programmable chip business, Altera, which Intel acquired for $16.7 billion in 2015. Intel has already taken steps to spin it out as a separate but still wholly owned subsidiary and has said it planned to sell a portion of its stake in an initial public offering in the future, though it has not set a date.

But Altera could also be sold entirely to another chipmaker interested in growing its portfolio, and the company has quietly begun exploring whether a sale would be possible, according to one source familiar with its advisory plans and one of the sources familiar with the plans to cut businesses.

Infrastructure chipmaker Marvell is one potential buyer for such a transaction, according to one of the sources.

Bloomberg earlier reported various options for Intel including a potential split of Intel’s product design and manufacturing businesses that is expected to be discussed at the board meeting.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)