Following the sudden departure of CEO Pat Gelsinger, Intel's leadership is facing a critical juncture, with the possibility of spinning off its manufacturing business emerging as a key consideration. At the Barclays investment banking conference, the company's temporary co-CEOs, Michelle Johnston Holthaus and David Zinsner, hinted at the potential separation of Intel's manufacturing operations into a standalone subsidiary.

This development comes as Intel's manufacturing business finances and operations are already being separated, according to Reuters. While Zinsner confirmed that the separation is underway, he stopped short of committing to a full spinoff, leaving the door open for future decisions. Holthaus echoed this sentiment, suggesting that a complete separation might not be pragmatic, but ultimately, the decision rests with Intel's board and incoming CEO.

The possibility of a manufacturing spinoff raises significant questions about Intel's future direction and competitiveness in the chipmaking industry. The company has faced a series of setbacks this year, including the outsourcing of its Lunar Lake laptop chip production to rival TSMC, which proved to be a financial mistake. Additionally, Intel's 13th and 14th Gen chips have struggled to gain traction, and its next-gen desktop CPUs have underwhelmed.

A spinoff would require careful consideration of the implications on Intel's business model and relationships with the US government, which has provided nearly $8 billion in CHIPS and Science Act funding. The US Department of Commerce would need to oversee any change of control, adding a layer of complexity to the decision-making process.

If Intel does decide to spin off its manufacturing business, it would effectively become a chip design company, similar to its direct rivals. This would mark a significant shift in the company's strategy and could have far-reaching implications for the industry as a whole. The success of Intel's "18A" process, set to arrive next year, will be closely watched as a key indicator of the company's ability to compete with TSMC and AMD.

As Intel's board searches for a new CEO to lead the company forward, the decision on whether to spin off its manufacturing business will be a critical one. The outcome will have significant implications for Intel's future, its relationships with partners and competitors, and the broader chipmaking industry.

With the company's future uncertain, all eyes will be on Intel's next move, as it navigates this critical juncture and charts a course for its future success.