It was fairly per week for Intel.

The chipmaker, which has misplaced over half its worth this 12 months and final month had its worst day available on the market in 50 years after a disappointing earnings report, began the week on Monday by announcing that it is separating its manufacturing division from the core enterprise of designing and promoting pc processors.

And late Friday, CNBC confirmed that Qualcomm has recently approached Intel a couple of takeover in what could be one of many greatest tech offers ever. It isn’t clear if Intel has engaged in conversations with Qualcomm, and representatives from each corporations declined to remark. The Wall Road Journal was first to report on the matter.

The inventory rose 11% for the week, its greatest efficiency since November.

The rally gives little reduction to CEO Pat Gelsinger, who has had a tricky run since taking the helm in 2021. The 56-year-old firm misplaced its long-held title of world’s greatest chipmaker and has gotten trounced in synthetic intelligence chips by Nvidia, which is now valued at nearly $3 trillion, or greater than 30 occasions Intel’s market cap of simply over $90 billion. Intel mentioned in August that it is slicing 15,000 jobs, or greater than 15% of its workforce.

However Gelsinger continues to be calling the pictures and, for now, he says Intel is pushing ahead as an impartial firm with no plans to spin off the foundry. In a memo to staff on Monday, he mentioned the 2 halves are “higher collectively,” although the corporate is establishing a separate inner unit for the foundry, with its personal board of administrators and governance construction and the potential to lift exterior capital.

For the corporate that put the silicon in Silicon Valley, the street to revival is not getting any smoother. By forging forward as one firm, Intel has to 2 clear two gigantic hurdles without delay: Spend more than $100 billion by means of 2029 to construct chip factories in 4 totally different states, whereas concurrently gaining a foothold within the AI increase that is defining the way forward for know-how.

Intel expects to spend roughly $25 billion this 12 months and $21.5 billion subsequent 12 months on its foundries in hopes that changing into a home producer will persuade U.S. chipmakers to onshore their manufacturing reasonably than counting on Taiwan Semiconductor Manufacturing Firm (TSMC) and Samsung.

That prospect could be extra palatable to Wall Road if Intel’s core enterprise was on the prime of its recreation. However whereas Intel nonetheless makes the vast majority of processors on the coronary heart of PCs, laptops, and servers, it is dropping market share to Advanced Micro Devices and reporting income declines that threaten its money circulate.

Monday’s announcement on the brand new governance construction for the foundry enterprise served as a gap salvo meant to persuade investor that severe adjustments are underway as the corporate prepares to launch its manufacturing course of, known as 18A, subsequent 12 months. Intel mentioned it has seven merchandise in improvement and that it landed a large buyer, asserting that Amazon would use its foundry to provide a networking chip.

“It was crucial to say we’re shifting to the subsequent part of this foundry journey,” Gelsinger informed CNBC’s Jon Fortt in an interview. “As we transfer to this subsequent part, it is way more about constructing effectivity into that and ensuring that now we have good shareholder return for these important investments.”

Nonetheless, Gelsinger’s foundry wager will take years to repay. Intel mentioned within the memo that it did not count on significant gross sales from exterior prospects till 2027. And the corporate can even pause its fabrication efforts in Poland and Germany “by roughly two years primarily based on anticipated market demand,” whereas pulling again on its plans for its Malaysian manufacturing facility. 

TSMC is the enormous within the chip fab world, manufacturing for corporations together with Nvidia, Apple and Qualcomm. Its know-how permits fabless corporations — those who outsource manufacturing — to make extra highly effective and environment friendly chips than what’s at the moment attainable at quantity inside Intel’s factories. Even Intel makes use of TSMC for a few of its high-end PC processors.

Intel hasn’t introduced a big conventional American semiconductor buyer for its foundry, however Gelsinger mentioned to remain tuned.

“Some prospects are reluctant to provide their names due to the aggressive dynamics,” Gelsinger informed Fortt. “However we have seen a big uptick within the quantity of buyer pipeline exercise now we have underway.”

Previous to the Amazon announcement, Microsoft said earlier this 12 months it might use Intel Foundry to provide customized chips for its cloud providers, an settlement that might be value $15 billion to Intel. Microsoft CEO Satya Nadella mentioned in February that it might use Intel to provide a chip, however did not present particulars. Intel has additionally signed up MediaTek, which primarily makes lower-end chips for cellphones.

Intel mentioned this week that it obtained $3 billion to construct chips for the navy and intelligence companies in a specialised facility known as a “safe enclave.” This system is assessed, so Intel did not share specifics. Gelsinger additionally lately met with Commerce Secretary Gina Raimondo, who’s loudly selling Intel’s future function in chip manufacturing.

Earlier this 12 months, Intel was awarded as much as $8.5 billion in CHIPS Act funding from the Biden administration and will obtain a further $11 billion in loans from the laws, which was handed in 2022. Not one of the funds have been distributed but. 

“On the finish of the day, I feel what policymakers need is for there to be a thriving American semiconductor trade in America,” mentioned Anthony Rapa, a companion at legislation agency Clean Rome who focuses on worldwide commerce.

For now, Intel’s greatest foundry buyer is itself. The corporate began reporting the division’s funds this 12 months. For the most recent quarter, which led to June, it had an working lack of $2.8 billion on income of $4.3 billion. Solely $77 million in income got here from exterior prospects.

Intel has a purpose of $15 billion in exterior foundry income by 2030.

Whereas this week’s announcement was seen by some analysts as step one to a sale or spinoff, Gelsinger mentioned that it was partially supposed to assist win new prospects that could be involved about their mental property leaking out of the foundry and into Intel’s different enterprise.

“Intel believes that this can present exterior foundry prospects/suppliers with clearer separation,” JPMorgan Chase analysts, who’ve the equal of a promote ranking on the inventory, wrote in a report. “We consider this might finally result in a spin out of the enterprise over the subsequent few years.”

It doesn’t matter what occurs on that aspect of the home, Intel has to discover a repair for its primary enterprise of Core PC chips and Xeon server chips.

Intel’s shopper computing group — the PC chip division — reported a couple of 25% drop in income from its peak in 2020 to final 12 months. The information heart division is down 40% over that stretch. Server chip quantity decreased 37% in 2023, whereas the price to provide a server product rose.

Intel has added AI bits to its processors as a part of a push for brand spanking new PC gross sales. Nevertheless it nonetheless lacks a powerful AI chip competitor to Nvidia’s GPUs, that are dominating the info heart market. The Futurum Group’s Daniel Newman estimates that Intel’s Gaudi 3 AI accelerator solely contributed about $500 million to the corporate’s gross sales over the past 12 months, in contrast with Nvidia’s $47.5 billion in information heart gross sales in its newest fiscal 12 months.

Newman is asking the identical query as many Intel buyers about the place the corporate goes from right here.

“For those who pull these two issues aside, you go, ‘Effectively, what are they greatest at anymore? Have they got the perfect course of? Have they got the perfect design?'” he mentioned. “I feel a part of what made them sturdy was that they did all of it.”

— CNBC’s Rohan Goswami contributed to this report

WATCH: CNBC’s full interview with Intel CEO Pat Gelsinger