## Intel Pumps the Brakes on Intel Capital Spin-Off
In a surprising about-face, semiconductor giant Intel has announced that its venture capital arm, Intel Capital, will not be spun out as previously planned. The decision, revealed during Intel’s Q1 earnings call on Thursday, marks a significant shift from the company’s strategy announced earlier this year.
Intel CEO Lip-Bu Tan stated that Intel Capital will remain an internal entity, continuing its investment activities with a focus on supporting Intel’s core objectives. “We have made the decision not to spin off Intel Capital, but to work with the team to monetize our existing portfolio, while being more selective on new investments that support the strategy we need to get our balance sheet healthy and start the process of deleveraging this year,” Tan explained.
This announcement contrasts sharply with Intel’s January declaration, which outlined a plan for Intel Capital to become an independent fund. At the time, Intel Capital’s VP and senior managing director, Mark Rostick, had highlighted the firm’s strong track record and its potential to attract outside investors, even amidst a challenging venture landscape. Rostick noted that the spin-off had been considered multiple times over the years and that the firm felt it had earned the right to stand alone.
Reports also indicated that former Intel CEO Pat Gelsinger supported the initial spin-off plan, which aimed for Intel Capital to achieve independence by the third quarter of 2025, with Intel remaining as an investment partner.
The reasons behind this sudden change in direction remain somewhat unclear. Tan’s statement points towards a need to prioritize balance sheet health and deleveraging, suggesting that keeping Intel Capital within the corporate structure is deemed more beneficial for achieving these financial goals. The reversal leaves Intel Capital’s future strategy uncertain, as it pivots from preparing for independence to aligning its investments more closely with Intel’s internal needs.
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