Intel’s latest plans send its stock soaring — What you need to know

Key recommendations

• Intel shares rose in extended trading Monday after CEO Pat Gelsinger provided an update on the company’s turnaround plans.

• Gelsinger said Intel has made progress in cutting costs through layoffs, reducing its real estate footprint and selling part of its stake in Altera, among other moves.

• The company also plans to spin off its chip-making arm into a separate subsidiary and has said it will make chips for Amazon as well as the US military.

Intel (INTC) shares rose in extended trading Monday after CEO Pat Gelsinger provided an update on the chipmaker’s plans to cut costs and strengthen its business, as investors awaited signs of a recovery for its stock.

Shares rose more than 8 percent shortly after the closing bell, after gaining 6 percent during the regular trading session. Even with those gains, Intel shares have lost more than half their value since the start of the year.

Intel plans to spin off Intel Foundry into a separate subsidiary

Gelsinger said Intel has made progress in cutting expenses through layoffs, reducing its real estate footprint and selling part of its stake in its Altera programmable chip unit, among other cost-cutting steps.

The company also said it plans to spin Intel Foundry, which makes chips for other companies, into a separate subsidiary, a move Intel said would give it greater independence, allow it to seek financing independently and will help Intel “optimize the capital structure of each business.” Recent reports suggested that Intel might sell the operation.

Intel will make chips for Amazon, the US military

Intel also announced multibillion-dollar deals to make custom chips for Amazon (AMZN), as well as the US military. The Pentagon news was first reported by Bloomberg.

“This news, combined with our (Amazon Web Services) announcement, demonstrates the continued progress we are making to build a world-class foundry business,” Gelsinger said in a statement.

Gelsinger added that the chipmaker will still continue with projects in Arizona, Oregon, New Mexico and Ohio, adding that Intel remains “well-positioned to increase production around the world based on market demand.”

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