Intel Capital next into the chip giant's trebuchet, to be shot as far over the wall as possible

Stricken silicon giant Intel has decided it doesn’t want to be the sole investor in its venture capital operation, so will spin it out for others to plow money into.

The x86 titan today announced the intention to separate Intel Capital, its global venture capital arm, into a standalone fund. Intel will remain an “anchor investor” in the outfit.

Intel Capital invests in “companies shaping the future of cloud, devices, frontier, and silicon, the four domains that feed into the future of compute.” That string of corp-speak means its current portfolio includes Kubernetes-native storage startup MinIo, autonomous bus outfit Beep, 3D printing aspirant FABRIC8LABS, electric aircraft company Joby, and infosec ratings outfit SecurityScorecard.

The operation apparently has a strong track record, as it claims it has deployed over $20 billion of capital and “created over $170 billion in market value in the past 10 years alone.” Past investee companies include Red Hat, VMware, and MongoDB, all three of which have gone public and presumably delivered a nice payoff for Intel Capital.

Readers may have noticed a theme here, as all investees have the potential to increase demand for Intel’s hardware.

Intel doesn’t want that to stop but wants help to fund Intel Capital’s investments.

The separation of Intel Capital is a win-win scenario ...

“The separation of Intel Capital is a win-win scenario as it provides the fund with access to new sources of capital to expand its franchise while allowing both companies to continue benefiting from a productive long-term strategic partnership,” reads a canned quote from David Zinsner, Intel’s CFO and interim co-CEO. “This step supports our broader strategy to maximize the value of our assets while driving greater focus and efficiency across the business.”

That last bit about realizing value and efficiency is important: Intel has made large losses in recent years as it’s failed to deliver promised products and manufacturing improvements, and therefore struggled to compete with a growing brood of rivals that have targeted its server and client businesses.

Those troubles have seen the Xeon goliath reduce headcount by 15 percent in pursuit of $10 billion in cost savings this year alone. It has also re-organized to make its foundry business an independent entity, sold its stake in rival processor designer Arm, offloaded its Altera FPGA business, and taken many other actions to consolidate its product portfolio and/or save money.

Finding money for the risky-by-nature investments that venture funds pursue must be hard in that climate of cuts and austerity.

• Intel’s datacenter architecture boss and Xeon lead jumps to Qualcomm
• Intel execs discuss the possibility of spinning off foundry
• Who had Pat Gelsinger retires from Intel on their bingo card?
• Intel lets go of 2,000 staff at Oregon R&D site, offices in Texas, Arizona, California

Intel Capital managing partner Anthony Lin posted a letter to portfolio company investees that argues they have nothing to fear and plenty to gain.

Using words that are near-identical to those in Intel’s press release, Lim wrote: “This change brings our corporate structure in line with other leading venture firms and presents exciting opportunities for our future.”

He further argued that a standalone Intel Capital “will have the autonomy and flexibility to raise external capital to grow our franchise and expand our network of investors and partners,” and “will create an even more robust and geographically diverse ecosystem of resources, expertise and market access to accelerate your growth.”

Just how that will happen isn’t explained. To hazard a guess, Intel Capital will pitch its track record of making successful investments and the chance to tap that expertise, and investors will clamber aboard.

Change will come fast to Intel Capital, which will change name and start operating as a standalone entity sometime in the second half of 2025.

If investors had a reaction to the news, it wasn’t fulsome as Intel’s share price started Tuesday trading at $19.36, ended it at $19.20, and is now $19.18 in after-hours. ®