Four former Intel Corp. directors have called on the chipmaker to spin off its fab business into an independent company.

Reed Hundt, Charlene Barshefsky, James Plummer and David Yoffie expressed their position in a Fortune op-ed published on Tuesday. Hundt is a onetime Federal Commission Communications chair and Barshefsky is a former U.S. Trade Representative. Plummer was Stanford University’s dean of engineering for over a decade, while Yoffie is a Harvard Business School professor and longtime Intel director.

The authors begin their argument for why Intel should spin off its fab business by reviewing the alternatives.

One scenario is that Intel will be acquired by a fellow chipmaker or an investment firm. That possibility is being discussed because the company’s stock price has declined significantly in recent months. As a result, its market capitalization is now low enough that some rivals could afford an acquisition or a purchase of key business units.

A prospective buyer would see “little value” in Intel’s fab business, the four former board members wrote in their op-ed. They argue that an acquirer would make cost cuts in order to realize a return on its investment quicker. Because Intel’s fab business is operating at a significant loss, it could emerge as a focus of such a cost-cutting initiative.

Not separating Intel’s fab business from its chip design unit also presents other issues, the authors argue.

The op-ed points out that some potential customers may be hesitant to use the company’s fabs because of competitive concerns. A data center chip supplier, for example, might be worried about the fact that Intel designs its own server processors. Spinning off the fab business into a separate company that doesn’t design its own processors would address such concerns.

The authors go on to note that Intel has offered fab services to customers for more than two decades. So far, however, it has not established itself as a major player in the contract chip manufacturing market.

The op-ed also provides suggestions for how a spinoff should be carried out. The authors argue that the U.S. government, which will provide Intel with up to $19.5 billion worth of grants and loans under the CHIPS Act, should insist that the company go through with a split. After the spinoff, the authors continue, Intel’s chip design business should place orders with the newly formed fab company to underwrite its losses while it works to become profitable.

The publication of the op-ed follows reports that the chipmaker has received takeover offers for some of its business units. In September, reports emerged that Arm Holdings plc and Qualcomm Inc. had approached Intel about buying its chip design business. It’s believed the latter company is particularly interested in buying the part of the design business that develops chips for personal computers.

Photo: Intel