Intel Corp. said today that its venture capital arm Intel Capital is being spun off into an independent entity, the latest move in a series of structural changes it’s making as it struggles to regain its mojo.

By becoming a separate and standalone fund, Intel Capital will be able to raise money from outside investors, transitioning from its existing model, where it receives all of its funding from Intel only.

The announcement comes on the back of Intel’s worst-ever performance on the stock market last year, which followed a series of mishaps, market share losses and steadily declining revenue. The chipmaker has already taken a number of steps to cut its costs and streamline its business at a time when it’s struggling to find the capital it needs to invest in cutting-edge chip factories and reinvigorate its flagship PC and server chip business.

Last month, Intel’s board of directors ousted Chief Executive Pat Gelsinger, who had overseen a troubled, four-year term at the helm of the company. He has been replaced by two interim co-CEOs, David Zinsner and Michelle Holthaus, while it conducts a search for a permanent successor.

During Gelsinger’s tenure, Intel’s fortunes had steadily declined while he tried to implement an ambitious turnaround plan that envisions it rivaling Taiwan Semiconductor Manufacturing Co. as a contract chip manufacturer, making computer chips for rival semiconductor firms.

As part of those efforts, Intel has shed or sold a number of smaller businesses while laying off thousands of employees in order to cut costs.

The company is currently in the process of spinning off its Altera unit which makes programmable chips called field-programmable gate arrays as a publicly traded company. Intel also owns a majority stake in Mobileye, an Israeli firm that specializes in automotive chips and other components and software used in self-driving cars.

In the last year, Intel took a number of steps toward spinning off its foundry business into an independent entity, naming a separate CEO and board of directors.

But all this isn’t enough, says theCUBE Research Chief Analyst Dave Vellante.

“This is another example of Intel painfully and slowly removing the bandage from its wound,” he said. “The time has long passed for Intel to shed its foundry and focus on being a great designer of chips. The problem it faces is the foundry has no cash producing value and will take the better part of a decade to be profitable.”

As a result, he added, “in my view this move will require creative thinking and collaboration from key stakeholders, including the U.S. government, chip designers like the hyperscalers, Nvidia and Apple, and some outside funding. Unless and until Intel sheds its foundry these moves are just window dressing.”

Intel Capital, which has $5 billion in assets, will retain its existing workforce when it becomes independent in the second half of the year, Intel said. As part of the split, Intel Capital may be renamed, although no plans have been finalized in that regard.

Holger Mueller of Constellation Research Inc. said Intel is changing far more than anyone expected when it first announced its turnaround plans when Gelsinger first took charge of the company.

“Spinning off its venture capital arm is another move that no one would have dreamed off just a few years ago,” Mueller said. “It’s not clear why the company has made this decision, but it could be about more focus, protection from valuation fluctuations in its investments, or other reasons.”

The chipmaker established Intel Capital in 1991, becoming one of the first large technology corporations to set up a dedicated venture capital arm. Since then, the model has been replicated by many of Silicon Valley’s biggest players, with the likes of Google LLC, Microsoft Corp. and Salesforce Inc. all establishing their own dedicated investment units to try to find and fund the hottest startups that can potentially aid their own businesses.

Although Intel set the trend, it isn’t the first tech firm to decide to spin off its investment arm. In 2011, SAP SE spun out SAP Ventures as an independent entity that later became Sapphire Ventures.

Photo: Thomas Cloer/Flickr