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Four former members of Intel's board of directors believe that the company should spin off its manufacturing operations and assert that this is the only way for Intel to survive. They wrote in a column for Fortune that the U.S. government should use its almost $20 billion in grants and loans pledged federal funding as leverage to force Intel to split into two entities.

With losses over the past 2.5 years amounting to $5.87 billion and tens of billions of lost market capitalization, it is clear that Intel is struggling with its IDM 2.0 strategy to make it a successful chip designer and a thriving chipmaker. Whether the company will make money after cutting costs by laying off some 15,000 employees remains to be seen. Still, David Yoffie, Reed Hundt, Charlene Barshefsky, and Jim Plummer believe that the only way for Intel to survive is to split into two independent entities.

They argue that Intel's fabs, engineers, and intellectual property are vital for U.S. national security and technological advancement. Intel is the only American company that manufactures advanced logic on a large scale. Without it, the U.S. risks becoming overly reliant on Taiwan's TSMC (concentrated mainly in Taiwan), which presents major geopolitical and supply chain risks. The former directors stress that the U.S. needs its advanced semiconductor capabilities to remain competitive in areas like AI and defense technologies.

But Intel has lagged in the race with TSMC, losing its lead in leading-edge process technologies in recent years. Furthermore, while companies like Broadcom, Nvidia, and Qualcomm need an alternative to TSMC for manufacturing, they are reluctant to choose Intel Foundry. At the same time, it remains controlled by Intel, their direct competitor. Samsung Foundry faces the same issue as prominent designers like Apple and Nvidia avoid its foundry due to competition concerns.

While Intel's products division remains competitive, Intel Foundry has been bleeding money. Furthermore, Intel's current management still has to prove that they can run contract chipmaking operations, as the company has consistently fallen short in execution, missing deadlines and targets, the ex-directors say.

The former Intel directors believe that if Intel continues to operate this way, it may go bankrupt, which would be a disaster for the national economy and security.

The former directors urged Intel to separate its foundry business from its design business, similar to what AMD did in 2009 when it created GlobalFoundries. Intel's product design unit must form a long-term supply contract with the new independent foundry. The former BOD members assert that this arrangement would help stabilize the foundry's operations initially before the manufacturing unit lands orders from third parties.