Key Takeaways

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

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

• The company also plans to turn its chipmaking arm into a separate subsidiary and said it would produce chips for Amazon, as well as the U.S. military.

Intel (INTC) shares surged in extended trading Monday after CEO Pat Gelsinger offered an update on the chipmaker’s plans to cut costs and bolster its business, with investors awaiting signs of a turnaround for its stock.

Shares were up over 8% shortly after the closing bell, after gaining 6% during the regular trading session. Even with those gains, though, Intel’s shares have lost more than half their value since the start of the year.

Intel Plans To Turn Intel Foundry Into Separate Subsidiary

Gelsinger said Intel has made progress in lowering expenses through layoffs, trimming its real estate footprint, and selling part of its stake in its Altera programmable chip unit, among other steps to cut costs.

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

Intel To Make Chips for Amazon, US Military

Intel also announced multibillion-dollar agreements to produce custom chips for Amazon (AMZN), as well as the U.S. 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 release.

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

Read the original article on Investopedia.