In a move to reduce the higher costs associated with road distribution and ease the burden on Nigeria’s congested road infrastructure, Dangote Refinery has announced its intention to transport 75% of its local petroleum product supply via sea routes.

This decision is part of a broader effort to improve the efficiency of product evacuation from the refinery while lowering transshipment costs for consumers. Key destinations targeted by this shift include Warri, Port Harcourt, and Calabar, among others.

Speaking to Arise News on Sunday as the refinery began distributing Premium Motor Spirit (PMS), Devakumar Edwin, Vice President (Oil & Gas) at Dangote Industries Limited, revealed the new transportation plans, highlighting the benefits of leveraging Nigeria’s sea routes.

“We have both exporting facilities by sea and by road. 75% of the production can be evacuated through sea. In fact, now we are ramping up to make it even 100%,” Edwin stated, noting the company’s commitment to adopting sea transportation to reduce reliance on Nigeria’s overburdened road network.

The refinery, the largest single-train facility globally, boasts an impressive capacity to load 40 tankers of PMS simultaneously within 40 minutes and can manage up to 2,900 trucks daily. However, this immense capacity poses a significant risk of traffic congestion along the Lekki-Epe corridor, where the refinery is located.

By prioritizing sea routes for product evacuation, the refinery aims to circumvent these potential bottlenecks.

“Anything going to Calabar, Port Harcourt, Warri, Apapa, Atlas can all be taken through the sea. So only what is imminently required by road can be taken. But I also have the facility to load 83% of my production also through road,” he said.

This flexibility allows the refinery to meet urgent demands by road while minimizing traffic congestion and the associated logistical bottlenecks.

Sea Transportation as a Solution to Cost and Regional Access

In addition to alleviating road congestion, the switch to sea transport is expected to significantly reduce the costs associated with road haulage, such as wear and tear on vehicles, fuel expenses, and delays due to poor road conditions or traffic. The refinery’s sea transportation plans, according to Edwin, will play a key role in cutting transshipment costs and ultimately lowering product prices for consumers.

The strategic use of sea routes will also enhance access to various parts of Nigeria. For instance, products destined for central Nigeria, including cities like Abuja and Jos, can be shipped from Port Harcourt and Warri, while those heading to the East and Northeast will be dispatched from Calabar.

“We can avoid all traffic congestion on the road by evacuating through sea and it will also bring down the cost of transhipment,” Edwin said.

While sea transportation offers multiple benefits, including cost reductions and reduced traffic, the refinery’s road capacity remains available to address urgent supply needs, particularly in regions that may not be fully serviced by sea routes. This built-in flexibility ensures that there will be no interruptions in supply, even as Dangote Refinery shifts toward maritime solutions.

The Nigerian National Petroleum Company Limited (NNPCL) moved approximately 300 trucks to the 650,000-barrel-per-day Dangote Refinery in Lagos, initiating the first loading on Sunday, September 15, 2024.

As the largest single-train refinery in the world, Dangote Refinery’s operational capacity is immense, with the ability to manage thousands of trucks daily. However, the move to sea transportation reflects the company’s commitment to sustainable and cost-effective distribution.

In a statement on Monday, the refinery assured Nigerians of the availability of quality petroleum products and putting an end to the endemic fuel scarcity in the country.

Nigerians have placed high hopes on Dangote Refinery to address energy insufficiency and insecurity, which has bedeviled the economy in the past 50 years. The refinery’s vast capacity to produce and distribute petroleum products locally holds the potential to significantly reduce the country’s reliance on imported fuel. Thus, the plan to transit to sea transportation for effective distribution of petroleum products across the country, which paves the way for a more efficient and cost-effective supply chain, has been widely lauded.

However, some energy analysts caution that while the refinery’s use of sea transportation is a welcome development, it may take some time before these cost savings translate to noticeable reductions at the pump.

Intel will possibly spin off the foundry business into an independent company: “In a move to reinvigorate its competitive edge in the chip market, Intel on Monday announced a significant restructuring plan, which saw its shares surge by 8% in extended trading. The tech giant is set to transform its foundry business into an independent unit with its own board, with the potential to raise outside capital.”

Yet, that new company will still have to deal with two things: (1) it has to provide something new TSMC, an industry-leading contracting fab company, does not have, and (2) it needs to win Nvidia, Qualcomm, AMD and other fabless chip makers as customers.

But if you look at the big picture, this particular Intel’s decision is the right call. Why? TSMC is the premier semiconductor foundry which has most of the top fabless chip companies as customers, and Intel in its current format may not be seen as a great destination for these companies, since Intel is also a design company. Indeed, you should not expect AMD and Nvidia to ship designs to Intel to fab for them, making the core essence of the current form of Intel questionable.

But with the foundry business separated, that company can fight on its own, unconstrained by being associated with a potential competitor with its potential customers. CEO Pat Gelsinger made the right call. I expect Intel to evolve, as it focuses on designs, and with that, it will return to greatness. May the best WIN.

Intel Announces Plan to Turn Foundry Business Into A Subsidiary, Allowing for Fund Raising From Outside

In a move to reinvigorate its competitive edge in the chip market, Intel on Monday announced a significant restructuring plan, which saw its shares surge by 8% in extended trading. The tech giant is set to transform its foundry business into an independent unit with its own board, with the potential to raise outside capital.

This shift is part of CEO Pat Gelsinger’s broader strategy to turn around Intel’s performance, which has faltered amid increased competition and market share losses.

Intel’s foundry division, a critical part of its operations responsible for manufacturing chips for other customers, has been a financial burden. The company has poured around $25 billion into the business over the last two years, and despite the investment, it has dragged down Intel’s profitability.

In a memo to employees, Gelsinger explained that this restructuring would allow the foundry business to explore “independent sources of funding.” Additionally, Intel plans to sell off part of its stake in Altera, a company it acquired in 2015 to boost its position in the programmable chip market.

This move comes after Intel’s board met recently to evaluate the company’s future direction, with discussions reportedly including a potential spin-off of the foundry unit. If spun off into a separate publicly traded company, the foundry business would likely have more operational freedom and financial flexibility.

According to an unnamed source who spoke to CNBC, Intel has been actively considering this path, which would allow it to streamline its corporate structure and simplify the process of separating the unit from the rest of the company.

A Company in Crisis

Intel’s struggles have been significant, with its stock plummeting nearly 60% over the past year. The company has been steadily losing market share in its core businesses, including personal computers (PCs) and data centers, while Nvidia has dominated the growing market for AI-focused chips.

In August, Intel reported a particularly disappointing quarter, triggering its sharpest stock sell-off in five decades. In response to this, Intel initiated a $10 billion cost-reduction plan that includes laying off more than 15% of its workforce. Gelsinger noted that the layoffs are already halfway completed.

Beyond the layoffs, Intel is also hitting pause on several international projects. The company announced it would delay its fabrication plans in Poland and Germany by roughly two years, citing expected market demand. Plans for its Malaysian factory are also being scaled back. However, Intel’s U.S.-based manufacturing projects will proceed without interruption.

Boost from the CHIPS Act

In a timely boost to its domestic operations, Intel secured up to $3 billion in funding from the Biden administration’s CHIPS and Science Act. This initiative is part of the U.S. government’s push to reduce reliance on foreign semiconductor production, especially given the increasing geopolitical risks surrounding Taiwan, home to Taiwan Semiconductor Manufacturing (TSMC), the world’s largest contract chipmaker.

The funds are earmarked for Intel’s “Secure Enclave” program, a project tied to the Department of Defense. U.S. Commerce Secretary Gina Raimondo has been actively engaging with Intel’s leadership, and Gelsinger has reportedly expressed concerns about the U.S. semiconductor industry’s dependence on TSMC. The U.S. government’s support reflects a growing focus on bolstering domestic chip production as a matter of national security.

Expanding AI Ambitions with Amazon

Further cementing its plans for the future, Intel revealed a new deal with Amazon Web Services (AWS), one of its key customers. The agreement will see Intel produce custom chips for AWS, specifically targeting the rapidly expanding market for artificial intelligence (AI) workloads. This collaboration will also extend their long-standing partnership, as Amazon has used Intel chips for its AWS servers for years.

Under the deal, AWS will purchase custom Xeon processors from Intel, and the two companies will work on AI chips, potentially giving Intel a much-needed foothold in the increasingly competitive AI server chip market. While Intel has several products designed for AI, including the Gaudi 3, Nvidia has taken a commanding lead in this space, and Intel is under pressure to catch up.

Interestingly, Amazon has been developing its own AI chips for over five years, including one called Trainium, underscoring the competition Intel faces even within its own partnerships. Microsoft and Google are also heavily invested in custom chips to run AI, attempting to offer cheaper alternatives to Nvidia’s general-purpose GPUs.

Intel plans to carry out its most advanced manufacturing, including the AWS AI chips, at its plant in Ohio, which is still under construction. This facility, part of Intel’s massive investment in U.S. semiconductor manufacturing, is expected to play a pivotal role in the company’s future.

Gelsinger’s Bold Vision

Gelsinger is determined to change Intel’s trajectory and silence the growing chorus of critics. In his memo, he acknowledged the challenges ahead: “All eyes will remain on us,” Gelsinger said. “We need to fight for every inch and execute better than ever before. Because that’s the only way to quiet our critics and deliver the results we know we’re capable of achieving.”

Intel’s restructuring and the potential spin-off of its foundry business represent a strategic pivot at a critical time. By shedding its reliance on integrated operations and seeking outside investment, Intel could unlock new financial opportunities and refocus on its core strengths.

However, the road to recovery is a steep one. Its once-unshakeable grip on the global semiconductor industry has been loosened, leaving a void that Nvidia has eagerly filled. Now, the company aims to prove to investors and the industry that it can once again be a big player, by attempting to carve out a fresh path—through spinning off its foundry business.

The restructuring, layoffs, and cost cuts are just the beginning. Analysts believe that for Intel to truly rebound, it must execute flawlessly on its ambitious goals, from manufacturing advanced AI chips to scaling up U.S. production facilities.