Intel’s Turnaround, and Pat Gelsinger’s Legacy, Is In Jeopardy

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Intel’s Turnaround, and Pat Gelsinger’s Legacy, Is In Jeopardy

Intel’s turnaround is not exactly going as planned, jeopardizing its future and CEO Pat Gelsinger’s legacy as the architect of the company’s plan.

Once the world’s top chipmaking company, Intel has been eclipsed in recent years by its rivals, both old and new. TSMC has gained the technological upper hand, AMD is taking business from Intel’s strongholds, and Nvidia’s value is skyrocketing, surpassing Intel.

As The Wall Street Journal’s Asa Fitch reports, as bad as those issues appear, Intel’s problems run deeper and are putting its turnaround in jeopardy.

Intel is in a unique position in the semiconductor industry, one of the only companies that both design and manufactures chips. When he returned to the company and took over the role of CEO, Gelsinger minced no words about why Intel’s fortunes had turned, saying previous leaders lost the company’s “maniacal” focus on manufacturing.

Intel’s Foundry Efforts

Since his return, Gelsinger has doubled down on manufacturing, spending billions to revitalize Intel’s own manufacturing and carve out a foundry business manufacturing chips for other companies, including Intel’s competitors.

Unfortunately, as Fitch points out, those efforts have yet to pay off. In fact, Intel’s efforts to get into the foundry business have been plagued by one setback after another. Intel was working to acquire both Qualcomm and Tesla as customers but failed to secure either. Qualcomm decided against the deal as a result of Intel’s technical missteps, and Tesla went with other options because Intel couldn’t provide the same level of chip design services that other foundries offer.

Ultimately, many of Intel’s problems breaking into the foundry business may stem from a fundamental cultural issue.

“Foundry is a service business,” Gelsinger reportedly said in an interview. “That isn’t the culture that Intel’s had.”

Long on Promise, Short on Delivery

That hasn’t stopped Gelsinger from making ambitious claims about the company’s future. In fact, just over a year ago, Gelsinger took aim at AMD, proclaiming that its days of challenging Intel were over.

“Alder Lake, all of sudden, boom! We are back in the game! AMD in the rearview mirror in clients, and never again will they be in the windshield,” Gelsinger said.

Similarly, Gelsinger has alternated between mocking Apple’s chip design efforts and saying he would like to gain them as a foundry customer.

“We have to deliver better products to the PC ecosystem than any possible thing that a lifestyle company in Cupertino,” he said shortly before taking over as CEO. “We have to be that good, in the future.”

“Apple is a customer, and I hope to make them a big foundry customer because today they’re wholly dependent on Taiwan Semiconductor,” he said just a couple of months later. “We want to present great options for them to leverage our foundry services, as well, just like we’re working with Qualcomm and Microsoft to leverage our foundry. We’re going to be delivering great technology, some things that can’t be done anywhere else in the world.”

Despite the bold talk, Intel’s fortunes have continued to sink under Gelsinger’s leadership. In fact, the company recently reported its worst quarterly loss in company history and has undergone multiple rounds of layoffs.

Moving Forward

While some believe Intel’s position as a chip designer and manufacturer gives the company a competitive advantage, it can also be argued that it leads to a company with a divided focus, where its investments and even its culture are at odds with itself.

There’s a reason many of the industry’s most successful companies focus on either fabrication or design. To the degree that Intel succeeds or fails in its efforts will reestablish it as the leading semiconductor company in the world or a dinosaur from a bygone era.

Either way, at some point, Gelsinger will have to deliver the goods or risk Intel fading into obscurity and taking his legacy with it.

Intel’s Turnaround, and Pat Gelsinger’s Legacy, Is In Jeopardy
Matt Milano

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