It is interesting that the strategy in the end is to fight everyone on all fronts, starting from behind in both technology and scale, and this is a winning strategy ?
More layoffs are all but certain!
https://aakashgupta.substack.com/p/how-did-intel-do-so-badly
How did Intel do so badly?
How did Intel manage to do so badly in an industry with so many tailwinds?
There was a time Intel was worth more than Nvidia, AMD and TSMC combined. Now each of those upstarts is worth multiples of Intel. It’s a great lesson in strategy gone wrong.
- Losing the technical lead
For years, Intel had a lead in lithography and made the technically leading chips. But since 2018 when Intel was beat to market in 7nm chips, it has stayed behind. It went from two years ahead to two years behind.
In the latest earnings call, Intel CEO Pat Gelsinger had an, “embarrassing thing to say.” Intel’s data center technology hadn’t improved in five years. In market-leading semiconductor companies, innovation is critical.
Moore’s law states that the number of transistors in a microchip doubles every two years. It was on that belief he founded Intel. But Intel has fallen far behind that pace in recent years. Moore’s law is dead. At least at Intel.
- Ceding the mobile & AI markets
Early smartphone chips were low margin and not leading edge. Intel ceded this market to Qualcomm, who worked with TSMC & Samsung to dominate the space. This made Intel miss an entire wave of industry growth & have to focus on high-end PC CPUs.
And Intel has also fallen behind in the next wave as well: AI, which is led by Nvidia. For years, Intel stuck to integrated graphics - long after it was clear most AI jobs were going to GPUs. Wave after wave of additional demand for chips has come, but Intel has missed them.
- Getting hamstrung by doing it all
Unlike AMD, Nvidia, and Qualcomm - who focus on chip design - Intel did design and manufacturing. This caused the product strategy to be conservative. Intel fell behind AMD in chip design and TSMC in manufacturing.
News has only gotten worse with Apple announcing its own silicon. It’s moved off of Intel. Whereas TSMC can just shift to the next best design, Intel’s manufacturing is reliant on its own designs. Apple’s entry demonstrates how TSMC enables other players to eat Intel’s lunch.
Things aren’t looking up for Intel. It is predicting a net loss next quarter. The once highly profitable company has had a tremendous fall. While its competition continues to see revenue grow, it does not.
Intel is a cautionary tale for product & business leaders:
- Never stop innovating
- Don’t discount new waves of demand
- Pick your battles