Intel Ruled Tech. Now It’s in Deep Trouble

Intel, once the undisputed leader in the global tech industry, is facing a period of profound uncertainty, reflecting a dramatic shift from its dominant position. Nearly 30 years after former CEO Andy Grove’s influential book “Only the Paranoid Survive” outlined how to navigate disruptive tech trends, Intel’s failure to keep pace with the mobile revolution and the rise of artificial intelligence (AI) has left the company struggling to regain its former prominence.

In the late 1990s, Intel was at the pinnacle of tech, producing the chips that powered virtually every personal computer. Grove envisioned Intel as not just a chip supplier but a driving force in the future of computing, from entertainment to communication. However, the company faltered in key areas in the following decades.

Intel’s downfall began around 2010 when mobile computing took off. Apple’s iPhone, launched in 2007, adopted ARM architecture for its chips, propelling ARM ahead of Intel in the burgeoning mobile market. Intel’s failure to anticipate this shift meant it missed out on the mobile boom and lost dominance in a fast-growing sector. This trend continued as ARM-based chips replaced Intel’s in some PCs, further eroding its market share. Meanwhile, rivals like AMD capitalised on Intel’s struggles by aligning themselves with cloud computing, an area Intel was slow to adopt.

Intel’s stock, which peaked in 2000, has plummeted by 68% since then. The company has taken steps to address its woes, including announcing plans to lay off 15% of its workforce and cutting $10 billion in costs. In August, it lost its spot in the prestigious Dow Jones Industrial Average to Nvidia, another tech giant that has thrived by capitalising on AI.

Despite efforts by CEO Pat Gelsinger, who took over in 2021 with hopes of revitalising the company, Intel has struggled to meet the challenges posed by AI. Nvidia, once a small competitor in the GPU market, now leads the charge in AI, its chips becoming essential for machine learning and deep learning applications. Intel’s recent attempts to introduce AI chips, such as the Gaudi accelerator, have failed to gain significant traction.

While Gelsinger’s leadership saw improvements in Intel’s manufacturing capabilities, it was too focused on its traditional products to predict the rise of AI-driven tech. Nvidia, with a market value of $3.4 trillion, now outpaces Intel, valued at just $104 billion.

Intel’s prospects are further clouded by its push to expand its foundry business, which manufactures chips for other companies. This strategy, aimed at competing with Taiwan’s TSMC, has been plagued by delays and growing uncertainties about Intel’s product roadmap and the long-term viability of its investments.

With Gelsinger stepping down as CEO, interim co-CEOs David Zinsner and Michelle Johnston Holthaus face the task of navigating Intel through these turbulent times. Their strategy may include creating more affordable, energy-efficient AI products for smaller businesses, but Intel’s path forward remains unclear. Analysts have even speculated about a potential sale or spin-off of its foundry business, though such moves are complicated by US government investments under the CHIPS Act.

Intel’s future depends on its ability to identify and capitalise on the next major tech trend. As the company faces these challenges, investors and industry watchers are left wondering if Intel can ever return to its former glory. “You have to be able to call the inflections,” said Angelo Zino, an analyst at CFRA Research, and for now, Intel’s ability to do so is uncertain.