2024-09-17 21:52:36
Chip manufacturer Intel is in the deepest crisis in its history. Numerous bad decisions have led to this. A chronicle of failure.
Difficult times for what was once the world’s largest chip manufacturer: Intel. The company’s market value has fallen sharply in recent months, and the last quarterly results were disastrous.
To cope with the crisis, Intel has already suspended dividend payments and reduced its workforce by 15 percent. Now the company has even postponed the construction of its 30 billion euro chip factory in Magdeburg.
The crisis at Intel comes as no surprise. The company has made numerous bad decisions in recent years. In addition, the development of important technologies was neglected or left to the competition.
Here are the main factors that led to the crisis at the former largest chip manufacturer Intel:
A key step that led to the current crisis at Intel: the bumpy transition of chip production from 10 nanometer manufacturing size to the much more efficient 7 nanometer processors.
The smaller the structure widths, the more processors fit on a wafer (semiconductor disk) during production. This also makes it more flexible to integrate the chips into small mobile devices.
An important technological advancement that Intel missed by several months. While competitor AMD already had 7nm chips on offer, an error in Intel’s production process led to an excessive number of unusable processors and thus a delay in the market launch.
As a result, hardware boss Murthy Renduchintala had to leave. In 2020, his area of responsibility was divided among several managers who reported directly to then CEO Bob Swan.
Intel was founded in 1968 by Gordon Moore and Robert Noyce in California. The company initially manufactured memory chips. The breakthrough came in 1971 with the introduction of the first microprocessor, the Intel 4004.
In the 1980s, Intel became the leading manufacturer of PC processors thanks to its x86 processors. Together with IBM, Intel set the industry standard for today’s personal computers (PCs).
Another factor that has led to the crisis at Intel is the strong competition from chip manufacturer AMD. Intel is still number one in processors for finished desktop PCs and notebooks.
However, in the market for end customers who assemble their own computers or have them built, AMD has overtaken its rival in recent years, reports the IT magazine “Computerbase”. Statistics and surveys by mail order companies such as Amazon indicate that AMD is clearly the leader here, it says.
Intel has also missed the market for so-called discrete graphics cards, which are developed for the PC market. The Arc-A series was originally scheduled to hit the market in March 2022.
The company was unable to meet the deadline. It was only months later, in August, that it was ready. Once again, delays in production led to a postponement of the market launch of a product, which gave competitors such as Nvidia and AMD a competitive advantage.
Intel’s biggest mistake: For far too long, the company relied on its traditional CPU architectures and the sale of processors for PCs and servers without focusing early on specialized hardware for machine learning and artificial intelligence.
Here, competitor Nvidia had a big lead. An analyst from Wells Fargo Equity Research estimates that Nvidia will be able to record around 98 percent of all sales from data center accelerators in 2023, reports the IT magazine “Heise online”. AMD comes in at 1.2 percent, Intel at just 0.8 percent.
Intel has also missed out on the development of AI development platforms – while companies like Google with TensorFlow and Nvidia with Cuda and AI frameworks invested early in such software ecosystems. This means that developers are more likely to run their AI models on Nvidia hardware rather than on Intel products.
Apple’s decision to opt for its own ARM-based chips in its Macs rather than processors was also a blow for Intel. After 15 years, the first Apple computers with their own M1 chip appeared in 2020.