The Rise, Fall, and Future of Intel: What Went Wrong?

The Impact of Instability Issues: Overstated?

Intel’s recent struggles are often attributed to the instability of its 13th and 14th-gen chips within the gaming PC community. While these issues were well-publicized, their financial impact on Intel was minimal. The problematic chips represented a small subset of high-end models, while Intel’s bread-and-butter business lies in selling mid-range chips to major computer manufacturers like Dell and Lenovo. So, the roots of Intel’s decline lie elsewhere.

The Turning Point: Intel’s 10nm Struggles

To truly understand Intel’s predicament, we need to go back to 2015, when the company’s attempts to produce chips on the 10-nanometer process hit a roadblock. Achieving 10nm would have enabled more powerful and energy-efficient chips—critical for staying competitive. However, Intel chose not to invest in extreme ultraviolet (EUV) lithography, a manufacturing technology that simplifies creating chips with smaller transistors.

This decision wasn’t just about technical conservatism. At the time, Intel faced little pressure from competitors. AMD was still struggling with its underwhelming Bulldozer CPUs, and Apple was a loyal customer for Intel processors in its Macs. Yet, the landscape began shifting rapidly after 2015.

Competition Heats Up

• AMD’s Renaissance: AMD’s Zen architecture, launched in 2017, was an immediate hit. AMD began clawing back market share with competitive performance and pricing.
• TSMC’s Breakthrough: In the same year, TSMC adopted EUV technology, giving it a significant edge in producing chips with smaller transistors.
• Apple’s Breakup: In 2020, Apple ditched Intel processors for its own ARM-based Apple Silicon, further eroding Intel’s dominance.

Suddenly, Intel was playing catch-up in a game it once led.

A New Direction Under Pat Gelsinger

Intel began addressing its issues in 2021 with the return of former executive Pat Gelsinger as CEO. Under his leadership:

• Intel embraced EUV technology after internal debates on modernizing its chip strategy.
• The company introduced chips based on the “Intel 7” process—a refined version of its troubled 10nm process.
• Mass production using EUV technology began in 2023.

While these efforts marked progress, Intel’s challenges extended beyond manufacturing.

The Burden of Owning Fabs

Unlike competitors like AMD and Apple, Intel owns its own fabrication facilities (Fabs). While this offers control over production, it also comes with high costs. These Fabs must run near full capacity to be profitable. During Intel’s struggles, some Fabs were operating at just 70%, meaning fewer chips were being produced and sold, despite high operational expenses.

To address this, Intel plans to:

• Perform contract manufacturing for other chip designers using its Fabs.
• Transition to industry-standard design tools, making its Fabs more accessible to external clients.
• Open new Fabs, slated for production in 2027, while seeking outside investors to co-own the Fab business.

Selling Off Assets: A Partial Solution?

Rather than selling the entire company, Intel has already begun offloading parts of its business:

• NUC Business: Now owned by Asus.
• Smartphone Modem Technology: Sold to Apple.
• Altera: Intel is seeking a minority stake sale for this FPGA division.
• Data Center AI Business: Lagging behind NVIDIA and AMD, this division may also be a candidate for sale.

These moves aim to streamline operations and generate revenue, though they fall short of solving Intel’s broader challenges.

Could Intel Be Bought Out?

Rumors of an Intel acquisition have swirled, but the reality is more complex:

• Apple: Already committed to ARM and partnered with TSMC for manufacturing.
• Samsung: Faces its own manufacturing struggles and would likely encounter regulatory hurdles in acquiring a U.S.-based business.
• Other Buyers: Few companies have both the desire and financial capability to acquire Intel outright.

Intel’s significance to the U.S. economy, reinforced by federal support via the CHIPS Act, further complicates any potential sale.

The Road Ahead

Intel’s struggles stem from years of delayed innovation, strategic missteps, and intensifying competition. While the company faces an uphill battle, it isn’t on the brink of collapse. By modernizing its Fabs, exploring contract manufacturing, and focusing on core competencies, Intel has a chance to regain its footing. Whether it can recapture its former glory remains to be seen.