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Once synonymous with semiconductor chips as “Intel Inside”, the firm is struggling to regain its mojo after CEO Pat Gelsinger’s unexpected exit. Rivals Nvidia and AMD have surged ahead in a rapidly evolving artificial intelligence (AI)-driven chip market. Will its fortunes turn?
What could have led Gelsinger to quit?
Initially celebrated as the “saviour” of ailing Intel, Gelsinger’s abrupt retirement as CEO on 1 December saw the company’s stock rise 5.7% in intraday trading on Monday but close 0.5% lower.
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Gelsinger began his Intel journey in 1979, served as its first CTO, and returned in 2021 after leading VMware—now part of Broadcom. He had ambitious turnaround plans for the chipmaker, but his tenure saw Intel posting its largest quarterly loss at $16.6 billion, leading the board to lose confidence in his leadership. Intel has since appointed two interim co-CEOs even as the board searches for a new leader to steer the troubled ship.
What went wrong with Gelsinger’s strategy?
Intel once secured discounted chips from Taiwan Semiconductor Manufacturing Company (TSMC) for designs it couldn’t produce in-house. The deal soured after Gelsinger questioned TSMC’s stability due to its proximity to China. Meanwhile, TSMC supported Nvidia and AMD in developing advanced AI chips. Gelsinger tried to revitalize Intel with an AI-first push backed by the US government. But Intel’s revenue fell from $79 billion in 2021 to $54.25 billion in 2024. Last month, Intel announced plans to cut about 15% of its workforce, sparking speculation about a potential acquisition.
What could be the impact on Intel India?
Gelsinger’s exit may slightly affect senior executives close to him, but it’s unlikely to impact Intel India significantly. With over 13,000 employees, it remains Intel’s largest design and engineering hub outside the US.
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As part of its $10-billion cost-cutting plan, Intel might shift more operations to cost-efficient India, a key market for chip design, AI PCs, and data centres.
How have Intel’s fortunes changed?
In 1988, Intel dominated the chip market led by its founder and CEO Andy Grove. Nvidia and AMD were minor players. The tables have turned. Today, Nvidia’s revenue exceeds that of Intel and its $3.3-trillion market cap, fuelled by its AI and data centre technologies, dwarfs the latter’s $103-billion market value. AMD’s revenue is half of Intel’s, but its market value is more than double Intel’s. Having missed opportunities such as investing in OpenAI seven years ago, Intel needs strong leadership to compete in the AI era.
What’s the road ahead like for Intel?
AI is transforming the chip market, intensifying competition. Intel recently introduced its Xeon 6 processors and Gaudi 3 AI accelerators to bolster its AI and data centre offerings, though adoption has been slow. Its collaboration with Amazon Web Services on custom AI chips may strengthen its position in AI servers. Spinning off its troubled foundry business (to manufacture chips for external customers) could help raise funds to modernise its fabs. Catching up with Nvidia needs a better strategy.
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