Intel is at the crossroads, again, and so is its charismatic chief, Pat Gelsinger, who was brought for a turnaround of this American semiconductor giant more than three years ago. Is trouble brewing at the Santa Clara, California-based chip industry icon? According to a recent Reuters story that chronicles Gelsinger’s three years at the helm, it looks more so.
The Reuters story titled “Inside Intel, CEO Pat Gelsinger fumbled the revival of an American icon” comes soon after the news about a possible patch-up between the foundry operations of Intel and Samsung, two outfits competing with fab market leader TSMC at cutting-edge semiconductor manufacturing processes.
While the hookup between these two TSMC rivals isn’t without merits, industry watchers mostly see it as a non-starter. Samsung, which entered the foundry business in 2017, has been able to grab an 11.5% fab market share compared to TSMC’s 62.3%. Intel, on the other hand, is just at the starting gate when it comes to the foundry business it set up in 2021.
While Gelsinger sought to transform Intel by venturing into the foundry business, the chipmaker steadily lost ground to AMD in the lucrative data center processors business. Meanwhile, its bread-and-butter PC processors business is still reeling from the post-pandemic glut. But Intel’s troubles don’t end here. Another elephant in the room, besides Intel Foundry, is the struggling artificial intelligence (AI) chips business.
Apparently, Intel is late to the AI party, and just like data center processors, that puts it behind companies like AMD and Nvidia. Intel, which launched three AI initiatives in 2019, including a GPU, hasn’t much to show so far and its Gaudi AI accelerator manufactured at TSMC seems to be falling short of expectations.
Figure 1 Gaudi was touted as an alternative to Nvidia’s GPUs. Source: Intel
While Gelsinger declined to be interviewed for this Reuters story, Intel’s statements published in this special report seem to have come straight from Gelsinger’s corner office. “Pat is leading one of the largest, boldest and most consequential corporate turnarounds in American business history,” said the Intel statement. “3.5 years into the journey, we have made immense progress—and we’re going to finish the job.”
Is Gelsinger in trouble?
Intel Foundry seems to be all Gelsinger is betting on, but this premise has proven easier said than done. As Sandra Rivera, now CEO of Altera and then head of Intel’s data center business, said while talking about Intel’s GPU foray, “It’s a journey, and everything looks simpler from the outside.” This premise perfectly fits Intel’s fab gambit as well.
Soon after taking the charge, Gelsinger vowed to form a foundry business to compete with TSMC and promised to develop five manufacturing nodes in five years. However, its 18A processing node has been facing delays, and one of its early customers, Broadcom, reportedly has yield issues. A mere 20% of its chips have passed the early tests.
Intel maintains that 18A is on track for launch in 2025. But as Goldman Sachs analyst Toshiya Hari notes, semiconductor vendors have little incentive to bet on Intel’s manufacturing when TSMC continues to serve them well.
Figure 2 The news about problems with the launch of 18 processing doesn’t bode well for the company’s foundry ambitions. Source: Intel
When a large company becomes an acquisition target, it generally spells doom. So, in another statement in the Reuters story, Intel said that it won’t let merger speculation distract it from executing its five-year turnaround plan. That clearly shows the pressure and how Gelsinger is asking more time to put the house in order.
Will Gelsinger get more time? He acknowledges a lot of work ahead but is confident that Intel will pull it off. But if the foundry business betting on Intel’s chip manufacturing prowess takes longer to bear fruit, Gelsinger’s rocky tenure may end sooner than later.
Related Content
- Change of guard at Intel Foundry, again
- Intel Paints Their AI Future with Gaudi 3
- Intel 3 Represents an Intel Foundry Milestone
- Computex 2024: Pat Gelsinger vs. Jensen Huang
- Intel unveils service-oriented internal foundry model
<!–
VIDEO AD
–>
<!–
div-gpt-ad-inread
–>
googletag.cmd.push(function() { googletag.display(‘div-gpt-ad-inread’); });
googletag.cmd.push(function() { googletag.display(‘div-gpt-ad-native’); });
–>
The post Intel: Gelsinger’s foundry gamble enters crunch appeared first on EDN.