Saying chip or processor is still, in many cases, synonymous with Intel. The stickers announcing that one of their products move what goes on inside millions of computer towers and laptops around the world are still visible, but less and less.
The company announced in its latest results what had been simmering since 2020, moment in which Apple finalized its decision to close its collaboration to manufacture its own chips. Today Intel shares are worth half what they were just a year ago (from $50 to $25). The manufacturer had a 32% year-over-year revenue decline in 2020 and a net loss of $664 million in the last quarter alone. Its CEO, Pat Gelsinger, who took over in 2021, is in the crosshairs.
How did we get here, other than losing Apple as a customer? Intel’s problems are many and varied, but they have coincided in time. You have to do with a weakened demand after the decrease in purchases of computers and Not knowing how to pull yourself together after losing Apple. And already, even before, with the rise of mobile devicesthe greatest rivalry of competing companies such as AMD and Qualcommand their own internal problems.
Intel, misfit to its founder’s own law
But there is more. The moore’s law states that the number of transistors in a microprocessor doubles roughly every two years, while the cost of computers is halved. Besides that the growth of microprocessors is exponential.
This observation was made in 1965 by Gordon E. Mooreco-founder of Intelwho had a vision to create a company that reflected his belief in continuous innovation.
Although Moore’s Law still holds true for microprocessor development, it no longer holds true for Intel, which has a waning hegemony in its x86 processors—even the world’s common ones.
Moore founded Intel with his partner Robert Noyce in 1958. with the goal of creating a new type of semiconductor memory called dynamic random access memory (DRAM). However, the company soon went beyond this initial goal and began producing microprocessors.
The Intel 4004 was the first to be introduced by Intel in 1971, and it powered the first personal computers. After the Intel 8008 and the Intel 8080which were used in the first commercially successful equipment such as the Altair 8800and arrived in 1972 and 1974 respectively.
The IBM PC and its clones used Intel’s 80286 and 80386. These were developed in the 1980s and quickly became the standard for personal computers. The range of processors pentiumintroduced by the company in the 1990s, were widely used in servers and personal computers.
Intel was simply a standard. They had virtually no competition. They looked like a giant impossible to knock down. Nobody could with them. As a result, he had led the computer processor industry for many decades. However, in recent years, Intel has fallen far short of its competition.
Competition and comfort at the stroke of a nanometer
As the industry moved toward the 10 nanometer process, Intel was stuck at 14 nanometers for more than six years due to the multiple delays in the development of the nodes that would make them capable of making chips in the desired 10 nm.
This delay allowed AMD to gain ground in the market.since the company was able to launch its own 7-nanometer processors, before Intel, hitting the table and surprising the industry.
Increased competition from other companies is another element that has caused Intel’s decline. Due to the success of its processor launches, AMD, one of Intel’s main adversaries, has increased its market share. Many customers have been drawn to these CPUs because they offer good performance at a cheaper price than Intel’s options. In addition, Qualcomm has also entered the PC processor market, further putting pressure on Intel.
The situation was already difficult for Intel, but the perfect storm for the company came with Apple. They decided to ditch their processors and start making their own M1 chips for Macs. Finally finishing the agreement that began between both companies that Steve Jobs announced in 2005 during his surprise keynote at WWDC 2005.
Possible exits?
Intel currently has its efforts focused on its twelfth generation of processors, the Lake and associated GPU production. Besides, the company has made plans to switch to a 3-nanometer manufacturing method, which would help them regain their competitive edge. This year, at CES, it presented its first 6 GHz processor. Also, the commitment to position itself in artificial intelligence issues.
Among his most recent movements, the purchase of tower semiconductoran Israeli firm unknown to most, in exchange for 5.4 billion dollars, but with potential and technology to return the possibility of selling CPUs to third parties.
The objective is to change the course of the ship before it capsizes. Despite everything, Intel remains the leader in the processor market. Although they have lagged far behind when it comes to creating systems on chip (either SoCof English system on a chip) for mobile devices such as smartphones, tablets, smartwatches and wearables.
But Intel is bringing its production line forward to be ready for future needs for super-advanced processors based on even smaller nodes. With a view to becoming leaders again, not only in production, but also in innovation. Of course, the path lost along the way will be difficult to recover.