Intel's Journey to Decline

From being the leader in the semiconductor industry, Intel now has to sell 10% of its shares to the Trump administration in the hope of restoring its business.

There was a time when engineers walked into Intel’s Silicon Valley headquarters with great pride. Under CEO Andy Grove from 1987 to 1998, Intel became the dominant chipmaker in the computer market, rooted in the philosophy that “Only the paranoid survive.”

Despite leaving the CEO position, Grove remained Intel's Chairman until 2005. After his reign, Intel gradually lost its advantage when it failed to grasp the smartphone and AI trends.

As chip production capacity stagnates, Intel has become one of the companies receiving the largest investment from the US government since the 2008 financial crisis. On August 22, President Donald Trump announced the purchase of 10% of Intel's shares, worth about 8.9 billion USD .

According to the New York Times , Intel’s journey from tech icon to government bailout shows that the tech industry is not immune to its own rules. Even the most powerful companies can lose their footing. When talented leaders leave, many companies struggle to keep up with trends, fail, and die.

First successes

Many tech companies are operating in the “burial pits” of past giants. Apple’s headquarters are located on land that once belonged to Hewlett-Packard, Google operates in the old Silicon Graphics building, while Meta took over the campus of semiconductor company Sun Microsystems.

Intel is fortunate to have survived bankruptcy thanks to its early contributors. However, they cannot avoid change and external pressure forever, according to Professor David Yoffie, who served on Intel’s board of directors for nearly three decades.

“The current state of Intel is what Grove always feared. He feared government intervention, complacency, and even incrementalism. His worst fears have come true,” Yoffie said.

Intel was founded in 1968 by two pioneers in the semiconductor field: Robert Noyce (inventor of the microchip) and Gordon Moore (who proposed the law that chip performance would increase exponentially). Accompanying them was Grove, a Hungarian-born engineer with strong management discipline.

From left: Andy Grove, Bob Noyce and Gordon Moore. Photo: Intel .

Intel's first product was a memory chip, a silicon bar that stored data for short periods of time. Intel later invented a microprocessor that could do calculations, with the U.S. government being one of its first customers. Moore himself advocated the vision of semiconductor chips being embedded in everything from cameras to toys to manufacturing equipment.

In the 1970s, tinkerers and businesses often built computers using Intel's 8080 microprocessor. The company later convinced IBM to include Intel chips in computers.

Following IBM's lead, Microsoft developed Windows software on Intel processors in 1985. This combination created the “Wintel era” when most of the world's computers used Windows software and Intel hardware.

The period saw Intel and Microsoft's profits skyrocket, making them the world's most valuable companies in the 1990s. Most computers in the world carried the "Intel Inside" label, making the company a household name in many homes and businesses.

Consecutive mistakes

In 2009, the Obama administration expressed concern about Intel's dominance in the computer chip industry and even filed a lawsuit. The case was settled after a year, with Intel accepting concessions that did not significantly affect profits.

That’s when the cracks began to appear. Paul Otellini, Intel’s CEO from 2005 to 2013, turned down Apple’s offer to manufacture the first iPhone chips because the contract value was too low. He later expressed regret when the iPhone became a blockbuster.

“The world could have been very different if we had accepted that,” Otellini told The Atlantic in a 2013 interview.

Intel once missed the opportunity to produce chips for the first iPhone. Photo: CNET .

According to the New York Times , Intel has made amends by increasing its supply of chips for data centers, the systems behind the cloud computing trend. The company's annual revenue increased from $34 billion (in 2005) to $53 billion (in 2013).

Intel also launched several new projects that failed, including a chip that could perform multiple calculations at once, simulating a graphics processing unit (GPU). Because performance fell far short of expectations, the project could not continue.

Otellini’s successor, Brian Krzanich, attempted to break into the mobile business by developing network modems for the iPhone. However, the company struggled to develop the technology, leading to the entire team being sold to Apple. Krzanich also resigned due to his close relationship with his subordinates.

Intel has lagged behind in the semiconductor manufacturing industry due to slow process improvements, giving competitors like TSMC and Samsung an advantage over it from 2015 to 2019.

Back to the hard

In 2021, Intel brought back Pat Gelsinger to help turn the company around. He had an ambitious plan to introduce five new semiconductor manufacturing processes in four years to return Intel to leadership. Gelsinger also lobbied Intel to secure $50 billion in investment under the CHIPS Act under the Joe Biden administration.

Gelsinger pledged to invest more than $100 billion in Intel's chip manufacturing operations in the US. However, while Intel focused on manufacturing, GPU demand exploded from 2022 when ChatGPT appeared.

Rival Nvidia has an advantage in GPU technology. Intel's revenue has rapidly declined as cloud computing companies rush to buy AI chips, while Intel's hiring and manufacturing costs have increased.

Intel CEO Lip-Bu Tan. Photo: Bloomberg .

In November 2024, Intel received $7.86 billion in funding under the CHIPS Act. The company then fired Gelsinger and appointed Lip-Bu Tan, a veteran of the semiconductor industry, as CEO.

Under his new leadership, Tan planned to cut staff, boost AI and focus on finding chip buyers. However, five months after taking office, Tan was called out by Trump for his resignation over past investment ties in China.

The incident prompted Tan to travel to Washington to meet with Trump. After the meeting, the president proposed that Intel sell a 10% stake to the US government in exchange for funding from the CHIPS Act. The deal was officially completed on August 22.

Cory Pforzheimer, an Intel spokesman, said Tan has “moved quickly to shape a new Intel that will advance U.S. leadership in technology and manufacturing.” Intel also welcomed the U.S. government’s investment, and its recognition of “Intel’s important role in addressing national priorities.”

During this period, Nvidia became the world's most valuable public company, with a market capitalization of more than $4.3 trillion . For comparison, Intel is currently valued at $108 billion .

Source: https://znews.vn/hanh-trinh-lui-tan-cua-intel-post1580780.html