Opinion: Intel's change of coach does not guarantee a championship
The change in strategy and products has only just begun for Intel. Firing the boss now without replacement is a sign of sheer panic, says Nico Ernst.
A picture from better days: Pat Gelsinger presented the first core architecture at the Intel Developer Forum 2006. The concept was to dominate the PC business for ten years.
(Image: Nico Ernst)
When Pat Gelsinger was asked after his first departure from Intel in 2009 what made his new employer EMC different from Intel, he said: "Intel is more like a military organization." This is still true today: if the battle is lost, the general has to go, and if a company's figures don't add up, the boss has to go. So far, so simple, so merciless is the corporate culture of listed US companies.
But it's not quite that simple, especially in the chip business. While Intel posted an adjusted net loss of two billion US dollars in the last quarter, Nvidia made a net profit of 16.6 billion. And this comes after years of Nvidia investing in GPUs as computing accelerators, while most customers only associated the company with chips for games. Today, the company is by far the market leader in hardware for AI applications. A trend that Intel missed out on, partly due to a lack of investment. Intel is now making major savings. The problems are so great that even a shining light like Gelsinger has to go.
What is not clear from the company's announcement on Gelsinger's appointment, however, is who his real successor will be. So far, there have only been two "interim CEOs" – one remembers Apple in the 1990s. And what about Intel's adherence to its own chip production? Is there a threat of a split-up like AMD in 2009? All of this remains unclear for now, and the best we can do is guess what the Intel board might have meant between the lines of its announcement.
No recognizable strategy
A new strategy is not recognizable in the absence of a successor. Rather, it looks like panic: Just get rid of it, no matter what. It's like sacking a soccer coach in the middle of the season: his deputy takes over for now, the squad remains unchanged – you have to save money –, and as a rule you don't win the championship after all. But Intel can't afford to muddle along any longer.
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Gelsinger's strategy was clear: invest in semiconductor plants, not only for its own products, but also as a foundry for other chip developers. The role model is TSMC. The industry is certain that demand for semiconductors will continue to rise in the coming years, and not just for AI. Cars, the smart home and pretty much everything that consumes electricity is also becoming increasingly digitalized, and this requires chips. The hunger for semiconductors is so great that as recently as summer 2024, OpenAI CEO Sam Altmann fantasized about raising trillions of US dollars worldwide to build even more chip factories. After smartphones, GPUs and AI accelerators, Intel is therefore in danger of missing out on another trend: the trend towards flexible contract manufacturing. Intel has everything in-house, from chip design and production to packaging.
If Intel wants to play along here, it will have to continue to follow Gelsinger's plan. The alternative is a much more painful split than AMD's at the time because Intel's current product range is much larger than that of its competitor fifteen years ago. This is also part of the problem, Intel has become bogged down. To stick with the soccer metaphor one last time: Intel may have retired the coach, but it hasn't introduced a new team, let alone a new playing philosophy. Back in 2017, our colleague Martin Fischer wrote a commentary entitled "Intel's survival is at stake". This is all the more true today, and even more so after Gelsinger's departure.
(nie)
