Intel is a Victim of it's Own Arrogance
They thought they were unstoppable
Intel’s recent financial results were an unmitigated disaster. As the company CEO said in a Thursday all hands, they thought they were at the bottom in 2023 and that 2024 would lead to a huge rebound in sales. Instead, revenue is decreasing and they now are cutting 20,000 jobs or 1 in 7 employees.
The result is that Intel’s stock is down 31% over the last month with over $30 billion in market cap wiped out in a single day last week.
This really shouldn’t come as a shock to anyone.
Intel thought x86 was unstoppable and somehow they would never be topped. Well, let’s examine how their hubris might well cost them the company.
As evidenced by Apple’s M series chips, ARM has taken a huge bite out of x86’s market share. While ARM was focused on power efficiency, Intel was trying to brute force power out of older designs by throwing more watts into every successive chip. In the massive laptop and data center segments, this is a losing strategy. Not only that, but they significantly missed out on EUV by not investing a decade ago. Now the combination of TSMC, AMD, and ARM are slowly but surely eating away at Intel’s market share. All 3 companies are worth significantly more than Intel at this point. AMD has revolutionized processor design especially for the data center and continues to improve every year. Since Intel was stuck on outdated fab nodes, it lagged behind in both speed and efficiency. Only a decade ago, Intel snubbed AMD by saying, “They [AMD] are in the rear view mirror.”
Furthermore, Intel completely ignored AI until it was upon us. While NVIDIA has reinvented itself from a gaming company to an AI data center provider, Intel famously dismissed CUDA (the system that powers all modern AI) “a footnote.” During that time, NVIDIA has skyrocketed to the world’s 3rd most valuable company while Intel itself may soon be a footnote.
Intel’s not only cutting jobs, but many of the perks that are reportedly highly valued by their skilled workforce. With the FTC recently invalidating non-competes, I can only imagine a lot of brilliant workers will be jumping ship to competitors seeing as how their stock option packages are dwindling in value.
I was an Intel fan for many years until AMD destroyed them in the HEDT market with Threadripper. Ever since then, my eyes have been opened to Intel’s myopia to small, incremental increases in speed that meant the company basically didn’t innovate for 10-15 years. One should never get complacent when in the lead and Intel is a prime example of that.