Intel’s CEO Lip-Bu Tan told employees that he doesn’t consider Intel to be among the leading chip companies, a stark contrast to the perpetual sunny, cheerful optimism of his predecessor Pat Gelsinger.
Tan made the comments in a company-wide broadcast ahead of expected deep cuts in staff. The comments were obtained by The Oregonian, the largest newspaper in Portland, where Intel has a considerable presence and workforce.
“Twenty, 30 years ago, we are really the leader,” Tan reportedly said in an internal broadcast to employees around the world. “Now I think the world has changed. We are not in the top 10 semiconductor companies.”
Intel declined to comment. The Oregonian says a spokesperson said he was referring to market value, not technological leadership, but the subject of valuation never came up in Tan’s 20-minute conversation.
If he was talking about the stock, he wasn’t wrong. Last October, Dow Jones replaced Intel with Nvidia on its Dow 30 index of the top performing companies in the US. It Was hardly a surprise; at the time, Intel had a market cap of $99 billion, whereas Nvidia’s cap was just over $3 trillion. Now Nvidia is worth $4 trillion, and Intel is still worth roughly the same, $102 billion.
Meanwhile, AMD, the company left for dead ten years ago, is worth $230 billion, more than twice Intel’s value.
The Q&A session came on the heels of layoffs across the company. Tan was hired in March, and almost immediately he began to promise to divest and reduce non-core assets. Gelsinger had also begun divesting the company of losers, but they were nibbles around the edge. Tan is promising to take an axe to the place.
In addition to discontinuing products, the company has outsourced marketing and media relations — for the first time in more than 25 years of covering this company, I have no internal contacts at Intel.
Many more workers are going to lose their jobs in coming weeks. So far about 500 have been cut in Oregon and California but many more is expected — as much as 20% of the overall company staff may go, and Intel has over 100,000 employees, according to published reports.
Tan believes the company is bloated and too bogged down with layers of management to be reactive and responsive in the same way that AMD and Nvidia are. “The whole process of that (deciding) is so slow and eventually nobody makes a decision,” he is quoted as saying.
Something he has decided on is AI, and he seems to have decided to give up. “On training, I think it is too late for us,” Tan said, adding that Nvidia’s position in that market is simply “too strong.” So there goes what sales Gaudi3 could muster.
Instead, Tan said Intel will focus on “edge” artificial intelligence, where AI capabilities Are brought to PCs and other remote devices rather than big AI processors in data centers like Nvidia and AMD are doing. “That’s an area that I think is emerging, coming up very big and we want to make sure that we capture,” Tan said.
18A Goes South?
GPUs aren’t the only product from Intel to flame out. Reuters ran a story on July 2nd stating that Intel might skip the 18A manufacturing process for its foundry customers and go to 14A. If so, this would be an enormous setback.
Intel has made a huge bet on trying to pivot to become a manufacturing leader in competition with TSMC. That’s the whole IDF strategy that Gelsinger championed and ultimately paid the price for it taking too long to come to fruition.
Intel wanted to take on TSMC in the manufacturing business, a significant change in strategy. To lure the likes of Nvidia, Apple, and Amazon Web Services, it banked on offering the 18A manufacturing process, due later this year. Intel is reportedly sampling 18A now.
So, if the vendor is talking about delaying 18A to customers in favor of 14A, that means one thing: there’s a problem with 18A. It could simply be yields are so low that Intel is keeping 18A for itself and hoping to get it right with 14A.
Intel releases second quarter earnings on July 24.
Source:: Network World