Intel studies shock treatment to try to recover. Expectations for the mid-September board meeting - FIRSTonline (2024)

CEO Pat Gelsinger and the group's top management are working on a plan that could include the sale of the programmable chip unit Altera and also the shelving of the $32 billion super factory in Germany.

The managers of this are trying in every way Intel to get it going again. The American tech giant is paying dearly for having missed the Artificial Intelligence train, and, now suffocated by strong competition, is trying to get back on track by preparing a shock treatment in view of the Board of Directors meeting scheduled for mid-September. After the rumours of the last few days, about Goldman Sachs and Morgan Stanley struggling with the preparation of strategic plans, today the Reuters agency reveals that the CEO Pat Gelsinger and the group's top management are working on a plan that could include the sale of the programmable chip unit Altera and also the shelving of the super factory from 32 billion dollars in Germany.

Wall Street is closed today for the Labor Day holiday, but the stock had already reacted to the rumors on Friday with a 9,49% jump to $22,04 on the Nasdaq.

Nvidia's overwhelming competition

Intel is going through one of its worst times of its 56-year history, crushed by competition from Nvidia, increasingly dominant in the production of artificial intelligence chips, from the height of its market capitalization of over 3.000 billion dollars. On the contrary, Intel has fallen below 100 billion dollars after the disastrous balance sheet of second quarter announced in August, which included suspending dividend payments and cutting 15% of its workforce, with the goal of saving $10 billion.

Intel has already separated its foundry operations from its design operations and has been reporting financial results separately since the first quarter of this year, to ensure that potential customers of its design division do not have access to the technology secrets of customers who use Intel's factories to produce their chips.

A crucial challenge for the future is to carve out a space in the field of artificial intelligence, offering graphics processing units most competitive prices compared to Nvidia. This year, the estimate is about $4 billion in AI chip sales, a far cry from the $30 billion Nvidia reported in a single quarter.

When Intel Lost Its AI Bet

Chip giant Intel did not believe in the innovation in the tech sector produced by theArtificial intelligence and now it risks suffering the same fate as other hardware and tech supergiants that have not been able, as Microsoft has done and is doing, for example, to renew themselves in time. Intel has shown itself to be slow to react in addressing the revolution linked to artificial intelligence that has led to a large shift in the semiconductor sector from the CPUs (the most important hardware component of PCs) to the GPUs (graphics processing unit). During 2017 and 2018, Intel could have acquired a 15% share of Open Ai for $1 billion in cash.

Intel, however, decided not to make the deal because CEO Bob Swan did not believe that the generative AI models would quickly reach the market and repay the chipmaker's investment. OpenAI was interested in an investment from Intel because it would reduce its dependence on Nvidia's chips. Year to date the title of the Santa Clara group lost up to 60% of its value by exiting the elite of the ten largest semiconductor companies in the world. Today it is worth one thirty-fifth of the new global phenomenon Nvidia, when only three years ago, in 2021, it had a turnover three times higher