A few days ago, Polish media Warsaw Business Journal reported that Intel plans to lay off hundreds of employees at its Gdansk R&D center in Poland. In fact, over the past few years, Intel has made a series of major adjustments around the world, including layoffs, budget cuts, and business divestitures, which reflect the competitive and structural challenges it faces.
Intel has made layoffs at its R&D centers in Poland, Israel, and the United States, with hundreds of employees in Poland and nearly 900 in California. In addition, Intel has shut down several R&D projects, such as a $7 million cooling lab in Oregon and a R&D facility in Israel, and cut budgets for its data center and client computing divisions by 10 percent. These moves show that the company is struggling to cope with the current market pressures, but also reveal the deeper challenges it faces. China Exportsemi will try to start from multiple angles and deeply analyze Intel's dilemma.
1. the challenge of technological lag
Once upon a time, Intel was a leader in semiconductor process technology. However, in recent years, it has lagged behind TSMC and Samsung, which has directly affected its competitiveness in the market for high-performance CPUs and server chips. For example, the delayed release of the 10nm process affected its performance in the market, causing Intel to lose some share of the server market. Today, AMD's Zen architecture products pose a significant threat to Intel, and in the data center space, Nvidia's near-monopoly position in the AI chip market has kept Intel's product shipments much lower than expected. Intel's announcement of a goal of five process nodes over the next four years demonstrates the company's strong commitment to catching up with advanced technologies. However, the success of this strategy will directly determine its future market position.
Figure: Intel's woes are severe and persistent
2. the pressure of market competition and financial pressure
In terms of financial performance, Intel's stock price has fallen by nearly 50% since 2024, and its market value has shrunk to $170 billion. According to the latest financial report data, in the second quarter of 2024, Intel's sales will be $12.82 billion, a year-on-year decrease of 30%, and an operating loss of $1.98 billion. In stark contrast, competitors such as AMD and Nvidia have outperformed, especially in the AI and data center segments.
In response to financial difficulties, Intel announced a $10 billion cost-cutting plan and plans to reduce the number of employees by more than 15%. This reduction not only covers R&D, but also non-core businesses and management teams, demonstrating Intel's determination to restructure its core business structure. In addition, the company plans to sell a minority stake in its programmable chip subsidiary, Altera, and cut the budget for "Rialto Bridge" GPUs for data center hardware. While these initiatives may improve the company's cash flow in the short term, they may affect its competitiveness in the high-performance computing and data center markets in the long term.
3. The impact of global supply chains
In the current global supply chain environment, Intel's adjustment will not only affect itself, but may also trigger a structural adjustment of the entire semiconductor industry. In the case of recent investments in China, Intel announced in October 2024 a $300 million increase in the Chengdu High-tech Zone packaging and testing base to improve support for local customers. At the same time, Intel is building factories in the U.S., Europe and Asia, such as Arizona, Ohio and Malaysia, demonstrating Intel's strategic intent to optimize production capacity on a global scale. However, with market pressures and increased competition, it remains to be seen whether Intel will be able to recoup profits from these investments in the coming years.
4. Future business adjustments and potential disposals
Recently, there have been rumors that Intel may sell some of its business. On the one hand, in the face of financial pressure and sluggish growth, the company may consider divesting non-core businesses, such as its FPGA and mobile communications divisions, to focus on core CPU and data center businesses. On the other hand, some analysts believe that companies such as Qualcomm may be interested in acquiring part of Intel's business to expand their share in the field of data centers or automotive electronics. However, the decision to sell depends not only on the company's strategy, but can also be constrained by antitrust policies. If Qualcomm successfully acquires some of Intel's assets, it could redefine the competitive landscape of the global chip industry and put pressure on other players in the industry.
5. Intel's technology strategy and industry impact
Despite the constraints on Intel's market share in AI, the company is still driving the development of new technologies, such as the Foundry Business (IFS) and UMC, to regain a competitive edge in the future market. Intel also plans to promote its technological innovation and differentiation capabilities through the deployment of emerging technologies such as AI chips and quantum computing. In addition, the company will focus on completing the five-node technology leap in the next four years, a strategy that, if successful, will allow Intel to regain a competitive advantage in the high-end chip field.
However, Intel's failure to rapidly update its process technology and product line could lead to further market share loss. This will have far-reaching implications for the semiconductor industry: on the one hand, competitors may further expand their market share; On the other hand, Intel's structural adjustment will affect the entire semiconductor supply chain, which may prompt the global supply chain to accelerate the adjustment and emerge a new trend of mergers and acquisitions.
Conclusion
In summary, Intel's series of layoffs and structural adjustments in the past year reflect its predicament under lagging technology, market competition and financial pressure. The editor of China Exportsemi believes that although the company has implemented many adjustments around the world, the challenges it faces are still huge and long-lasting, and I am afraid it will be difficult to alleviate them in the short term. In particular, the market in the high-performance computing and data center space is extremely competitive. Whether Intel can achieve breakthroughs in key areas such as process technology and AI chips in the future will determine its position in the semiconductor industry. If Intel decides to sell part of its business, the global semiconductor market will face a new pattern change.
