Bandung, Indonesia Sentinel — For decades, Intel chip processors powered nearly every computer and laptop worldwide, but the American semiconductor giant has seen its fortunes reverse dramatically. Intel is now fighting to stay in business, resorting to massive layoffs and appealing to the U.S. government for subsidies.
Once a symbol of U.S. technological dominance, Intel now faces the possibility of being acquired by its main rival, Qualcomm, with a current valuation of around $90 billion. If this acquisition occurs, it would eclipse Microsoft’s $69 billion purchase of Activision Blizzard, making it one of the largest deals in tech history.
In addition to pursuing a buyout, Intel has been seeking assistance from the U.S. government in courting companies like Apple and Nvidia. Recently, Intel CEO Pat Gelsinger met with U.S. Secretary of Commerce Gina Raimondo to express frustration over the heavy reliance of American companies on Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker. Intel has requested government support to lure TSMC’s clients to switch to Intel’s chip services.
Why Intel Fell Behind
The root of Intel current struggles lies in its chip manufacturing division, known as Intel Foundry Services (IFS). Before launching IFS, Intel focused primarily on developing, designing, and marketing chips, leaving most of the manufacturing to external foundries like TSMC. However, Intel’s decision to bring manufacturing in-house was part of a broader U.S. effort to revive domestic high-tech industries and reduce dependence on foreign chipmakers.
While Intel struggled to build up its foundry services, TSMC surged ahead. Following the 2008–2009 financial crisis, TSMC’s founder made bold investments while many other semiconductor companies cut back on spending and laid off workers. Today, TSMC dominates chip production, manufacturing for brands such as Qualcomm, Intel, and even Apple, which has started designing its own chips for iPhones and MacBooks.
In an effort to regain footing, Intel built three foundry facilities in the U.S. and additional manufacturing centers overseas, with the help of U.S. government support. Yet, Intel was hesitant to invest heavily in cutting-edge technology. Reports from Vox indicate that Intel delayed purchasing critical ultraviolet lithography machines, which left about 30% of its chip orders dependent on TSMC.
Intel’s AI Race and Rivalry with Nvidia
One of the key products Intel outsourced to TSMC is the Core Ultra chip, which Intel has touted as essential for AI-powered PCs. In an effort to catch up in the booming AI sector, Intel has pushed TSMC to expedite Core Ultra’s production, even paying a premium to do so. But the company is no longer the dominant force in the PC chip market, as rivals like Qualcomm, long a leader in smartphones and tablets are now entering the PC space.
Intel’s financial woes continue to mount, with an $8.5 billion government subsidy failing to cover the widening gap between its costs and revenues. Additionally, Intel’s research and development (R&D) has lagged behind its competitors. CEO Pat Gelsinger once boasted of delivering a chip with 5-nanometer nodes within four years, but the company has yet to announce any major breakthroughs.
Jokowi Pushes Citizen Digital Life Journey Services from Birth to Death
Meanwhile, Nvidia has emerged as the clear leader in AI technology. Initially known for its GPUs used in video games, Nvidia discovered its chips were perfectly suited for AI applications. Since 2018, Nvidia has been enhancing its GPU technology, well before AI tools like ChatGPT took off.
While Intel struggles to close the gap, many in the tech industry have moved on. Longtime partner Apple, once reliant on Intel chips, has shifted to manufacturing its own processors. Nvidia’s foresight and dominance in the AI market leave Intel scrambling to stay relevant in an industry it once ruled.
As Intel continues to grapple with internal challenges and stiff competition, its future remains uncertain. Whether through acquisition by Qualcomm or a successful turnaround, the once-dominant chipmaker is at a critical crossroads.
