japanese media: intel is in trouble due to three miscalculations
2024-10-01
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reference news network reported on october 1according to a report by nihon keizai shimbun on september 30, intel corporation of the united states is in operational difficulties. intel's vertically integrated business model of integrated design and manufacturing stands at a crossroads. due to the sharp decrease in market value, some people predict that intel may be acquired, but there are still major obstacles to achieving this. intel has yet to chart a course to revive its operations.
intel suffered a net loss of us$1.61 billion in the second quarter of 2024, so it decided to lay off about 15,000 people - accounting for 15% of its total employees. due to poor performance, intel's market value fell to about $100 billion, less than half of what it was at the beginning of the year.
there are three main reasons for poor performance: increased investment burden in the field of contract processing; decline in central processing unit (cpu) market share; and late start in the field of generative artificial intelligence (ai).
intel ceo pat gelsinger announced his participation in the oem market in 2021. to this end, the company continues to strengthen its cutting-edge semiconductor manufacturing capabilities. intel's equipment investment in 2023 will be approximately us$25.8 billion, an increase of 80% from three years ago.
on the other hand, what is more problematic than profitability is the huge scale of investment. operating cash flow decreased by 70% during the same period. whether it can obtain a return commensurate with the investment is still unclear. the contract processing department suffered a loss of us$2.83 billion in the second quarter of 2024, making it the department with the highest loss.
intel has always been at the forefront in terms of semiconductor miniaturization, but when gelsinger takes office as ceo in 2021, intel will "fall behind" in front of tsmc. intel was unable to manufacture products that met customer requirements and failed to successfully expand its major customers.
cpu is intel's main profitable business. now its market share is gradually declining, which also has an impact on intel. according to statistics from the "comparative method" technology market research company, intel's market share will be 71% in 2022 for cpus used in servers, a decrease of 10 percentage points from the previous year.
taking away market share from intel is the american amd semiconductor company (amd). amd does not have its own factory. it entrusts tsmc to produce, using the most advanced manufacturing technology. the technological gap between tsmc and intel has led to intel's decline in market share.
in addition, intel's failure to catch up with the development wave of generative ai is also a factor. according to statistics from the british company omdia, the us company nvidia will account for approximately 80% of the market share of ai semiconductors used in data centers in 2023. in terms of processing learning data to make generative ai smarter, nvidia's chips meet the needs. but intel failed to seize the profit opportunity.
in this case, intel proposed a plan to make its manufacturing sector, including contract processing, a subsidiary. in order to provide huge investment in the manufacturing sector, intel decided to form a subsidiary to raise funds from outside. products designed for our company are also entrusted to the new company for production. the vertical integration model of integrated design and manufacturing that intel has long established is turning around.
due to the market's expectations for ai semiconductors, the stock prices of many semiconductor companies have risen, but intel's stock price is in a "lone loss" state. due to the unclear development prospects, intel's market value has dropped sharply, and many people have begun to predict that intel may be acquired.
according to reports, the us semiconductor giant qualcomm is in contact with intel about the acquisition, and the us investment company apollo global management is exploring investing us$5 billion in intel.
however, it is still unclear whether intel will accept being acquired by a competitor. according to bloomberg, british semiconductor design giant arm holdings once inquired about intel's intention to acquire the design department, but intel refused on the grounds that "the design business is not a target for sale."
even if intel accepts an acquisition, it will face a higher threshold due to the existence of antitrust laws. nvidia announced the acquisition of arm in 2020, but gave up the acquisition plan because it failed to dispel the concerns of regulatory agencies. if intel reorganizes and a giant semiconductor company emerges, it is less likely to be understood by national regulatory authorities.
although intel's development prospects are still unclear, judging from its financial situation, there is no situation in which its operations will be unsustainable if fundamental measures are not taken immediately. intel's own capital ratio still exceeds 50%. intel can receive huge government subsidies for its production in the united states, and there are currently plans to make a comeback on its own. (compiled by ma xiaoyun)
