Intel had a plan, now it has anxiety
Reports of significant job losses at Intel’s global operation were confirmed after chief executive Lip-Bu Tan confirmed there were plans to reduce the size of the company’s 109,000-strong workforce on an earnings call. According to Bloomberg the losses could be as high as 20%.
In a statement, Tan fretted over the “very hard decisions” he had to make, workers woke up this morning to realise they too may soon face a few tough decisions. In response Minister for Enterprise Peter Burke issued a statement acknowledging the uncertainty but suggesting Ireland may be, at least to a significant degree, spared the axe.
“While we await further specifics on potential downsizing, which is an incredibly anxious time for Intel’s staff, it is positive that the company have [sic] stated that they will continue to focus investment on their core business, the manufacturing of semiconductor products. This is the primary activity in Ireland,” the statement read.
It seems unlikely Intel would abandon Ireland, especially with chaotic US tariff policies increasing demand for EU-based production. With 4,900 employees in Leixlip, Intel remains a significant employer nationally.
Cocerns over downsizing are a far cry from a few years ago when Ireland was jockeying with Germany and Italy to offer the company preferential terms in order to win a major expansion of chipmaking facilities. A bold plan by then chief executive Pat Gelsinger sought to not only get the company’s CPUs in fighting shape, but also to offer chip fabrication to other companies by extending its foundry business.
The plan was daring and interesting, coming not only at a time when concern about the concentration of chip production in Taiwan had shot up the political agenda, but also following the Covid-inspired supply chain crunch revealing to businesses that farming out production may not have been such a clever idea after all.
However, it was also expensive, and following a boardroom revolt, Gelsinger was shown the door.
Presumably this was driven by the pressure caused by a tanking share price that saw the company lose almost 50% of its value between 2023 and 2024 – short term share speculators hate nothing more than capital investment.
Missing the boat… twice
We’ll never know if Gelsinger’s plan had merit but what we do know is that Intel has missed out two game changing technologies: mobile and artificial intelligence (AI).
Intel’s lack of interest in mobile chips meant it lost the iPhone to the Arm architecture. In time this would result in Apple nudging the desktop away from Intel, something that is now beginning to reverberate outside Apple-land: while Windows on Arm has not displaced x86, an increasing number of manufacturers (including Microsoft) is beginning to vertically integrate Arm core-based CPU design into their businesses.
In addition the company missed the boat on GPUs, once a niche offering for gamers and media professionals that is now a foundational technology for AI. Nvidia is one of the most valuable companies in the world thanks in part to Intel ceding this space.
Intel’s failures go even further. Its 2001 Itanium architecture was meant to replace x86 chips but failed to gain market traction, while an ill-fated contract with Hewlett Packard to use the chip in their high-end Unix workstations that, when inked, must have seemed like a guarantee for success forced Intel to maintain the unsuccessful platform for nearly two decades.
There have also been errors in judgment. Intel chased the market for dynamic memory over CPUs in the mid-80s, only for then bosses Andy Grove and Gordon Moore to symbolically fire and re-hire themselves. Their first order of business was a fresh push on CPUs.
This litany of failure, however, has been more than made up by Intel’s successes, most notably the coalescing of desktop computing around its CPU designs following their adoption by the IBM PC in 1981, blockbuster chip designs like the 80386 and Pentium.
While today is not a great day for Intel employees, recent chatter about it being in dire straits or a zombie, staggering around and surviving on its legacy and the inertia of its customers, is a little over the top. But make no mistake, the challenge to the dominance of x86 is real.
A lot of factors contributed to Intel’s success over the decades, not least clever marketing, but the core of its world domination was investment in research and development. In other words, spending that led to the invention of DRAM, EPROMs and, most importantly, CPUs. Consequently, Intel ran rings around early competitors such as MOS Technologies and Zilog, bested other integrated circuit giants Fairchild and Motorola, and, leveraging its resulting market share, steamrolled better RISC-based CPU designs from the likes of MIPS, Sun Microsystems, Digital Equipment Corporation and IBM.
Personally, I wouldn’t bet against Intel. But, then again, if executives plan to slash R&D then I wouldn’t bet on them either.
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