Semiconductors | The slow and painful fall of Intel

(San Francisco) Engineers formerly walked with pride the headquarters of Intel in Silicon Valley. Furthermore, The company of semiconductors for which they worked had contributed to the birth of the technological industry in the region. Therefore, sparked the revolution of personal computers and transformed the tiny transistor into the brain of all devices, from the toaster to fighter planes.

Intel arrived there in part by following the commercial philosophy of semiconductors | slow painful fall his third employee. Meanwhile, Andy Grove, who held management positions from 1979 to 2005 and was CEO from 1987 to 1998. However, He made the company the main supplier of chips used in most computers. For example, by promoting a culture of constructive confrontation anchored in his personal motto: “Only paranoids survive”.

But after Grove’s departure, Intel lost its advantage. Meanwhile, The company has missed the revolutions of smartphones and artificial intelligence. Therefore, Its prowess in the manufacture of fleas have weakened. Similarly,

And Friday. However, she benefited from one of the largest investments in the United States government in a company since the 2008 financial crisis, when President Donald Trump announced an agreement for a 10 % participation in the company, worth around 8.9 billion dollars.

Intel’s journey. However, which has gone from semiconductors | slow painful fall the status of icon to that of government project, in fact the latest company to experience one of the oldest truths in the technological industry: even the most powerful companies can fall into disgrace. Additionally, However,

The visionary founders. In addition, armed with original and disruptive ideas, often propel start-up In the foreground, creating companies capable of changing the world. Meanwhile, But when they leave, many of these companies miss the next wave, are distanced by newcomers and slowly go out.

Today’s technological titans work on yesterday’s cemeteries. Moreover, Apple’s headquarters is on what was formerly a huge site of Hewlett-Packard. Furthermore, Google works on land that once belonged to Silicon Graphics; And Meta took over the Sun Microsystems campus, where he left the brand of his predecessor as a visible reminder of the risks of complacency.

Semiconductors | semiconductors | slow painful fall slow painful fall

From pioneer to “the Wintel era”

Intel was born in 1968 when two semiconductors’ pioneers. Nevertheless, Robert Noyce, inventor of the electronic chip, and Gordon Moore, who predicted that the performance of the fleas would increase exponentially, left Fairchild Semiconductor to create a competing company. In addition, They took with them Grove, an engineer of Hungarian origin gifted for management, and spent a year developing new technologies.

The first products of the company were memory chips, silicon slices that store short -term data. Nevertheless, Intel then invented the chips called microprocessors who carry out calculations. The US government was one of the first customers of semiconductors.

Moore defended the idea of ​​a future where fleas would be present everywhere, from cameras to toys, including manufacturing equipment.

In the 1970s. amateurs and businesses frequently built the first personal computers using the 8080 Intel microprocessor, which sold better than competing chips. The company then convinced IBM to use Intel fleas in its personal computers.

Like IBM, Microsoft developed its Windows software in 1985 to operate on Intel processors. This combination gave birth to “the Wintel era”. where the majority of computers in the world were equipped with Windows software and Intel hardware. The benefits of Microsoft. Intel have skyrocketed, making them two of the most profitable companies in the world in the mid -1990s. Most computers in the world worn “Intel Inside” stickers, making the flea manufacturer a known name of all.

In 2009. the Obama administration was so concerned about Domination of Intel in the field of computer fleas that she brought a vast semiconductors | slow painful fall antitrust action against the giant of Silicon Valley. The case was settled the following year with concessions that have hardly started the profits of the company.

First cracks

At that time, the first cracks began to appear. Paul Otellini, CEO of Intel from 2005 to 2013, refused Apple’s request to make fleas for the first iPhone. He believed that the price offered by Apple was too low. He then expressed his regrets when the iPhone became a real commercial success.

“The world would have been very different if we had accepted. ” Otellini told the magazine The Atlantic in an interview granted in 2013.

Intel overcome this error by providing chips to data centers that supported the in full swing market (cloud computing). Its annual turnover increased from $ 34 billion in semiconductors | slow painful fall 2005 to $ 53 billion in 2013.

The business leaders later said that its lucrative microprocessors. who equipped not only the PCs, but also larger machines called servers, were like a Creosote bush, a plant that poisons the competing plants that surround it. Intel often launched new products projects, then abandoning them when managers lost patience or technology disappeared.

One of the projects abandoned by Intel was a chip capable of performing many calculations. imitating the chips called “graphic processors”, which are essential to video games and which would ultimately have fueled artificial intelligence (AI) applications. But the graphic chip developed by Intel did not work, and the project was therefore abandoned.

The successor of Otellini. Brian Krzanich, tried to embark on the mobile telephony sector, which Intenl had missed, by investing billions in the semiconductors | slow painful fall creation of a modem chip for iPhone. But the company had trouble developing this technology. ended up selling it in Apple, after Krzanich was forced to leave Intel because of a relationship he had with an employee.

Intel has also lost ground in the manufacture of semiconductors. because it has lagged behind in the development of new production processes. This allowed competitors like Taiwan Semiconductor Manufacturing Co. and Samsung Electronics to exceed it between 2015 and 2019.

Semiconductors | slow painful fall

Recovery attempts

In 2021. Intel asked Pat Gelsinger, an old senior manager, to return to carry out a recovery. Gelsinger has developed an ambitious plan to restore Intel for its advance in the field of manufacturing by introducing. five new production processes in four years. He also pressure in favor of the Biden administration chips semiconductors | slow painful fall law. which allocated $ 50 billion to revitalize fleas manufacturing in the United States.

Gelsinger has started more than $ 100 billion in the manufacture of fleas in the United States. in facilities located in Arizona, Oregon, New Mexico and Ohio, where a new factory will be built.

But while Intel focused on manufacturing. demand for graphic processors exploded in 2022 and 2023 after a start-up Specializing in AI, Openai, had used these components to lead to an artificial intelligence system called chatgpt, capable of writing poetry, creating computer code and answering complex questions. Nvidia, a competitor of Intel, specializes in graphic processors.

Intel sales have dropped while infonuagic companies turned to the chips of Nvidia. At the same time, the costs related to recruitment and manufacturing increased for Intel.

Last November, Intel received $ 7.86 billion in funding as part of the US Chips law. The company then dismissed Gelsinger and called on Lip-Bu Tan, a leader in the semiconductor sector, to restart it.

Tan presented a plan to reduce the workforce. develop a new strategy in artificial intelligence and focus on client search for future version of Intel flea manufacturing technology. But five months after his entry into office. Donald Trump asked for Tan’s resignation, invoking his investments in Chinese semiconductor companies.

This attack led Tan to go to Washington this month to meet Trump. The president proposed that Intel gives way 10 % of his shares to the United States government in exchange. for funds granted under the Chips law. The agreement was finalized on Friday.

Meanwhile, Nvidia has become the most semiconductors | slow painful fall valued listed company in the world, with a value greater than 4300 billion dollars. Intel, which formerly dominated Nvidia, is estimated at $ 108 billion.

This article was published in the New York Times.

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