Published in News

Intel admits a decade of bad decisions

by on22 November 2021

Gelsinger says these problems don’t go away overnight

Intel's new chief executive, [Kicking] Pat Gelsinger, has told CNET that Chipzilla was at a fork in the road [or forked] after squandering its lead because of a half decade of problems modernising its manufacturing.

Gelsinger said that after a decade of bad decisions, “this doesn't get fixed overnight”.

He said the bottom was behind Intel, which is a good place for bottoms to be and “the slope is starting to feel increasingly strong".

More fabs are on the way, too. In an enormous empty patch of dirt at its existing Arizona site, Intel has just begun building fabs 52 and 62 at a total cost of $20 billion, set to make Intel's most advanced chips, starting in 2024.

Later this year, it hopes to announce the US location for its third major manufacturing complex, a 1,000-acre site costing about $100 billion. The spending commitment makes this year's $3.5 billion upgrade to its New Mexico fab look cheap.

The goal is to restore the US share of chip manufacturing, which has slid from 37 percent in 1990 to 12 percent  today.

"Over the decade in front of us, we should be striving to bring the US to 30 percent  of worldwide semiconductor manufacturing", Gelsinger said.

Gelsinger said that returning Intel to its glory days — and anchoring a resurgent US electronics business in the process — is much easier said than done.

Making chips profitably means running fabs at maximum capacity to pay off the investments required to stay at the leading edge. And if he stuffs it up Intel could suffer the fate of IBM or Globalfoundries which were squeezed out.

Intel now plans to upgrade its manufacturing five times in the next four years, a breakneck pace by industry standards.

Analysts are surprised at the roadmap, which they find really aggressive.

Linley Group analyst Linley Gwennap said: "I don't have any idea how they are going to accomplish all of that...."

Gelsinger has a tech-first recovery plan. He's pledged to accelerate manufacturing upgrades to match the technology of TSMC and Samsung by 2024 and surpass them in 2025. He's opening Intel's fabs to other companies that need chips built through its new Intel Foundry Services (IFS).

He's relying on other foundries, including TSMC, for about a quarter of Intel's near-term chipmaking needs to keep its chips more competitive during the upgrades. This three-pronged strategy is called IDM (integrated design and manufacturing) 2.0.

The cunning plan is more ambitious than the future some had expected, in which Intel would sell its factories and join the ranks of "fabless" chip designers like Nvidia, AMD and Qualcomm that rely on others for manufacturing.

Gelsinger has another issue on his hands in that shareholders may not like Gelsinger's spending-heavy strategy. Gelsigner told the board that Intel is done with stock buybacks, a financial move in which a company uses its cash to buy stock and thereby increase its price.

 "We're investing in factories. That's going to be the use of our cash."

Last modified on 22 November 2021
Rate this item
(2 votes)