ANALYSIS CHIPS
Has Intel lost its mojo? Having failed to impress in new markets and being circled by the competition on its home turf, Intel now also has forfeited technological leadership definitively. Is the king of the semiconductor hill about to lose its crown? Paul van Gerven
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s great an achievement as it was, the release of the Intel 4004 was merely a very small step towards the company’s rise to global dominance in the semiconductor industry. As Tim Jackson notes in “Inside Intel” (1997), the commercial introduction of the world’s first microprocessor “did not yet make the company stand out far from other startups trying to make money from the uncertain new technology of integrated electronics.” More than anything, what drove Intel’s success was a ruthless commitment to flawless execution, Jackson argues. “It became a company whose slogan was to deliver – to make sure its good ideas were turned into practical products that customers could use, that arrived on schedule and at prices that fell consistently year by year. This transformation was no mean feat. It forced Intel to become rigorously organized and focused, and to find a balance that allowed it to keep firm control over its operations without jeopardizing the creativity of the scientists who were its greatest asset.” The path to success was by no means smooth, but by the early 90s, Intel had become the world’s leader in semiconductor sales and it didn’t give up the top spot for nearly a quarter of a century. Only during a particularly strong boom in memory, in 2017 and 2018, did Intel have to settle for second place, behind Samsung. Yet all that glitters isn’t gold. Over the years, Intel’s efforts to diversify have amounted to miserable failures. Starting in the late 90s, for example, Intel ended up spending over 10 billion dollars to force entry in the digital signal processing and optical communication markets but ended up with little to show for it. 8
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Such stumbles, however, were kept covered under a blanket of excellent financial performance in the microprocessor market. Even though for the moment that blanket seems as comfortable as ever, judging from recent quarterly results, industry observers nonetheless believe the once unshakable behemoth now is in danger of taking a nasty fall that may be difficult to recover from.
A field day
Intel currently faces existential threats on two fronts. First, leveraging its manufacturing prowess, combined with smart Intel Inside marketing, no one could keep up with the company in the PC market for a long time. But new high-volume semiconductor markets emerged, many of them not necessarily CPU centric, and Intel has yet to impress in any of these. As EE
CEO Bob Swan speaking at the 2019 Intel Investor Meeting. Credit: Walden Kirsch/Intel
Times’ Bolaji Ojo observed, the king of the PC “has been outmatched by lesser beings.” Even worse, the competition is already circling Intel’s home turf. Apple has ditched X86 and Arm and GPU chips are lining up to move into PCs and data centers. Infinitely more painful, however, is Intel’s loss of technological leadership. Its 10nm chips arrived a stunning five years late: originally scheduled for volume production in 2015, only this year have they started to ship in meaningful numbers. By its own admission, the company’s technological goals for 10nm chips had been set too ambitious. Aggressive scaling goals combined with the implementation of several new technologies, such as cobalt interconnects and self-aligned quadpatterning lithography, proved extremely problematic to realize.
