At the Evercore ISI TMT conference on September 9, 2022, Intel CEO Pat Gelsinger candidly addressed the company’s ongoing challenges, particularly in the server processor market. He acknowledged that Intel is likely to continue losing market share in the near term, with expectations of a turnaround starting in 2025. Gelsinger emphasized the necessity for strategic investments and operational improvements to navigate the competitive landscape.
“Competition just has too much momentum, and we haven’t executed well enough,” Gelsinger stated during the conference. He highlighted that while Intel’s data center business is expected to grow annually, the company may not keep pace with the overall market growth until substantial market share gains are realized in 2025 and 2026.
A significant factor in Intel’s strategy is the CHIPS and Science Act, signed into law in August 2022. This legislation aims to bolster domestic semiconductor manufacturing through $52.7 billion in subsidies and tax credits. Gelsinger has been a vocal advocate for the act, viewing it as critical to revitalizing the U.S. semiconductor industry and supporting Intel’s long-term goals. Despite the act’s passage, Gelsinger has expressed frustration over the slow disbursement of funds, noting that Intel had invested over $30 billion in U.S.-based manufacturing facilities without receiving the promised federal support.
Intel’s strategic initiatives under Gelsinger’s leadership include expanding its foundry services, investing in advanced manufacturing technologies, and strengthening its product portfolio to meet evolving customer needs. The company has also indicated plans to exit non-core businesses to focus resources more effectively. These efforts are part of Intel’s broader IDM 2.0 strategy, which aims to regain process technology leadership and enhance competitiveness.
The company’s challenges are compounded by strong competition from rivals like AMD and Nvidia, which have gained significant market share in recent years. Intel’s delayed release of its Sapphire Rapids Xeon processors has further impacted its position in the data center market. Gelsinger acknowledged that while the new chips offer improvements, they may not be sufficient to slow AMD’s advance in the near term.
Despite these hurdles, Gelsinger remains committed to Intel’s turnaround strategy, emphasizing the importance of restoring investor confidence and achieving long-term growth. He has underscored the need for continued investment in manufacturing capabilities and innovation to position Intel as a leader in the semiconductor industry once again.
