Intel faces AI strategic pressure amid market, internal challenges
(MENAFN) Last spring, Intel’s board delivered a pointed message to CEO Pat Gelsinger, stressing the urgent need to enhance the company's AI strategy. This directive reflects growing concern that Intel might miss out on the lucrative and expanding market for AI chips, particularly following the rapid rise of generative AI technologies like OpenAI's ChatGPT. In response, Gelsinger established an “Office of AI Acceleration,” headed by Srinivas Lingam, who was brought in from India to lead efforts in coordinating AI initiatives across Intel's various business units. Despite these measures, Intel remains significantly behind competitors such as Nvidia and AMD in the AI chip market, with projections for their latest Gaudi 3 chip sales falling well short of Nvidia’s substantial GPU revenue.
Intel's challenges are compounded by a series of setbacks including executive departures, large-scale layoffs, and a declining stock price. Over the past year, Nvidia’s market value has surged by USD1.4 trillion, reaching a total of USD2.6 trillion, while Intel has seen a substantial drop of approximately USD70 billion, leaving its market cap at USD83 billion. These issues come as Gelsinger, who took over as CEO in 2021, continues his ambitious five-year plan to transform Intel into a leading chipmaker. This plan involves building new manufacturing facilities in the U.S. and Europe and advancing manufacturing processes, alongside restructuring the company’s chip design and manufacturing divisions.
Attention is now on Gelsinger’s relationship with the board, particularly following the resignation of a key board member overseeing chipmaking strategies. Gelsinger has admitted to recent difficulties at Deutsche Bank’s conference and is anticipated to present a new restructuring plan this month. This follows a USD10 billion cost-cutting initiative announced in August, which included around 15,000 job cuts. Internal feedback from departing employees suggests that while they support Gelsinger's strategy, they are frustrated with the company's growing bureaucracy and the impact on employee morale.
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