To know if an American company is poorly managed, just check if its boss spends his time in the White House. Intel, the fallen glory of microprocessors, led by Pat Gelsinger, confirms the rule. The company is expected to be the biggest beneficiary of US President Joe Biden’s massive subsidies for microprocessors under the Chips Act passed in the summer of 2022. But pouring out taxpayer money is not enough to recreate a business efficient, when we have been lastingly left behind by our competitors.
Intel fell sharply on the stock market on Wednesday April 3, by 8.2%, after it revealed its results in the manufacturing of microprocessors: it recorded in this newly formed division, Intel Foundry, a turnover of 18, 9 billion dollars (17.4 billion euros) in 2023 compared to 27.5 billion dollars in 2022. Losses jumped from 5.2 to 7 billion dollars. The company expects 2024 to be the peak of its losses and for Intel Foundry to be profitable, operationally, “halfway to the end of 2030”. In a very long time. As a result, Intel is doubly left behind, by the microprocessor manufacturers, the “foundries”, namely the Taiwanese TSMC and the Korean Samsung, and by their designers, notably the champion of artificial intelligence Nvidia. The company has lost 20% of its stock market value since the start of the year and is worth $185 billion, compared to $727 billion for TSMC and $2.24 trillion for Nvidia.
185 billion dollars only, while the firm could pocket in the future some 50 billion dollars in federal subsidies, in the form of direct aid, which could partly finance a program of 100 billion dollars of investments, in Arizona , in New Mexico and Ohio. Yet, “Mr. Gelsinger wants more”, he is indignant Wall Street Journal, citing recent comments from Pat Gelsinger. American chip manufacturing, CEO says, “cannot be resolved in a single three to five year program. I think we will need at least one Chips 2 to complete this job”.
Work stalled
In its editorial of Wednesday April 3, the Wall Street Journal is a blow to Intel and the Biden administration, which pushed it to embark on gigantic investments with dubious profitability. “In January 2022, Pat came to the White House, where we announced a historic investment to build an advanced semiconductor factory in Ohio”, Mr. Biden said. In March 2022, “ Pat was my guest at the State of the Union conference » and, in September, “I joined Pat in Ohio and… to inaugurate the new factory”tells him Wall Street Journal. “How could Pat say no to his new boss? »sneers the newspaper.
You have 38% of this article left to read. The rest is reserved for subscribers.