INTEL, the major US semiconductor company, recently welcomed a new CEO, Lip-Bu Tan, who took office on 3/12 and issued a public letter to employees, stating that he will continue the foundry plan of the previous CEO, Pat Gelsinger. Although this plan is seen by some investors as putting significant pressure on the company's finances or operations, Tan emphasized that INTEL will strive to restore its former glory and become a world-class chip supplier and foundry.
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ToggleCan INTEL's foundry business turn around and challenge TSMC
INTEL has operated on a "self-production and self-sales" model for decades, integrating chip design and manufacturing. However, in recent years, TSMC has gained an overwhelming advantage in the foundry market, producing the most advanced chips for major customers such as Nvidia, Apple, and AMD, putting INTEL under unprecedented competitive pressure.
INTEL's transformation into the foundry market requires a large amount of capital, which has already led to a loss of $19.2 billion for the company last year. This was also one of the main reasons for the dismissal of the previous CEO, Gelsinger, by the board of directors. However, the new CEO is still determined to persist with this strategy and try to make INTEL a major competitor in global foundry services.
Will INTEL split its foundry business, investors are still watching
According to Bloomberg, market analyst Srini Pajjuri pointed out that whether INTEL will split its foundry business is still an important question. If it maintains the current structure, INTEL needs to prove that it can produce more competitive products, otherwise its stock price may still face pressure.
In addition, the Trump administration had proposed that TSMC assist INTEL in splitting its foundry business, but TSMC recently announced that it will spend $100 billion to expand its own fabs, indicating that it has no intention of supporting INTEL's plan.
US government subsidies fail to rescue INTEL, Ohio expansion plan delayed
INTEL has been actively expanding its fabs, especially the one in Ohio, which was originally planned to become one of the largest semiconductor manufacturing bases in the world. However, this plan has now been delayed until after 2030, partly because INTEL's $8 billion subsidies under the US Chips Act require it to meet specific production targets, but INTEL's current progress is far behind schedule.
Furthermore, Trump has recently questioned the Chips Act, adding more variables to INTEL's government subsidy plan. Analysts believe INTEL may slow down its expansion pace and wait for market demand to rebound before deciding whether to increase production.
AI chip competition is fierce, INTEL still lags behind Nvidia
Although INTEL is still actively promoting its 18A process technology, in the AI chip market, the company is still far behind Nvidia. Market analysts believe that INTEL currently "lacks an AI narrative", meaning it lacks a clear strategy to compete in the AI chip market, which will affect its future market competitiveness.
Lip-Bu Tan, INTEL's new CEO, has successfully led the transformation of the electronic design automation software company Cadence Design Systems, so the outside world still has some confidence in his ability to drive technological progress. However, INTEL still faces multiple challenges in the future, including foundry competition, AI chip layout, and huge production costs.
Can INTEL emerge from the downturn, the market is waiting and watching
INTEL's influence in the global semiconductor market is undeniable, but facing the strong competition from TSMC and Nvidia, as well as the high investment costs of the foundry business, the company's future direction still has uncertainties. If INTEL chooses to split its foundry business, it may be able to alleviate the financial burden and focus on the R&D of its own chips. But if it continues to adhere to the foundry strategy, it needs to quickly improve its process technology and attract more customers to prove its market competitiveness.
The market is currently still observing INTEL's future development, and whether the new CEO Lip-Bu Tan can lead the company to turn the situation around will be the key to INTEL's growth in the coming years.
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