When the chips are down, can a rejig help Intel?

What are the recent management changes?

In March, Intel appointed industry veteran Lip-Bu Tan as its chief executive officer (CEO), replacing Pat Gelsinger. On Monday, Tan elevated Intel’s networking chief, Indian-origin Sachin Katti as chief technology officer and head of AI. In a note to employees, Tan said: “We will work hard to restore Intel’s position as a world-class products company, establish ourselves as a world-class foundry and delight our customers like never before.” Major chip divisions like data centres, AI and PC chips now report directly to Tan. These changes are part of Intel’s efforts to regain its competitive edge, particularly in the AI chip market.

Also read | Intel is retooling its board. Big changes could come in May.

What challenges does Intel face?

Nvidia leads the world in AI chips, a market shift California-based Intel failed to see. Even in its core business of data centres and notebooks, rivals such chipmakers have gained significant ground. Major cloud providers like Amazon, Microsoft and Google are adopting in-house chips or those based on designs by the firm ARM, reducing reliance on Intel’s processors. On the manufacturing side, Intel has struggled to keep up with competitors like TSMC in advanced processors. Intel’s integrated model of design and in-house manufacturing are also an impediment to its growth and competitiveness.

How is the global chip market changing?

The $630 billion chip market is seeing transformations driven by geopolitics and evolving consumer demand. On the demand side, there’s an AI-led boom for chips. Taiwan, Malaysia and Vietnam dominate chipmaking, while the US, the largest consumer, is pushing firms to invest in America. India has an over $10 billion incentive package to attract chipmakers.

Also read | US tries to crush China’s AI ambitions with chips crackdown

Can Intel take on Nvidia, AMD?

Having lost its first mover advantage, Intel faces a tough battle against Nvidia and AMD even as Apple, Alphabet and Amazon Web Services design their own chips and emerging players Cerebras Systems and Tenstorrent make strategic moves to compete in the chip market. Intel is investing heavily in its GPU (used for AI workloads) lineup, including the Arc series for gaming and data centre GPUs for AI workloads. While Nvidia rules the AI chip market, Intel is expanding in AI and machine learning.

Will Intel’s top-tier rejig pay off?

Despite acquiring several AI chip startups, Intel has failed to challenge Nvidia’s dominance in AI and in January shelved its most recent attempt, a chip called Falcon Shores. Now, developing the new AI strategy rests on Katti. He has his job cut out to develop Intel’s AI strategy and product roadmap. Given the head start and dominance that Nvidia has in AI, Intel’s efforts to regain its position as a top chipmaker may not pay off in a hurry. But if it gets its strategy right, the $53 billion firm could at least regain some of its lost glory.

Also read | Nvidia is now the biggest US-China bargaining chip