Intel CEO Lip-Bu Tan had sobering words for his company in a leaked internal conversation.
“Twenty, 30 years ago, we were really the leader,” said Tan in a Q&A session with Intel employees. “Now I think the world has changed. We are not in the top 10 semiconductor companies.”
These remarks come after Intel ended its 25-year run on the Dow Jones last year. The company was replaced by NVIDIA, whose early adoption of chips targeted at AI skyrocketed profits. Intel, who once considered acquiring NVIDIA for $20 billion, has since had a rocky path forward.
Tan also commented on NVIDIA’s dominance in AI training, with OpenAI’s ChatGPT powered exclusively with the rival company’s GPUs. “On training, I think it is too late for us,” said Tan. Instead, the CEO highlighted alternatives, including the emerging fields of edge AI and agentic AI, which forgo the cloud entirely. Tan hinted that the company is planning to capitalize on these fields with upcoming acquisitions: “Stay tuned. A few more people are coming on board.”
The following was originally published November 7, 2024:
The semiconducter industry is in the midst of a major shift as NVIDIA will replace Intel on the Dow Jones Industrial Average tomorrow. The change, which was announced by S&P Dow Jones Indices late last week, brings to an end Intel’s 25-year run on the Dow Jones. The rise of NVIDIA, which CNBC reports includes a 240% increase in share prices last year, and a rise of over 170% so far in 2024, is thanks largely due to the company’s focus on building AI chips.
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Conversely, Intel is currently the lowest-performing entity on the Dow, with Ars Technica reporting the company’s stock has experienced a 54% drop so far this year. The shift is predictably hitting Intel hard, as the chipmaker last week revealed it has approved cost and capital reduction activities, which includes the layoffs of nearly 17,000 employees.
In addition to NVIDIA’s AI-centric approach, analysts point that the company’s recent GPU strategy has also aided its sudden growth.
“You need CPUs to light up the GPUs but from a metric value, GPUs are a larger portion of the growth,” Chief Analyst at Moor Insights and Strategy Patrick Moorhead tells The Registrar. “Second, is the higher value of a solution (CPU+GPU+networking+even cables) from the individual piece parts. Total solutions are looked at as better for time-to-market and even reliability. A decade or two ago it would have mattered as the Dow represented stability while the NASDAQ was looked at as riskier, but today no.”
“The index changes were initiated to ensure a more representative exposure to the semiconductors industry and the materials sector respectively,” reads S&P Dow Jones Indices announcement.
