While ordinary businesses look to digital transformation to boost efficiency, a global enabler of digitalization is apparently lacking in prescient leadership

Recently, Intel Corp issued a negative growth forecast that lost it US$30bn in market value overnight, and its stock value reached doldrums not seen since 2013.

The firm is selling off its entire stake in ARM and ZeroFox, reducing its holdings of Astera Labs, and plans to shed 15% of its workforce while suspending dividends.

Industry observers have noted how the firm has reached this quandary due to some key missteps:

  1. Missed opportunities: The firm failed to capitalize on key markets such as phone chips, modems, and memory, where it could have gained a competitive edge or at least kept pace.
  2. Foundry challenges: Efforts to establish itself as a leading chip foundry were not successful when competitors from Taiwan have been more successful at innovating and at achieving good production yields.
  3. Failed launches: Its unsuccessful attempts to compete with Nvidia in the graphics processor market, among exits from the modem and memory industries. Its lag in transitioning to 10nm and smaller process nodes in the past, and current processor design flaws in the Raptor Lake overheating saga, have weighed heavily on its competitiveness and consumer trust levels.
  4. Financial strain: The firm had nearly US$15bn in new financing during the second quarter of 2024, while its foundry operations had lost US$2.8bn in the same period. The future of the firm’s funding by the current US administration (CHIPS Act, Science Act) are also in question if a new administration decides to continue funding the firm that is too big to fail.
  5. Leadership and strategy: Pat Gelsinger’s return as CEO was intended to revitalize Intel, but the firm’s strategic initiatives have not yet yielded the desired results.

According to Wells Fargo’s Aaron Rakers: “Intel’s diversification into various markets without achieving significant success has diluted its strategic focus.”

This could hold a lesson in corporate management, about prioritizing an organization’s core strengths and competencies. All the best talent and technological resources cannot undo leadership failures.