Intel released its financial results for the second quarter of 2023 on July 27. We now have profits after two quarters with losses. AMD’s numbers show that AMD is putting up a stronger fight against Intel as it puts up a bigger fight.
Intel has been the market leader for all of PC history. However, it is not uncommon for dominant companies to fall from their leadership positions due to internal decisions made by the CEO and board.
Intel was a leader in the industry, but it also retained its manufacturing capabilities to allow the company to weather the pandemic relatively well. It didn’t face the same supply issues as some of its fabless competitors. This advantage was offset somewhat by the shortage of other parts.
We will discuss Intel this week and then conclude with my Product Of The Week, the A770, Intel’s ARC graphics card. If you’re building a PC that looks like mine, you might want to consider it.
Intelligence: Its Importance
Intel’s importance as a manufacturer of microprocessors is increasing due to the uncertainty in global politics.
Taiwan is home to a large portion of the world’s microprocessor production capacity. Taiwan is at present in danger of being attacked by China and destroyed. In a conflict, the ability to produce advanced weapons will be directly linked to the manufacturing capacity lost during the initial stages of the conflict.
Even though there are other places in the world with more manufacturing capacity, this would not be enough to compensate for the potential loss in Taiwan. Moving parts internationally is difficult in a war of this magnitude, such as the one that China will likely become. China has aggressively bought or locked up some of these extra resources so that only the domestic manufacturing capability can provide what is needed to execute this war successfully.
Intel’s focus on the Chips Act, which builds up manufacturing capacity within the U.S., would be crucial to the country’s survival in future pandemics or wars.
Intel also does the majority of the work in defending x86 against competing technologies such as ARM. However, ARM’s latest moves have made it less desirable. This technology threatens America’s dominant position in microprocessors. Intel is also responsible for the majority of developer support and building for x86. If it fails, it will be difficult for the x86 platforms, which are still dominant in PCs and workstations.
Intel’s survival is crucial to the U.S. and other Western countries that have significant investments in x86 technology. AMD, as good as it is, doesn’t have the potential to replace Intel.
Turning Around a Business
Turnarounds in corporations are not easy. Intel CEO Pat Gelsinger is well aware of this. He successfully brought VMware back to life before returning to Intel, but Intel’s situation is more complex. Gelsinger assumed control of VMware when it was underperforming.
When Gelsinger assumed the leadership of Intel, it was in a much more difficult situation. Gelsinger’s and Bob Swan’s predecessors made a number of poor decisions, which led to the company’s problems. Swan had been a successful CEO despite having a background in finance. He was not qualified to lead Intel as a financial expert, but he did his best.
Gelsinger took over Intel in the midst of a mess that included underfunded projects, alienated workers, and a company in its own death spiral. Intel’s turnaround has not been completed, and mistakes were made, such as laying off workers and reducing compensation for the remaining employees. These decisions can make employees resentful of management, which can lead to an unplanned turnover or a climate of resentment. Both of these can be deadly for a company.
Intel’s employees did a good job and managed to bring in a respectable quarter. This gives us hope that Intel has now gotten out of its rut and will continue improving even before the new manufacturing capabilities are available.
Intel’s Competition
Intel’s main competitors are AMD, Nvidia, and Qualcomm. AMD and Nvidia are both running smoothly with no noticeable mistakes. Nvidia is now the company Intel should be watching because it has leveraged its GPU capabilities to gain a strong CPU presence.
Qualcomm needs to correct its problems with Apple (and its customers) trying to force it out of business and its lack of a real PC solution by putting more pressure on Intel next year.
Nvidia’s dominance in AI has pushed the company up to valuations that are almost unheard of. Intel must have a stronger position in AI and robotics, including autonomous vehicles. This AI battle will determine the competitive landscape, and Nvidia won’t be easy to catch.
Intel’s financial results indicate that it will be a much better fighter in the future. It will be difficult to catch up with Nvidia unless it stumbles like Intel.
Wrapping up
Intel’s Q2 results strongly suggest that the company has recovered and that OEMs can have confidence in Intel.
The company’s AI-focused components will be in full force by next year, with products that are competitive on paper. They could change the game if they continue to operate as they do now. It will still have to compete with the next-generation components from its competitors. This fight is not going to be pretty.
The AI wars are not yet decided. Intel is becoming more organized, and this will make the AI wars a fair battle. Nvidia is currently in a big lead, but AI hasn’t reached maturity yet. This means that we are likely to see many changes in leadership until AI matures. These changes may restore Intel’s former glory.
Intel employees deserve praise for their exemplary performance during a difficult time when they faced layoffs and reduced income. I expected the company to spiral downward after these difficulties. It now appears that it is on a path of recovery.
Intel ARC A770 Graphics Card
Intel sent me A770 and A750 graphics cards for testing before the end of last season. I have not been able to get them working until now. Intel has stopped sending desktop review systems and parts for some time, so we now mostly test AMD-based systems. These Intel graphics cards do not like the new AMD system.
If you own an AMD desktop PC, don’t consider these cards. However, on an Intel-based PC, the cards performed well and scored higher on 3DMark than similar-priced cards from AMD or Nvidia.
Both cards performed very similarly, which led me to believe that you would choose one card over the other more for its appearance than performance. The A770 is lit up in a pleasant blue. As shown in the picture, this card looks great inside a GPU display.
In a case where the card is mounted flat on the side, you can’t really see the lights. In a GPU display case, however, the lighted features and fans really make the card stand out.
