Intel CEO warns of more tough times ahead

Intel CEO Pat Gelsinger has warned that the company’s performance, which has underwhelmed of late, is likely to get worse before it gets better.

Speaking at the Evercore ISI TMT conference, Gelsinger explained he expects Intel to continue to lose share in the server processor market next year, with recovery starting in 2025.

After selling off its Optane memory business earlier this year, Intel is also likely to take further steps to streamline its bloated product portfolio, he announced.

Intel in choppy waters

Although Intel remains a giant of the semiconductor industry, the company has suffered through a period of underperformance of late.

While the return of Gelsinger in early 2021 appeared to breathe new life into the firm, a series of setbacks over the last couple of months has served to highlight the problems Intel continues to face.

For example, the launch of the company’s next-generation line of server processors, codenamed Sapphire Rapids, has been punctuated by delays. Originally slated to launch in 2021, the new Xeon chips were first pushed back to early 2022, then to the middle and end of the year – and now it appears most will have to wait until Q1 2023 to gain access.

Separately, Intel’s latest foray into the GPU business got off to a rocky start, with its first Arc cards suffering repeated delays connected to the global chip shortage and other Covid-related factors.

The company is also said to be struggling to bring its first-gen Arc GPUs up to speed with current-gen models from Nvidia and AMD from a performance standpoint. It was even rumored that Intel might have to scrap its Arc Alchemist and Battlemage lines completely, as a result of unfixable hardware flaws kneecapping their performance (though Intel moved swiftly to shut down these claims).

In July, Intel published a dismal quarterly earnings report, the lowlight of which was a 22% drop in revenue year-on-year. So bad was the performance, Gelsinger took to Twitter to issue a public apology.

“This quarter’s results were below the standards we have set for the company and our shareholders. We must and will do better,” he wrote.

Traditionally a stronghold for Intel, the data cener market is of immense strategic importance; a recovery of momentum here would go a long way to setting the company back on the right track.

Gelsinger suggested that, although the company’s products will continue to be competitive, Intel won’t recover true leadership status until the arrival of its Sierra Forest processors in 2024. 

The new line will benefit from a high level of power-efficiency and greater core count, which Intel hopes will help to fend off the advance of Arm-based chips (like AWS’ Graviton series), as well as processors from its x86 competitors.

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Via Tom’s Hardware

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