Intel encounters difficulties in Made in America and faces a tough road ahead

Recently, chip giant Intel is facing severe challenges and dilemmas. In the second quarter of this year, Intel's revenue was only 12.8 billion U.S. dollars, but its net loss was as high as 1.6 billion U.S. dollars. In the same period of the previous year, its net profit was 1.5 billion U.S. dollars. The performance is far below ***ysts' expectations. This poor performance is also quickly reflected in the stock price. On August 5, Intel's stock price once plunged by about 26%. The total market value fell below the 100 billion U.S. dollar mark to 91.848 billion U.S. dollars. On August 22, the stock price fluctuated again and once fell by more than 6%. At the close, the total market value dropped to 85.9 billion U.S. dollars. At the same time, compe***s such as Nvidia, TSMC, Broadcom, and AMD have seen their stock prices soar all the way, and their total market values far exceed that of Intel.

Intel has also suffered serious setbacks in business, especially in the fields of data centers and artificial intelligence. Its technologically backward products are constantly losing market share. In the past decade or so, Intel has missed multiple key opportunities, such as the opportunity to transition from computers to smartphones. It also refused to cooperate with Apple and missed the investment opportunity in ChatGPT developer OpenAI. There are also problems in the strategic layout of the AI chip market. The slow response has even led to the loss of Microsoft's large order. In addition, Intel adheres to the IDM model (designing chips by itself and manufacturing chips by itself). When its chip manufacturing technology lags behind foundries such as TSMC and Samsung, its compe***s can launch the latest process chips with the help of foundries, putting Intel at a disadvantage in market competition.

Geopolitical factors have also had a huge impact on Intel. The U.S. government has imposed restrictions on exporting chips to China. The Chinese market accounts for 27% of Intel's total revenue. This change in trade policy has restricted Intel's business in the Chinese market and seriously affected its overall revenue.

To cope with the dilemma, Intel has announced a 10 billion U.S. dollar cost-saving plan, including “global layoffs of 15%”. It is expected that 15,000 people will leave Intel. At the same time, Intel, which has continuously paid dividends since 1992, also announced that it will suspend dividends starting from the fourth quarter of 2024.

Intel, once the “giant” in the chip industry, is now deeply mired in the dilemma of “Made in America”. How to turn the situation around and regain its glory in the fierce market competition has become a difficult problem in front of Intel. Its future development trend is also closely watched by the industry.