The co-founders and early employees of Intel have established a long-term corporate dominance. But it cannot resist the subversive forces of Silicon Valley forever.
At some point, engineers at the Intel Silicon Valley headquarters walked at the company’s Silicon Valley headquarters with pride. This semiconductor company that they work not only helped to create the technology industry in Silicon Valley, blew up the personal computer revolution, but also caused tiny transistors to create the brain of various devices, ranging from bakers to fighter planes.
Intel was able to do this in part thanks to the business philosophy of Andy Grove, third employee of the company. Grove held senior management positions in the company from 1979 to 2005, of which he was Chief Executive Officer from 1987 to 1998. He created Intel as the dominant supplier of most of the chips used in computers and developed an enterprise culture of “constructive confrontation” at the heart of his personal motto, “Only paranoia can survive”.
But after Grove left, Intel gradually lost his competitive edge. Companies have missed the opportunity of a revolution in smart phones and artificial intelligence, and the power of chip production is declining. Last Friday, Intel became the beneficiary of the largest United States Government investment in business since the 2008 financial crisis, and Trump announced a deal to buy 10 per cent of the company’s shares at a price of about $8.9 billion.
From the industry pole to the government-supported enterprise, Intel’s journey confirms an ancient truth in the technology industry: even the most powerful firms can fall from their peaks. Too often, visionary founders can use original and subversive ideas to push start-ups to the top, creating enterprises that can change the world. But when the founders leave, many of these companies will miss the next wave of technology, be overtaken by emerging firms and eventually slow to decline.
Today’s technology giants stand above the ruins of the former industrial giants: Apple Headquarters was built at the old site of the Hewlett-Packard large park; Google office space was the headquarters of Silicon Charts; Meta took over the Sun Microsystems campus and retained the logo of the former company as a warning for peace.
In 1968, two pioneers in the semiconductor field — Robert Nois, microchip inventor, and Gordon Moore, who proposed an exponential increase in chip performance — left Fairchild Semiconductor and founded Intel as a competitor. They also brought with them engineers born in Hungary who were good at management, Grove, and spent a year developing new technologies.
Intel originally produced silicon-based storage chips for short-term data, and subsequently invented microprocessor chips to calculate the mission. The United States Government was one of the earliest client groups for semiconductors. Moore had predicted that future chips would be used in areas ranging from cameras to toys to manufacturing equipment.
In the 1970s, enthusiasts and businesses used 8080 microprocessors in Intel to assemble early personal computers, a chip that sold far more than competitors. Later, Intel successfully convinced IBM to use the Intel chip in its PC.
Following the IBM approach, Microsoft developed the Windows system in 1985, which can be run on Intel processors. This combination opened the “Wintel Age” when most computers around the world used Windows to match the configuration of Intel hardware. The profits of Microsoft and Intel rose sharply, both of which were among the highest in global market value by the mid-1990s. Soon after, most of the world’s computers were marked with Intel processors, making the chip manufacturer a known name.
In 2009, the Obama administration was deeply concerned about Intel ‘ s monopoly in the area of computer chips, and extensive antimonopoly proceedings were brought against the Silicon Valley giant. The following year, when the two sides reached a settlement and Intel made concessions, their profits were barely affected.
And then the danger began to appear. Paul Odnin, Chief Executive Officer of Intel from 2005 to 2013, refused the request for apples to customize his first generation iPhone ‘ s chip on the grounds that apples gave too low prices. Later, with the iPhone on the planet, Odnin expressed regret.
“If we had taken this order, the world might have been different.” In 2013, Odnin stated in an interview with the monthly Atlantic magazine.
However, Intel weathered the crisis caused by this failure by supplying chips for the data centre that underpins the dynamic cloud computing market. Its annual income increased from $34 billion in 2005 to $53 billion in 2013.
The company’s management later stated that the lucrative microprocessor of Intel at the time — not only driving personal computers to power but also supporting large equipment such as servers — was like a plant called the Tridentia bush, which could poison other competing plants around it. Although new product projects are often initiated in Intel, they are often interrupted by management ‘ s lack of patience or technical expectations.
One of the projects that Intel stopped was a chip that could be calculated several times at the same time, designed to simulate a graphical processing unit, which was essential for video games and later became a core algorithm for artificial intelligence applications. But the graphic chip developed by Intel failed and the project was put on hold.
Odnin’s successor, Brian Koziannik, tried to make up for Intel’s mistakes in the area of movement by investing billions of dollars in the development of modem chips for iPhone. However, the company has difficulties in developing this technology; even worse, Koziannik was forced to leave the company because of an inappropriate relationship with the company ‘ s employees and eventually Intel sold the modem to apples.
At the same time, Intel also lags behind in the semiconductor manufacturing sector due to delays in the development of new production processes. Between 2015 and 2019, rivals such as the build-up and the Tristar electronics took advantage of the opportunity to move beyond Intel.
In 2021, Intel invited former executive Pat Gersinger back to take responsibility for corporate transformation. Gersinger has developed an ambitious plan: five new production processes will be launched in four years to regain leadership in manufacturing. He also lobbied the Biden Government to adopt the Chips and Science Act, which allocated $50 billion to revitalize the American chip manufacturing industry.
Gersinger pledged to invest over $100 billion to build chip manufacturing facilities in Arizona, Oregon, New Mexico and Ohio in the United States, where Ohio will establish a new business entity.
But just as Intel focused on manufacturing, between 2022 and 2023, Openai, an artificial intelligence start-up company, trained the ChatGPT system with a graphic processor that can write poetry, code, answer complex questions, with a surge in the demand for graphic processors. And Intel’s rival, Yvette, is an enterprise specializing in graphic processors.
With the introduction of the British Weeda chip by Cloud Calculator, Intel’s sales declined significantly, while the company’s recruitment and manufacturing costs increased.
Last November, Intel secured $7.86 billion from the United States Government through the Chips and Science Act. The company subsequently dismissed Gersinger and appointed Chen Liwu, the senior manager of the semiconductor industry, to take over, in an attempt to save the situation.
Chen Liwu has put forward a series of plans: downsizing, developing new artificial intelligence strategies and focusing on finding clients for the future chip manufacturing technology in Intel. However, in only five months of his tenure, Trump asked Chen Li Wu to resign on the basis of his investment in China Semiconductor.
This pressure prompted Chen Li Wu to travel to Washington this month to meet Trump. The President suggested that Intel would need to give the United States Government 10 per cent of its share in exchange for previously approved funding for the Chips and Science Act. The deal was formally finalized last Friday.
At the same time, Weida has become the highest-marketed company in the world, with a market value of over $4.3 trillion. The value of Intel, which used to be far above Britain, is now only $108 billion.