One of Joe Biden’s biggest gambles is looking shakier by the day.
Pat Gelsinger has claimed that Intel was months from collapse before he took charge of the semiconductor company.
The company, which has spent most of its six-decade history at the cutting-edge of chip design, is losing ground in key markets such as the servers that sit inside today’s cavernous data centres, while its traditional PC business is in longer-term decline.This comes despite the Biden administration lavishing subsidies on the company, which has become the single biggest beneficiary of the Chips Act,On Friday, Intel’s shares fell by 26 per cent, the company’s biggest one-day slump ever.
Once run by giants of Silicon Valley such as Gordon Moore and Andy Grove, this century the company has flipped through a series of leaders who prioritised short-term profit over industry leadership. This all makes the task of turning Intel around a gargantuan – perhaps impossible – effort. Gelsinger has made a credible effort to try, vowing to invest heavily in cutting-edge factories and rapid development of high-end microchips.
In March, Intel was granted almost $US20 billion in grants and loans to finance factories in Ohio, Arizona and New Mexico, making it the single-largest beneficiary of Biden’s Chips Act. Gelsinger and the US president shared a stage on which Biden promised the deal would “transform the country”.Bloomberg
Friday’s share price collapse suggests investors have real questions about whether Intel can remain a serious force in semiconductors, even with billions in subsidies.
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