In 2024, Intel shares fell in price by about 2.5 times. Most likely, the company will leave the Dow Johnson index in the near future, which it joined in the 1990s together with Microsoft. As a result, Intel’s reputation will decline even further. Why this happened and what will happen next, you can read in our article.
What happened to Intel?
Over the past two years, Intel’s revenues have been declining. Yes, thanks to many of its own processing plants, the company is still standing. While it was at the pinnacle of technological progress (and progress) in the 1990s, it is now noticeably lagging behind other computer hardware companies. For example, while competitors have already moved on to 5- and 3-nanometer chips, Intel is still using outdated 10-nanometer solutions.
If we look at the situation globally, we can conclude that Intel management missed the active development of artificial intelligence and also did not invest money in the development of hardware for smartphones. Two such serious mistakes forced the company to catch up with other manufacturers.
At the same time, Intel wants to launch new Core Ultra and Lunar Lake processors and develop already released products for Copilot+PC systems. All this entails serious costs. To reduce them, the company carried out massive layoffs, which damaged its reputation. Since the beginning of the year, about 15 thousand people have been laid off.
Intel’s report for the second half of 2024 showed that it is now suffering huge losses, with future revenues expected to be 1% lower. We are talking about hundreds of millions of dollars. This news caused a slight panic among shareholders, and they started selling their assets on the US NASDAQ stock exchange. And such actions lead to an even greater devaluation of the company.
Today, Intel’s capitalization has fallen to 2010 levels. There’s a joke online that if someone bought $10,000 worth of Intel stock 14 years ago, they’d save that amount down to a penny today. In reality, the real value of each dollar has fallen due to inflation.
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Changes in the computer hardware market
Other companies decided to take advantage of the crisis. Intel plans to buy part of its business from Qualcomm, another American chipmaker. It is the company that now produces Snapdragon mobile systems, which are used in most Android devices. It is quite possible that Qualcomm plans to expand its business and get involved in hardware for personal computers. And under the current circumstances, it is easier for management to buy factories from another manufacturer than to rebuild their own factories from scratch. Moreover, Intel may agree to cut costs and stop the fall in the share price.
At the same time, it turned out that some Intel processors would be produced in the production facilities of Taiwanese TSMC, which specializes in semiconductors. This is a temporary solution: the company has to rebuild its own factories for the new 20A and 18A processors. Intel engineers have already thought through their work in theory, all that remains is to implement it in practice. The final transition to new hardware will take place at the end of 2025. In the meantime, modern equipment made on old 10-nanometer chips will be assembled abroad. Of course, this will entail even higher costs.
Can Intel Survive the 2024 Crisis?
There is no consensus on this issue. However, we will note that other well-known companies retained their assets even after much more serious declines in stock prices. A prime example is IBM, where a sharp decline was replaced by growth and an increase in capitalization. And Intel itself experienced difficult times, such as the era of confrontation with AMD. Moreover, the company has a name that still inspires confidence among millions of users around the world. Perhaps the current crisis is just a kind of reboot for Intel, which is necessary to move to a new technological level.
It is important to note that we are talking about the only company in the world that carries out the entire cycle of processor development, from writing microcode to releasing silicon elements. In addition, Intel has a lot of patents. You can use them yourself or sell them for a lot of money. This is a serious foundation that will help you survive any crisis.
But there are also opposite examples, where large manufacturers were unable to pay off all contracts and were forced to cut back on production. This happened to SEGA, which stopped producing the Dreamcast console in 2001 and left the hardware market. Today it functions as a game publisher.
Do you think Intel will be able to survive the current stagnation? Or will it cease to exist as an independent company? Share your thoughts in the comments!
Do you think Intel will survive the crisis?
Source: VG Times
Christina Moncayo is a contributing writer for “Social Bites”. Her focus is on the gaming industry and she provides in-depth coverage of the latest news and trends in the world of gaming.