WSJ Tech News Briefing: Why Intel Is Losing Ground to Nvidia

Release Date: January 15, 2025
Host: Bell Lynn
Guest: Christopher Mims, WSJ Tech Columnist

Introduction

In the January 15, 2025 episode of WSJ Tech News Briefing, host Bell Lynn delves into the declining fortunes of Intel, a once-dominant tech giant, as it grapples with losing market share to competitors like AMD and Nvidia. The discussion, featuring insights from WSJ tech columnist Christopher Mims, unpacks the multifaceted challenges Intel faces across its key markets and explores the broader implications for the tech industry.

Intel's Struggles in Key Markets

Bell Lynn opens the discussion by highlighting Intel's diminishing presence in critical sectors such as data centers, laptops, and PC gaming hardware. Once a leader in these areas, Intel is now losing ground to more agile competitors.

Bell Lynn (00:18):
"The maker of chips for data centers, laptops and hardware for PC gaming is losing market share in areas critical to its profitability."

Decline in Data Center Market Share

Christopher Mims provides a detailed analysis of Intel's retreat from the data center chip market—a sector traditionally dominated by the company's high-margin CPUs.

Christopher Mims (01:41):
"The biggest one, the most clear and present danger, is that they have lost so much share in the data center, which is typically where they sell their most expensive and highest margin chips."

The latest quarterly reports reveal that AMD has surpassed Intel in data center revenue, a stark reversal from 2022 when Intel's data center revenue was three times that of AMD. This shift signals a significant erosion of Intel's core business.

Erosion in Laptops and Gaming

Beyond data centers, Intel is also facing challenges in the laptop and gaming markets. Competitors like Qualcomm, Mediatek, and potentially Nvidia are increasingly using ARM-based architectures, diminishing Intel's dominance in these segments.

Christopher Mims (02:33):
"2025 really looks like it's going to be the year that lots of laptops are made with non-Intel chips."

In the gaming sector, Intel may even begin to lose market share in areas where it has traditionally been a stronghold.

Intel's Strategic Response and Future Plans

Intel is attempting to counteract these trends by focusing on what it terms the "year of the AI PC" and by advancing its manufacturing processes. The company claims that its upcoming manufacturing capabilities will surpass those of its main competitor, Taiwan Semiconductor Manufacturing Company (TSMC).

Christopher Mims (02:36):
"When I spoke with them, they said next year, we're looking forward to it being the year of the AI PC. They're also excited about their forthcoming manufacturing process, which they claim will put them back into the lead in the world in terms of the most advanced manufacturing ahead of their main competitor, TSMC."

However, Mims remains skeptical about the effectiveness of these strategies, questioning whether advancements in manufacturing alone can restore Intel's competitive edge.

ARM Architecture and Competitive Pressure

A significant factor in Intel's decline is the rise of ARM architecture, which offers a more flexible licensing model compared to Intel's proprietary x86 architecture. This openness allows companies like Apple, Microsoft, Google, and Amazon to design their own chips, further reducing Intel's market dominance.

Christopher Mims (06:26):
"ARM is really like Switzerland. So they have this chip architecture which they will license to anyone. And so that puts Intel in the position of it being Intel versus the world, essentially."

The widespread adoption of ARM-based chips leads to increased software optimization and investment in ARM technology, creating a feedback loop that favors ARM over Intel's x86.

Leadership Turmoil and Its Impact

Intel's leadership instability has compounded its challenges. The recent ousting of CEO Pat Gelsinger underscores the company's internal struggles.

Bell Lynn (07:58):
"Intel is looking for a permanent leader after CEO Pat Gelsinger was pushed out last month. To what extent do you think that search plays a role in Intel's current turmoil?"

Christopher Mims (08:12):
"Intel's troubles really start decades ago... Pat Gelsinger was supposed to be a return to form. He spent big and made a bet that ultimately Intel's board decided wasn't going to pay off."

The search for a new CEO with a strong background in chip manufacturing indicates Intel's intent to refocus on its core competencies. There is speculation that Intel might split its operations into separate entities for chip design and manufacturing—a strategy akin to AMD's business model.

Missed Opportunities in Artificial Intelligence

Artificial Intelligence (AI) represents a critical growth area where Intel has notably lagged behind competitors like Nvidia and AMD. Despite having AI-capable products, Intel has been unable to capture significant market share in this lucrative sector.

Christopher Mims (09:30):
"Intel does have products which can handle AI workloads. They are very far behind in terms of capturing any of that business. Obviously the lead there is Nvidia. A very distant second is AMD."

This failure to capitalize on the AI boom has further eroded Intel's competitive position, limiting its ability to innovate and secure new revenue streams.

Path Forward and Geopolitical Significance

Intel's acknowledgment of its dire situation reflects a broader understanding of the obstacles ahead. Turning around such a massive organization—employing over ten times the number of employees as Nvidia—requires substantial time and strategic overhaul.

Christopher Mims (10:20):
"Intel is a company that has really been humbled lately... They recognize that they have serious problems and that they need to turn the ship around. But it is a truly massive ship."

Moreover, Intel holds a unique geopolitical position as the last major American manufacturer of advanced chips. This status has attracted significant government investment through initiatives like the CHIPS Act, which has provided billions to bolster domestic chip manufacturing. However, Mims suggests that even this support may not be sufficient to fully stabilize the company without additional strategies.

Christopher Mims (10:20):
"Everyone is aware that Intel also has this unique kind of geopolitical role. They are the one remaining American high tech manufacturer of chips... the government has given them tens of billions of dollars through the CHIPS Act to build factories here."

Conclusion

Intel's current predicament is the result of long-standing strategic missteps, increasing competition from more agile rivals, and a failure to adapt swiftly to emerging technologies like AI. As Intel endeavors to stabilize and reinvent itself, the outcome remains uncertain. The company's substantial size and geopolitical importance add layers of complexity to its turnaround efforts. Stakeholders remain cautiously optimistic but recognize that Intel faces an uphill battle to reclaim its former leadership in the tech industry.

This summary captures the key discussions and insights from the WSJ Tech News Briefing episode "Why Intel Is Losing Ground to Nvidia." For a deeper understanding, listening to the full episode is recommended.