As the artificial intelligence industry grows rapidly, competition in the semiconductor industry becomes increasingly fierce. In this wave, Intel, the giant that once dominated the global semiconductor market, is now in trouble.

Recently, rumors about Qualcomm possibly acquiring Intel have attracted widespread attention. In August this year, after Intel's financial report was released, the company's stock price plummeted by more than 26%, setting a record for the largest single-day drop in more than 50 years. Along with this financial report, Intel announced that it would lay off 15,000 people this year.

Is the former chip giant Intel really going to become another "Nokia"?

Missed key opportunities one after another

As one of the world's largest semiconductor companies, Intel has made huge profits for many years due to its monopoly position in the PC processor field. However, as the market transforms, especially with the rise of artificial intelligence and mobile technology, Intel has missed several key opportunities. Although Intel occupies an important position in the fields of PC and server processors, it failed to respond in time to the explosive growth of smartphone chips and graphics processing units (GPUs).

Advertisement

Intel's past failure in the mobile chip market is a major reason for its current predicament. At the beginning of this century, the smartphone market began to take off, and the ARM architecture gradually became the mainstream of mobile devices. However, Intel focused on the x86 architecture and failed to gain a significant share in the mobile chip field, providing an opportunity for competitors such as Qualcomm and Samsung to rise rapidly. Qualcomm quickly dominated the smartphone market with its Snapdragon processors and further consolidated this advantage through its layout in 5G technology.

In the rise of the artificial intelligence market, Intel missed key opportunities again. With the rapid growth of artificial intelligence's demand for data processing capabilities, NVIDIA and Advanced Micro Devices (AMD) quickly seized market share with graphics processing units (GPUs). Although Intel has also made some attempts in the AI processor field, such as launching Xeon scalable processors and Nervana neural network chips for AI computing, the market performance is not outstanding.

Recently, there has been news that Qualcomm is interested in acquiring Intel, and this merger plan has attracted widespread attention in the industry. It is reported that Qualcomm CEO Cristiano Amon is actively promoting this merger, and they are trying to enhance the company's competitiveness in the AI and PC processor markets through the acquisition.

The news of the acquisition reflects the drastic changes in the semiconductor market pattern. As the leader in smartphone chips, Qualcomm's leading position in 5G technology and mobile computing gives it more say in the emerging markets driven by artificial intelligence. Intel's current difficult situation, especially its continuous defeats in the AI chip market competition, may prompt it to seek a way out through mergers and acquisitions.

However, experts generally believe that even if Qualcomm successfully acquires Intel, this move may not immediately solve all the problems faced by Intel. First, the business focus of the two companies is significantly different. Qualcomm mainly focuses on mobile chips, while Intel's core business is still concentrated in the PC and server chip markets. If Qualcomm acquires Intel, integrating these two companies with different business models will face huge challenges.Foreign media reported that industry analysts have pointed out that Intel's current market valuation has plummeted significantly. If the transaction is successful, it could reshape the global semiconductor industry landscape, especially in the AI chip market. However, this acquisition may face antitrust scrutiny from the United States, Europe, and China, particularly due to the extensive business overlaps between Qualcomm and Intel in multiple markets.

Given the prominent market positions of Qualcomm and Intel in the semiconductor field, any merger and acquisition activities may be subject to scrutiny from global antitrust regulatory agencies. This would introduce many uncertainties that could delay or hinder the deal from being reached.

Intel's Self-Rescue Plan

The rapid development of AI has driven drastic changes in the chip industry, especially in the fields of processors and high-performance computing. Intel has lost its market leadership position in recent years, while competitors like NVIDIA and AMD have quickly risen. NVIDIA has become a leader in AI computing with AI-specific chips and the CUDA ecosystem. AMD, on the other hand, has gradually established a foothold in high-performance computing and AI applications through GPUs and server chips.

In comparison, Intel's transformation has been relatively slow. Intel is working hard to develop AI processors and plans to increase revenue by expanding its foundry business. This foundry model means that Intel will no longer only produce its own chips but also manufacture chips for other clients, attempting to expand market share. However, facing fierce competition from foundry giants like TSMC, there is still uncertainty about whether Intel's strategy will be effective.

Faced with multiple predicaments, Intel has not been sitting idly by. In recent years, under the leadership of current CEO Pat Gelsinger, Intel has initiated sweeping reforms.

Firstly, Intel introduced the "IDM 2.0" strategy, aimed at redefining the manufacturing and design of chips. The strategy includes two parts: one is to continue designing and manufacturing high-performance chips independently, and the other is to cooperate with other chip design companies by providing foundry services.

In addition, Intel also announced plans to invest in the construction of wafer fabs globally, including building new semiconductor factories in Arizona, USA, and the European Union, aiming to respond to the diversification of the global supply chain and meet the semiconductor demands of different regions. However, despite these ambitious plans, they require time to take effect.

Under the wave of artificial intelligence, Intel has launched a series of AI chip products in recent years, such as the Movidius Vision Processing Unit (VPU) for edge computing and the Habana Labs Gaudi AI accelerator for data centers. These products are seen as Intel's hope for a comeback in the AI market.

However, the market's acceptance of these new products remains limited, especially compared to NVIDIA's GPUs, Intel's AI chips still have a significant performance gap. Moreover, with AMD's rise in the artificial intelligence market, Intel's competitor camp is continuously growing, posing greater challenges to Intel's artificial intelligence strategy.Despite the rumors of acquiring Intel providing the market with much room for imagination, whether Qualcomm would truly choose this path remains undetermined. Even if a deal is reached, successfully integrating two companies with different business models is also a huge challenge. For Intel, it still needs to regain competitive advantages in the artificial intelligence and mobile chip markets through technological innovation and strategic adjustments.

In the future, Intel's path to self-help is destined to be full of twists and turns, and the semiconductor market under the wave of artificial intelligence will also undergo a new reshuffling in this transformation. Whether through mergers and acquisitions, restructuring, or independent innovation, Intel needs to adapt to market changes quickly in order to survive in this competition for future technological dominance.