• Between 2021 and 2024, Intel’s revenue dropped by over 30%. This sharp decline highlights the company's weakening competitiveness in its core CPU market and a continuous loss of market share.

• Intel’s significant investments in its foundry business have resulted in substantial financial losses, underscoring the high capital intensity and prolonged return cycles inherent in the semiconductor manufacturing industry.

• Although Intel maintains a dominant position in the data center CPU market, its failure to make significant inroads in the booming GPU market driven by generative AI demand poses a serious challenge to its future growth.

Between 2021 and 2024, Intel experienced a significant revenue decline of over 30%, marking one of the most challenging periods in the company's history. This sharp drop underscores Intel's waning competitiveness in its core CPU market and highlights its ongoing struggles to maintain market share in an increasingly competitive semiconductor industry.

Intel lost significant ground to major semiconductor competitors

Intel’s revenue decline demonstrates its eroding dominance in the core CPU market, exacerbated by a stagnating PC industry and intensifying competition from AMD. AMD’s latest processors often match or exceed Intel’s in terms of performance, energy efficiency and cost-effectiveness, further eroding Intel’s market position. From an 80% share in the client and server CPU market in 2015, Intel’s share plummeted to around 60% by 2024.

While maintaining ownership of facilities gives Intel potential advantages in cost control and custom performance optimization, its manufacturing execution has faltered. Delays and setbacks in process technology improvement have left Intel’s products trailing historical standards. Meanwhile, AMD has leveraged cutting-edge process technologies, such as TSMC’s 7nm and 5nm nodes, to produce superior products that have steadily chipped away at Intel’s position across desktop, server and laptop segments.

Intel continues to invest billions in expanding foundry business to reclaim glory

Intel has traditionally been a semiconductor manufacturing technology leader in cutting-edge processes and intellectual property innovation. However, in the past decade, Intel has encountered significant delays in transitioning to more advanced manufacturing nodes. Its semiconductor manufacturing technology, particularly the 10nm process (10nm, 10nm+ and 10nm++), has faced multiple challenges, resulting in a decline in its position in the semiconductor industry.

Moreover, Intel's adoption of EUV technology, yield improvements and capacity expansion have been slower than its competitors. This has led to production bottlenecks and delays in new product launches. In contrast, competitors like AMD, NVIDIA and Qualcomm have leveraged TSMC's advanced foundry capabilities to gain a technological edge.

However, the development of semiconductor manufacturing technology is inherently not something that can be achieved overnight. TSMC, for example, has taken decades to transition from being a laggard to an industry leader. The foundry industry involves high capex, extended working hours and substantial labor costs. Updating manufacturing processes requires immense financial investment. For example, TSMC's capex for 2024 is projected to exceed $30 billion. Besides, the return on investment in semiconductor research often takes longer than expected due to the significant risks involved in developing advanced processes. Even extensive R&D efforts may not yield immediate returns. Moreover, the industry is also highly vulnerable to economic cycles, which can transform significant capex investments into liabilities during downturns.

Intel failed to seize opportunity offered by GenAI demand that emerged in 2023

In the data center and PC GPU markets, Intel is a latecomer entering a space dominated by NVIDIA and AMD, which have established strong reputations and market shares over decades. NVIDIA, in particular, has a profoundly entrenched presence in gaming, professional workloads and AI applications, setting a high bar for Intel to surpass. Intel’s products, such as the Arc series for PCs and Ponte Vecchio for data centers, are still relatively new and need to prove their ability to compete with more mature offerings, particularly in terms of algorithm and feature support. The company also lacks the robust developer ecosystem and software support that NVIDIA has cultivated through its CUDA platform, which has become an industry standard for AI and HPC workloads. While Intel's oneAPI framework holds significant potential, widespread adoption will take time and must address compatibility challenges across various applications and games.

Conclusion

Intel today stands at a pivotal point in its history. Once the leader of the semiconductor industry, the company now faces significant challenges, including intensifying competition, manufacturing delays and missed opportunities in high-growth areas like generative AI. While its investments in the foundry business and innovative initiatives such as oneAPI show potential, Intel must prioritize restoring customer confidence. To achieve this, the company needs to focus on enhancing its manufacturing capabilities through in-house production or leveraging external foundry partnerships.

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.