Canalys: Intel Is in 'Serious Trouble'

CANALYS CHANNELS FORUM EMEA — Intel “is in serious trouble.”

That was the blunt message from Steve Brazier, co-founder of Canapii and Channel Futures’ sister company, Canalys. He was speaking at the Canalys Channels Forum EMEA Wednesday in Berlin, Germany.

Intel has indeed had a troubled past few months. It reported $1.6 billion in losses in the second quarter and announced layoffs affecting more than 15,000 workers.

Canapii's Steve Brazier on stage at Canalys Channels Forum EMEA 2024, Berlin, Oct. 9.

“They’re in serious trouble,” said Brazier. “They have to separate this Foundry business from the design business like AMD did 10 years ago. [It’s] just a question of time, and probably them accepting the reality is not quite what they hoped it was going to be.”

We reached out to Intel for reaction to Brazier's comments but hadn't heard back by time of publication.

Intel CEO Pat Gelsinger earlier this year spoke on his plans to rebuild “the iconic Intel” after losing ground to rivals in Asia. Part that plan indeed has been to separate Intel’s Product and Foundry lines into two separate businesses. Intel has also expanded the Foundry to include technology development, supply chains, fabrication and packaging services. Intel’s product division will now focus on product development alongside licensing client, desktop, and networking solutions.

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“[We] said, ‘Hey, we’re not fixing one company. We’re creating two world-class companies,’” said Gelsinger.

However, Matthew Ball, who leads Canalys’ global infrastructure, cloud and cybersecurity research, said despite some big wins, like AWS, Intel remains “under significant pressure.” This is due, in part, to a lack of trust by other chip manufacturers.

“It's yet to prove real competition to TSMC and Samsung," Ball told partners in the audience. "Foundry’s No. 1 ally is the US government — it wants a local silicon industry and is investing in that to try to make that happen. But unfortunately, the major fabless chip companies haven’t come around to seeing Intel as a manufacturing partner it can trust, because they've long-term been competitors. So a separation here might help Foundry gain more clientele.”

Nvidia’s Jensen Huang 'Worth More' than Intel

“Extraordinary to see that Jensen [Huang, Nvidia’s CEO] is now worth, personally, more than Intel as a company," noted Brazier, firing another shot across the bow at Intel.

Huang owns approximately 3% of Nvidia, which he took public in 1999. Forbes reported Tuesday that Huang’s net worth has jumped another $4 billion this week, now close to $116 billion. Intel’s reported total market cap is around $96 billion.