Intel CEO maps out next steps in grand recovery strategy

Intel CEO Pat Gelsinger has mapped out the next steps in his plan to revitalize the company, after a protracted period of underperformance....

Intel CEO Pat Gelsinger has mapped out the next steps in his plan to revitalize the company, after a protracted period of underperformance.

In a letter to staff, Gelsinger sketched out the next phase in Intel’s new integrated device manufacturing strategy (IDM 2.0),  the goal of which is to “regain unquestioned technology leadership, manufacturing scale and long-term growth”.

Broadly, the plan is to lean more heavily into Intel Foundry Services (IFS), a pure-play foundry division established under IDM 2.0 to compete directly with the likes of TSMC, manufacturing semiconductors designed by third-parties.

Road to recovery

Although Intel remains a monolith of the semiconductor industry, the company has suffered through a difficult period of late, in which it has slipped down the pecking order in the fields of both manufacturing and design.

While the return of Gelsinger in early 2021 appeared to breathe new life into the firm, a series of setbacks over the last couple of months have illustrated the problems Intel continues to face.

For example, the launch of the company’s next-generation line of server processors, codenamed Sapphire Rapids, has been punctuated by delays. And separately, Intel’s latest foray into the GPU is off to a rocky start.

In July, Intel published a dismal quarterly earnings report, the lowlight of which was a 22% drop in revenue year-on-year. So bad was the performance, Gelsinger took to Twitter to issue a public apology: “This quarter’s results were below the standards we have set for the company and our shareholders. We must and will do better,” he wrote.

A core facet of the plan to dig Intel out of this hole is to accelerate the expansion of Intel’s foundry division, which will now operate practically in isolation from the internal design team and other business units.

The idea, Gelsinger explained, is to establish “consistent processes, systems and guardrails between our business unit, design and manufacturing teams”.

“This will allow us to identify and address structural inefficiencies that exist in our current model by driving accountability and costs back to decision-makers in real time. It will also put Intel’s product groups on a similar footing as external Intel Foundry Services customers and vice versa,” he added.

“We will also create a foundry accounting model that encompasses manufacturing, technology development and Intel Foundry Services. This will give us more transparency into our financial execution and will allow us to fully benchmark and drive ourselves to best-in-class foundry performance.”

Separately, Intel has established a new IDM 2.0 Acceleration Office (IAO), led by Stuart Pann, SVP of Corporate Planning, which will be charged with bringing to life the new-look foundry model described by Gelsinger.

In a final rallying call, concluding the statement, Gelsinger promised regular updates on the progress of these projects and told staff that now is the time to “take action as One Intel to unleash IDM 2.0’s full potential.”

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