Intel failures: A cautionary tale of business vs engineering

Opinion Just like Boeing, once upon a time, Intel was the darling of the engineering world. Both companies were the premier tech companies in their day, but those days are long gone now.

As for Boeing, what can you say about an aircraft manufacturer whose planes crash and doors blow off in mid-air? Oh, and which now appears unable to bring its spaceship, Starliner, down from orbit? I want it on the record that I predicted the Boeing astronauts would end up needing to hitch a ride with a SpaceX Dragon to get back to Earth.

Intel hasn’t experienced such speculator public failures, but it is tripping over its own feet a lot lately. As everyone knows, Intel’s 13th and 14th Gen processors, particularly the Raptor Lake series, have been failing… a lot.

It’s not like Intel hasn’t had chip problems before. I’m old enough to remember Intel’s 1994 floating-point division bug in its Pentium processors. And, as a hardcore Linux user, I know all too much about how the Meltdown and Spectre security problems let hackers steal passwords and how Linus Torvalds and the Linux kernel developer crew had to fight like the devil to fix the problem. Linus was not happy.

Today, adding insult to injury, these problems appear most often in its top-of-the-line Core i9-13900K and Core i9-14900K CPUs. When you pay north of $500 or £400 for a single processor, you’re not likely to take it kindly when the video flips out. Funny that.

The problem seems to be that elevated operating voltages caused by a microcode algorithm have led to instability and even processor failures. Additionally, oxidation issues during the manufacturing process have exacerbated these problems, leading to further instability – and a whole lot of ticked off customers.

In addition, Intel has been struggling with yields on its new chip families. Now, Intel hopes to catch up with AMD and TSMC by 2026 with its next-generation 2nm CPUs. I hate to tell you this, Intel, but it’s not like they’ll be sitting around waiting for you.

Intel CEO Pat Gelsinger referred to this struggle as a “death march” back in 2022. I don’t think I would have used that phrase, but it appears to be more apt than ever.

Numerous soon-to-be ex-Intel employees doubtlessly would agree with me. Recently, Intel announced it would soon be laying off 16,000 staffers. That’s 15 percent of its workforce if you’re playing the stock market.

The market wasn’t impressed. Between the layoffs, missing its guidance numbers, and chopping back its dividend, Intel’s share price is dropping like it’s in a, well, death march.

Why is all this happening? I think it’s the result of poor management decisions and underinvestment in critical manufacturing technologies. In particular, it was how Intel prioritized business strategies and financial performance over engineering excellence.

Starting with Paul Otellini as CEO in 2005 through Brian Krzanich, who became CEO in 2013, and Bob Swan, who succeeded Krzanich in 2019, bean-counting and not engineering, was the name of Intel’s game. That’s not a recipe for success.

Intel also made several strategic blunders. Chipzilla’s decision to pass on producing chips for the iPhone, considering the mobile market unprofitable, was a critical error. Would Arm even exist, never mind dominating the mobile space, if Intel had played its cards right? Seriously, did anyone ever believe that Intel Atom processors would power iPhones? I don’t think so!

This was followed by Intel’s botched venture into the 5G modem market. Despite grand announcements and promises, Intel failed to deliver a competitive product, ultimately losing out to competitors such as Qualcomm.

More recently, as Nvidia shows with its $2.5 trillion market cap, Intel simply doesn’t matter in the burgeoning graphics and AI chip market. Intel? Its market cap is just over $81 billion. Now, that will buy you a lot of fish and chips, but it’s barely table stakes when you’re gambling with the big tech boys.

Oh, and Intel does have an AI chip. I bet you didn’t know that. I didn’t until I started researching for this story. And I make my living from watching tech developments all day long.

The chip is named the Gaudi 3. This is an AI accelerator that Intel claims can beat Nvidia’s H100 AI processors. We’ll see. I’m not holding my breath.

I also noticed, though, that Intel doesn’t actually make this chip. It relies instead on TSMC, at least until Intel gets its AI foundry business up and running.

I’m not counting Intel out — not yet, anyway. But a few years ago, I wouldn’t have written Boeing off either, and that was a bad bet. It wouldn’t surprise me if my hope for Intel to get its act together also turns out to be forlorn. ®