Why Intel Is Losing Ground to Nvidia
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The once-mighty tech giant Intel is struggling to keep up and navigate changes in its key markets. The maker of chips for data centers, laptops, and hardware for PC gaming is losing market share in areas critical to its profitability. Meanwhile, its competitors like AMD and NVIDIA have nimbly moved to capture share. Now,

Now our tech columnist Christopher Mims tells us what's going on at Intel and why he says the company's woes may be worse than you think.

The market for data center chips, once considered Intel's sole domain, seems like it's up for grabs. One big flashing warning sign. In the latest quarter reported by both companies, AMD eclipsed Intel's revenue in that market. It's a stunning reversal. In 2022, Intel's data center revenue was three times that of AMD's.

For more on this, we're joined by WSJ tech columnist Christopher Mims. Okay, Christopher, tell us, why is Intel struggling even more than people might be aware of? Intel faces a number of threats. The biggest one, the

most clear and present danger is that they have lost so much share in the data center, which is typically where they sell their most expensive and highest margin chips. Intel's also losing ground a bunch of other places. So 2025 really looks like it's going to be the year that

Lots of laptops are made with non Intel chips with chips manufactured by Qualcomm, by MediaTek, potentially even by Nvidia, which are all based on the ARM architecture, which competes with the x86 architecture that Intel, of course, has pioneered. And it seems like Intel could even start to lose market share,

at least on the margin, in areas where they've always been dominant, like gaming. Yeah, that all paints a pretty bleak picture, right? It really does. When I spoke with them, they said, next year we're looking forward to it being the year of the AI PC. They're also excited about their forthcoming manufacturing process, which they claim will put them back into the lead in the world in terms of the most advanced technology.

manufacturing ahead of their main competitor, Taiwan Semiconductor Manufacturing, otherwise known as TSMC. But it remains to be seen if that will actually be the case. And even if they do take that title again of being the most advanced manufacturing process for microchips in the world,

What does that get them? They don't have a big business manufacturing others chips the way that TSMC does. And it could put them in the lead for manufacturing their own chips, but that's a shrinking market. Intel says that 2025 is going to be the year when they're going to stop losing market share.

for specifically the data center. And that this is going to be the year that they are going to try to, it's almost like they're putting the company in the emergency room. They're going to stabilize it and then hopefully start to turn things around.

Right, and we should note that a spokesperson for Intel said the company is focused on simplifying and strengthening its product portfolio and advancing its manufacturing and foundry capabilities while optimizing costs.

So we talked a little bit about its market share, but the last time I checked, Intel had about 75% of the market for CPUs that go into data centers. How do we kind of square this with the fact that it's not doing enough there? Intel has 75% of the market for a kind of chip that is still essential in data centers, which is the CPU. But

in terms of spend and demand is getting dwarfed by everyone spending so much money on these special GPU chips, which of course NVIDIA has been a pioneer of, which they use for AI training and for delivering AI. In addition, NVIDIA's future quote unquote AI supercomputers are going to increasingly have a CPU that is designed by NVIDIA itself.

Intel still has dominant market share for a particular type of chip that's essential in data centers. But the importance of that chip is waning even as competitors line up to actually take that particular market from Intel. Coming up, what will it take for Intel to turn the ship around? Why there's no simple answer to that question after the break.

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So Intel has also for a long time survived off of its proprietary chip architecture known as x86, which you mentioned already. But now we're dealing with this ascendance of ARM, the British chip designer, and some of the biggest cloud providers and the biggest cloud providers choosing to go the way of ARM. So what's going on there in that facet of the wars? ARM is really like Switzerland. So they have this chip architecture architecture

which they will license to anyone. And so anyway,

What that means is it puts Intel in the position of it being Intel versus the world, essentially, because Apple obviously uses the ARM architecture to make its own chips for its computers, but also Microsoft, Google, Meta, all of the quote unquote hyperscalers, Amazon are using ARM's architecture to make their own chips for their own internal use and

CPUs for the main kind of workloads and the special AI chips for processing AI. And so it's a really a closed versus not quite an open architecture, but an architecture that anyone can license.

And that just creates all these feedback loops because then all of the software starts getting written for the ARM-based chips. And more and more of the chip engineers are familiar with it. There's more and more investment. And of course, these ARM-based chips can be manufactured by anybody. I mean, today that really means TSMC, but...

By contrast, x86 chips are only getting manufactured by Intel. There's some manufacture of those by TSMC, but it's a much smaller fraction. It gets kind of complicated. So turning to Intel's leadership, the company is looking for a permanent leader after CEO Pat Gelsinger was pushed out last month. To what extent do you think that search plays a role in Intel's current turmoil?

Intel's troubles, according to the folks I've talked to, really start decades ago. I mean, they started with Intel promoting people to the CEO role who did not have a technical background. And Pat Gelsinger was supposed to be a return to form. He spent big and made a bet that ultimately Intel's board decided wasn't going to pay off.

Intel has indicated that whoever comes next will have a background in manufacturing chips. So it's clear that Intel is going to maintain its focus on trying to be a leader there. It could also indicate that someday Intel might split itself in two. You might have the chip design problem.

side, which is more like an AMD where all they do is design new chips. And then you would have the manufacturing or the so-called foundry side, which is focused on not just serving Intel, but serving everyone. And that might be what can ultimately save what remains of Intel.

And let's talk about artificial intelligence for a moment. We touched on it before briefly, but one of the things that you write about is that Intel missed the boat completely on AI. Is it too late for it to catch up? Intel does have products which can handle AI workloads.

They are very far behind in terms of capturing any of that business. Obviously, the lead there is NVIDIA. A very distant second is AMD, and Intel's so far down that it doesn't look like they have much opportunity to catch up. Their manufacturing side could end up making the cutting-edge AI chips that others design, AMD, even someday NVIDIA.

So we've talked a little bit about what Intel has said about what's in store for 2025 and how they're responding to destabilization by stabilizing. Anything else that the company has said about this sort of reversal of fortunes that it's had?

Intel is a company that has really been humbled lately. They recognize that they have serious problems and that they need to turn the ship around. But it is a truly massive ship. I mean, this is the biggest high tech company on earth, really. No one else does manufacturing and design.

Their revenue may be only about equal to NVIDIA's, but they've got at least 10 times more employees. So it's a big ship and it takes time to turn it around. And at this point, they're really asking for forbearance from their investors and from others. And everyone is aware that Intel also has this unique kind of geopolitical role. They are the one remaining company

American high-tech manufacturer of chips. And a lot of folks in the policy arena think that is really important. And that's why the government has given them tens of billions of dollars through the Chips Act to build factories here. That said, even with all of those tens of billions from the government, what I'm hearing is that might not be enough. There might need to be other strategies to

in order to preserve Intel as a geopolitical asset. That was our tech columnist, Christopher Mims. And that's it for Tech News Briefing. Today's show was produced by Julie Chang with supervising producer, Catherine Milsop. Logging off, I'm Belle Lin for The Wall Street Journal. We'll sign back in this afternoon with TNB Tech Minute. Thanks for listening. ♪

ADP knows any big thing, any small thing, any trendy thing, even a trendy thing that everyone knows isn't a great idea, but management just wants us to give it a try for a bit can change the world of work. From HR to payroll, ADP designs forward-thinking solutions to take on the next anything.