Do we need to prepare slowly for a real earthquake? Is it possible that a giant like Intel could collapse? And what could all this mean for the global economy?
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One of these questions can be answered very quickly. The chances of a company as big as Intel collapsing are illusory. It is too important a component of the US market for Washington to afford to allow such an event to happen. So if anyone has been rallying for this to happen, we have disappointing news for them. There is no chance of Intel going bankrupt.
Intel slept through its chance
However, this does not change the fact that the technology giant is currently experiencing a difficult time. The production of new chips has not been as successful as expected and is dragging the company down.
But what has gone wrong? Why such results when demand for chips worldwide is huge? Well, Intel, like some of the other big ones, slept through the opportunity to take a step forward. Everyone probably remembers cases like Kodak or Nokia, which few mention today, but which at one time dealt cards in their niches.
In the case of Intel, it is about betting on the wrong technology. When the time was right, the company did not start developing chips in EUV lithography, betting on a different horse. Time has shown that this was a big mistake, which today is reverberating with hiccups and generating huge losses.
Wanting to chase its big rival, i.e. TSMC, Intel admittedly invested in development, wanting to conquer the market with five (!) new lithography technologies in just four years. Pat Gelsinger's 2021 plan seemed extremely ambitious and, had he succeeded, he would probably be hailed as a visionary today.
It did not succeed
As it turned out, the programme failed. Powerful investments failed to deliver and in the second quarter of this year alone, Intel recorded more than one and a half billion dollars in losses.
This, in turn, translated into a valuation of the company's value on the markets, which fell by as much as 50 per cent! Not surprisingly, then, Intel's problems have now gone beyond the walls of their headquarters and become an issue that fires up public opinion in the US, but also around the world. And at the end of all accounts, it is leading to staggering rumours of the giant's imminent demise.
However, now that we have come to the consensus that this will not happen, there are two other solutions in play that should happen in the near future. These are under serious consideration as Intel is losing more and more market share every month to AMD, whose chips are much more powerful.
What lies ahead?
The first scenario is for Intel to find a wealthy investor who would be able to put up their capital and help the company stand on straight legs. And this option seems the most likely.
The second scenario - at least for the time being - seems a little more fantastical, but it too is being talked about. For it concerns the acquisition of Intel by... Qualcomm, in whole or in large part.
The San Diego-based company currently boasts a much higher capitalisation - a comparison of $188 billion to $93 billion on the Intel side. However, experts believe that this may not be enough and, in addition, Qualcomm could be denied approval for such a move by the relevant antitrust authorities.
However Intel's fortunes turn out, they are worth following. After all, the problems of such a large company do not matter locally, but will affect the market globally.
