By David Daoud: Who would have thought mighty Intel Corporation would be in such a bad situation? The company has always been the dominant player in such things as client computing with chips that seemingly cannot be rivaled. But these days, Intel is getting crushed by AMD and NVIDIA, resulting in its 2Q data center and AI-related revenues experiencing declines, so much so that it is about to layoff 15% of its workforce. They’re also making deep spending cuts, by reducing employee benefits and canceling leasing programs and are likely to move Intel foundry division as an independent subsidiary.
Having tracked the PC sector for so long, Intel was always known as one of the two fundamental pillars of the PC tech sector, along with MS on the OS front. These two companies are believed to be makers and breakers of industry strategies, capable of building coalitions of OEMs, ODMs, software makers, retailers, bankers, etc… like no one else, to push for new products as no one else can. A former boss of mine used to joke that “AMD was tolerated by Intel to avoid the scrutiny of the regulators who keep an eye on monopolies.” Right now, my colleague’s assumption does not fit anymore.
But superstar Intel is not the only giant struggling. Boeing is going through its own headaches, with all sorts of problems that have accelerated after a door panel blew off a 737 MAX jet model in mid-air back in January. In addition to production issues, its workers went on strike, with labor-management negotiations going nowhere. To make things worse, Moody’s is not ruling out a downgrade as the company may be looking to raise cash to pay down debts. There are chatters out there that Moody’s could cut its ratings of Boeing into junk. Extraordinary!
So what’s the conclusion? Two of them from my perspective: Despite all of this, these companies will recover and will continue to thrive long after I am gone. They are extremely powerful, notwithstanding their current financial and operational hiccups. Their power extends greatly to their impact on geopolitical affairs: Intel is steeped into technology politics with the strategic importance of chips and AI amid intense competition with China and others. Boeing is a major player in transportation, aeronautics and defense, in a period of elevated tensions in Europe, the Mid East and Asia. So they will find ways to return, without any doubt, regardless of Moody’s mood.
The second point is perhaps that we can agree that even the titans of industry, seemingly well managed, wealthy, staffed with the brightest strategists from Harvard, Wharton and the likes, can face extraordinary circumstances. (Photo: ChatGPT)
