There Are Some Issues With Intel’s New Business Model
The company still has a long way to go to catch up with rivals.
Hi there, it’s Tae from the Bloomberg Opinion team. Late last month with great fanfare, Intel Corp.’s new Chief Executive Officer Pat Gelsinger revamped the company’s business model, announcing the creation of a chip manufacturing business called “Intel Foundry Services," or IFS. In a bid to regain chipmaking dominance, Intel will spend $20 billion to build two new fabs in Arizona, vastly expanding capacity for both internal use and for customers of its new IFS program. On Tuesday an Intel executive said the company was preparing for "the biggest build-out of technology infrastructure in human history.”
On the surface, Intel’s strategic pivot comes at an ideal moment. The iconic company has fallen behind in recent years, as my colleagues outlined in a Businessweek feature out Wednesday. And chip shortages are disrupting production in sectors across the economy, from autos to consumer electronics. But despite its bold vision, Intel is set to face challenges to its grand turnaround plan that will prove extremely difficult to overcome.