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Intel’s Interim Co-CEO Highlights Foundry Experience as Key for Next CEO Amid Turnaround Challenges

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Intel’s next chief executive will need a strong background in manufacturing and product development, according to interim co-CEO David Zinsner. Speaking at the UBS Technology Conference on Wednesday, Zinsner emphasized the importance of foundry expertise as the chipmaker navigates a critical phase in its turnaround strategy.

The leadership search comes after CEO Pat Gelsinger announced his resignation earlier this week, following growing impatience with Intel’s progress on its ambitious and costly restructuring efforts. Sources indicate that Intel is evaluating several external candidates, including former board member Lip-Bu Tan, to steer the company forward.

“I’m not directly involved in the selection process, but I believe the next CEO will bring capabilities in both foundry operations and product innovation,” Zinsner noted, underscoring that Intel’s core strategy remains unchanged.

Cultural and Strategic Shifts Needed

Intel faces significant hurdles, particularly in transforming its culture to excel in the foundry and semiconductor businesses. Naga Chandrasekaran, Intel’s head of foundry manufacturing and supply chain, highlighted the need for this cultural overhaul, calling it essential for the company’s long-term success.

Chandrasekaran also reported steady progress on Intel’s 18A advanced node manufacturing process, with milestones being met despite initial challenges. “The remaining obstacles involve yield and defect density improvements, but there are no fundamental roadblocks at this stage,” he said.

Intel plans to deliver 18A chip samples to customers in the first half of 2024 and ramp up production at its Oregon facility in the second half of the year.

Struggles and the Path Forward

Intel’s share price has plummeted by more than 55% this year, as the company lagged behind competitors like Nvidia in the artificial intelligence (AI) chip market. The company was removed from the Dow Jones Industrial Average in October, replaced by Nvidia, further reflecting its challenges in maintaining a leadership position in the semiconductor industry.

Intel’s Lunar Lake processors, central to its foundry revival strategy, are expected to begin improving the foundry division’s margins by next year. Zinsner stated that cost reductions and a shift toward higher-margin wafers will also contribute to strengthening the foundry business.

Despite these efforts, Intel continues to trail industry giant Taiwan Semiconductor Manufacturing Co. (TSMC), which dominates advanced chip manufacturing and serves competitors such as Nvidia.

Outlook

Zinsner reiterated Intel’s optimism about its PC and server businesses, maintaining the revenue guidance provided in October’s earnings report. The company’s leadership transition and focus on cultural and technical transformations are viewed as critical to regaining its competitive edge in the semiconductor market.

As Intel moves forward, its manufacturing investments and product diversification will be under scrutiny, with hopes that the next CEO can deliver the expertise needed to restore the company’s standing in the industry.

US Finalizes $6.6 Billion Chips Subsidy for TSMC Ahead of Trump’s Presidency

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The U.S. Commerce Department announced on Friday the completion of a $6.6 billion subsidy deal with Taiwan Semiconductor Manufacturing Co. (TSMC) to support semiconductor production in Phoenix, Arizona. The agreement, part of the $52.7 billion Chips and Science Act, marks the program’s first major award since its inception in 2022.

Deal Highlights

  • Expanded Investment: TSMC agreed to increase its total Arizona investment from $40 billion to $65 billion, adding a third fab in Arizona by 2030.
  • Advanced Manufacturing: TSMC will produce 2-nanometer technology chips at its second Arizona fab, set to begin production in 2028. It will also deploy its A16 chip manufacturing technology, one of the world’s most advanced.
  • Financial Structure: In addition to the $6.6 billion subsidy, the agreement includes up to $5 billion in low-cost government loans. Payments will be tied to project milestones, with at least $1 billion expected to be released by year-end 2024.

Commerce Secretary Gina Raimondo highlighted the strategic importance of the deal, emphasizing its role in ensuring the U.S. produces cutting-edge chips domestically. “We had to convince TSMC that they would want to expand,” she said, stressing the economic and national security implications of the agreement.

National Security and Policy Concerns

The announcement comes amid heightened scrutiny of semiconductor technology exports to China. On Saturday, reports emerged that the Commerce Department had instructed TSMC to halt shipments of advanced chips to Chinese customers. Raimondo did not confirm the directive but stated, “Investing in TSMC to expand here is offense—defense is ensuring our most sophisticated technology does not reach adversaries like China.”

The subsidy agreement also requires TSMC to forgo stock buybacks for five years and share excess profits with the U.S. government under an “upside sharing agreement.”

Context and Challenges

The Chips and Science Act was designed to bolster domestic semiconductor production, a critical industry where the U.S. lags behind global leaders. Currently, no leading-edge chips are produced domestically. TSMC CEO C.C. Wei called the deal a key accelerator for advancing U.S. chip manufacturing capabilities.

However, President-elect Donald Trump has criticized the Chips Act, raising questions about the program’s future under his administration. Meanwhile, Commerce has allocated additional funds for other semiconductor projects, including $6.4 billion for Samsung in Texas, $8.5 billion for Intel, and $6.1 billion for Micron Technology. Raimondo aims to finalize these agreements before President Joe Biden leaves office in January.

Geopolitical Implications

The U.S. push for semiconductor independence underscores broader strategic concerns about global supply chains and national security. Raimondo reiterated the importance of balancing offensive and defensive strategies, ensuring subsidies support U.S. technological leadership while preventing advanced technologies from reaching competitors like China.

Outlook

With TSMC’s increased commitment and advanced chip production capabilities, the U.S. aims to regain its footing in the global semiconductor market. However, challenges remain, including Trump’s potential policy changes and the delicate geopolitical balance with China.