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Intel CEO Pat Gelsinger has mapped out the next steps in his plan to revive the company after a prolonged period of underperformance.
In a letter to staff (opens in new tab)Gelsinger outlined the next phase in Intel’s new integrated device manufacturing strategy (IDM 2.0), aiming to “regain undisputed technology leadership, manufacturing scale and long-term growth.”
Broadly speaking, the plan is to lean more heavily on Intel Foundry Services (IFS), a pure-play foundry division created under IDM 2.0 to compete directly with companies like TSMC, which manufacture semiconductors designed by third parties.
Road to recovery
While Intel remains a monolith of the semiconductor industry, the company has been going through a rough patch of late, falling down the pecking order in both manufacturing and design.
While Gelsinger’s return in early 2021 seemed to revitalize the company, a series of setbacks over the past few months have illustrated the problems Intel still faces.
For example, the launch of the next generation of the company: server processors, codenamed Sapphire Rapids, was interrupted by delays. And by the way, Intel’s latest foray into the GPU is off to a rocky start.
In July, Intel released a dismal quarterly report, bottoming out a 22% year-over-year revenue decline. The performance was so poor that Gelsinger took to Twitter to publicly apologize: “This quarter’s results were below the standards we set for the company and our shareholders. We must and will do better,” he wrote.
A key aspect of Intel’s plan to dig out of this hole is to accelerate the expansion of Intel’s foundry division, which will now operate virtually isolated from the in-house design team and other business units.
The idea, Gelsinger explained, is to “establish consistent processes, systems and crash barriers between our business unit, design and manufacturing teams.”
“This allows us to identify and address structural inefficiencies in our current model by sending accountability and costs back to decision-makers in real time. It will also put Intel’s product groups on a par with third-party Intel Foundry Services customers and vice versa,” he added.
“We will also create a foundry accounting model that includes manufacturing, technology development and Intel Foundry Services. This gives us greater transparency in our financial execution and allows us to fully benchmark ourselves and steer towards the best foundry performance.”
Separately, Intel has established a new IDM 2.0 Acceleration Office (ILO), led by Stuart Pann, SVP of Corporate Planning, which will be tasked with bringing the new foundry model described by Gelsinger to life.
In a final call, closing the statement, Gelsinger promised regular updates on the progress of these projects and told staff that now is the time to “take action as One Intel to unleash the full potential of IDM 2.0.”