It was announced that CEO Pat Gelsinger retired effective yesterday. Jon Fortt joins us now on the “Squawk” news line. He was immediately retired, Jon. Yeah, I was thinking, man, I will immediately retire. That never sounds good, does it? Good morning. When he came in early 2021, the goal was to restore Intel to its former greatness, and, you know, he gave the board a plan. He had initially planned to join the board. He gave them a plan for what he would want to do. It was an all-in plan, and they agreed to it, and now we have Intel that spent — committed to spending tens of billions of dollars to build up a manufacturing operation at the time when its core business of PC and server chips was challenged like never before by the rise of A.I., primarily NVIDIA. That’s what got us to this point. They’ve been spending this money trying to rebuild manufacturing at the time the core business has been challenged.
Challenges and Strategy for Intel
Okay. Interim co-. I mean, is there going to be a search for — you mentioned just NVIDIA? Who do they need at this point, what is the right strategy, and does it involve the Chips Act subsidies to move forward? I think Intel is locked into the manufacturing strategy, but what I’ve said, it’s tragic in this sense, is that most of Pat Gelsinger’s thesis for the Intel strategy he laid out has been borne out. He argued before OpenAI happened and the explosion in NVIDIA’s stock price and the demand for chips, there was a real need for domestic semiconductor production because of the instability globally in Taiwan and China’s designs over there, the fact we have let U.S. manufacturing of all kinds of things but particularly semiconductors fall so far behind, and people question, well, is it demand for high-end chips anymore? Do we need that domestically?
Future of U.S. Semiconductor Production and Intel’s Role
U.S. needs a dedicated supply chain for these higher-end chips, and that’s what Intel is in the process of building out. But it’s doing so from a cash-constrained position because that core chip business that used to throw so much cash is under threat. There’s the need for it, but there are a lot of cash demands on it. So who do they partner with for that cash? How do they engineer that part to make sure that that can go forward? They have deals with the likes of AWS, Amazon, talking to Qualcomm, and some others. There was some rumbling that Qualcomm was interested in taking on Intel, perhaps doing some sort.