When it comes to silicon manufacturing, volume is king. The core issue Intel faces is it has lost the volume game, forever. Incoming CEO Pat Gelsinger faces seemingly difficult decisions. On the one hand, he could take some logical steps to shore up the company’s execution, outsource a portion of its manufacturing & make incremental changes. On the other hand, Gelsinger could make much more dramatic moves, shed its vertically integrated heritage & transform Intel into a leading designer of chips for emerging multi-trillion dollar markets.
We believe that Intel actually has no choice. It must create a deep partnership (e.g. JV) with a manufacturer that covets a bigger presence on U.S. soil, outsource production & focus Intel’s resources on design.