Intel’s Fall From the Top: What Went Wrong

Intel Downside

Sep 11, 2025

Hi there 👋

The year 2025 will likely be remembered as the year politics hit tech hard.

Every week, we have new regulations rolling out in the EU for the better - mostly speaking.
UK is upto their sneaky laws to get into your secure data.

Whereas countless countries are looking to ban everything from AI, to Social Media, to I guess your privacy rights as well.

Without getting too politicking - it is clear that 2025 will mark the start of governments being heavily involved in Big Tech. And I guess for good reason? Some of these companies are larger in economics than most countries of the world, so they do be needing that regulation.

But today’s story is not about regulation, it’s about how one of these big companies is at serious risk, and perhaps government intervention is what saves it?

I am someone who has grown up in the 2010s and most of the computers that I've used in my life, be they laptops or PCs have had the 'intel inside' sticker. Up until recently, Intel has been the undisputed champion in the CPU space, that too for decades.

These days it's becoming hard to find Intel CPUs on many of the computers we use. Gamers these days love Ryzen. AMD EPYC CPUs are also steadily gaining share in the enterprise world. Intel has been the most dominant player in the desktop computers, laptops and data center market. Sadly, that's started to shrink.

Recently we’ve heard about the tens of thousands of people Intel has laid off in just the last two years. We also know what happened with the Intel 13th and 14th gen CPUs and how they caused people to lose trust in Intel's products.

The recent years have been really bad for Intel. It not only lost the CPU edge to its arch-rival AMD but it also lost Apple, a significant client. The vertical integration that was once the company's strength is now haunting it while TSMC outplays its foundries.

It's easier to read through the headlines and think this happened overnight but that's not the case. In-fact, this decline has been brewing for decades. Just like a domino, it took effect blow after blow as it is now presenting itself.

That's why in this article I'll go over some of the major reasons behind Intel's decline and what the future holds for 'Chipzilla' especially when Uncle Sam has decided to pitch in.

CPU Manufacturing and Intel's Moat

How CPUs Are Made

For a refresher, CPUs are the chips that are the main processing hubs for the computer. It doesn't matter if you have a PC, laptop, tablet or a smartphone, they all have CPUs inside them that allow for processing of data.

Smaller than your credit card, CPUs are small chips but they are some of the most complex pieces of technology that humans have ever engineered. This small chip is mostly built in three stages, usually by different companies and these are:

Design - This is where a company lays out the architecture of the CPU
Manufacturing - This is where the design is physically implemented using some really advanced machines
Assembly - This is where the final product is packaged and shipped to clientele (usually computer manufacturers)

Companies like AMD and Nvidia, when they 'make' their chips, they just design the chips and then outsource the actual manufacturing to other companies like TSMC.

What Made Intel Special?

So, the usual process of CPU manufacturing is the 3-stage where one company created the design, the other manufactures the design on a silicon wafer and another company does the final assembly of the chip.

The manufacturing part is really crucial because it is done through some of the most advanced and expensive manufacturing processes on Earth. Most of the companies like AMD and Nvidia just outsource this to fabs, which are chip manufacturing factories.

But Intel is different in this because it not only designs its chips but it also manufactures and assembles its chips. Intel has its own fabs which allow it to do the manufacturing part in-house which not only provides a vertical integration for Intel chips but also increases profit margins.

This vertical integration has worked well for Intel for decades but it is one of the reasons why Intel is failing because this chain of alignment only works if all three of the processes work as they should.

A mistake in design, manufacturing or the assembly would directly impact the final chip. So, this strategy only works if all parts of the puzzle are in-sync with the other.

Intel's Golden Age

Let's get back to Intel. Back in the 2000s and 2010s, Intel was a formidable force in the CPU market. PCs, Laptops all used Intel CPUs. Smaller players like AMD were almost invisible.

Intel owned the entire chain of CPU manufacturing from design to assembly. On top of that, Intel owned the language for CPU, the x86 ISA. Only two companies: Intel and AMD have a license to the x86_64 architecture because of a cross-licensing agreement.

With the whole manufacturing and design process under its control and the x86 architecture being the de-facto standard for CPUs, Intel was up in the air for most of the time.

Because of the increased marketing efforts back in the 2010s, the Intel i-series branding was the way most people understood CPUs to be. While rival companies like AMD were struggling, Intel was at the top.

Not to mention, It was this time that Intel won Apple, one of the largest computer manufacturers. With the Intel representative futuristic apparel at WWDC 2005, Intel wanted to show that it is the future of CPUs.

While these years seem all fine and dandy from this description, these were also the years where long-term stagnation started to grow inside the company. Moore's Law was called dead even though it was not.

The company, which was founded by engineers, one of which devised Moore's Law, now had a non-technical CEO who mostly focused on sales, marketing and branding and although that worked for the time, it was something that would bite Intel in the years to come.

During this time, Intel's strategy started shifting to updating stickers instead of experimenting and innovating with groundbreaking technologies. While other companies were experimenting with new ideas, Intel was enjoying a little too much.

Intel Misses the Smartphone Train

Back in 2005, Intel's deal with Apple was a victory for Intel. There was no denying the success of Intel. It not only manufactured the Windows PCs but it was now also powering Macintosh and later Macbooks.

Intel enjoyed its success in the desktop PC, laptop and enterprise market which greatly increased after their 2004 deal with Apple. But right around this time, it also made some of the recent history's worst strategic decisions.

The first iPhone that was released in 2007 was a revolutionary product and it was a signal that computers are going to fundamentally change. This didn't catch Intel off-guard which was complacent with its moat.

This resulted in Intel not taking the smartphone adoption seriously up until it was too late to catch up. Although Intel later tried to push for mobile CPUs through its Atom processors, they were a disaster - they were in-efficient, unpopular and too late.

Companies like Samsung and Qualcomm competed and took their share of the smartphone market while Intel lost it. The iPhone and Android shift gave rise to a new generation of computers that not only used different CPUs than Intel but they also used ARM.

Right around this time, a small British company created something that was to haunt Intel in the years to come. ARM created the language that mobile CPUs would use going forward. Pretty early, ARM cemented itself as the architecture of mobile computers like smartphones.

Back in the 90s and early 2000s, it was hard to think of computers not using Intel CPUs but right through the middle of 2000s, the explosive growth in the smartphone space pushed Intel into irrelevance in the smartphone CPU space.

No popular smartphone ever made use of Intel CPUs. Intel was left out in the dust both from their CPU side because of inefficiencies and also their x86 architecture which was replaced by a simpler and more efficient architecture - ARM.

"The world would have been a lot different if we’d done it,” said Paul Otellini, The CEO of Intel in 2013.

Intel later poured billions of dollars into making an iPhone chip but failed to create one. The train had already left and Intel had to sell the smartphone modem business to Apple.

But even if Intel lost the smartphone space, it still held its share of the desktop, laptop and enterprise CPU market. In these segments Intel was still the unquestioned leader but that's exactly what was going to be challenged.

The Threat of ARM

ARM Inside smartphones

Today, ARM is the de-facto standard for smartphones. The company claims that '99% of all Smartphones are Powered by Arm'. This goes to show the level of strength that the ARM instruction-set architecture commands in the smartphone world.

ARM started out an early-on in the mobile computing space. Smartphones loved the newer, efficient and more open licensing framework of ARM. Companies instantly started building processors and software for ARM.

ARM was the whole framework. It was simple, easier to license. Intel didn't license x86 to anyone other than AMD because AMD developed the 64-bit extension to x86. Because of this they have mutual agreement that only these two companies have access to this architecture.

Intel didn't license x86 to anyone other than AMD but it would make chips for Apple and the likes on-demand. This way other companies won’t make custom processors but rather lean on Intel or AMD to make their custom processors using the x86 architecture.

ARM made way for smartphones because it was a new instruction-set architecture. What this means is that it didn't have to deal with the complex nature of x86 which had to keep backwards compatibility down to the first 8-bit processor that Intel built - 8086.

Smartphones were new, they didn't have to be backwards compatible because there was no earlier code to be compatible with. That gave ARM the edge in performance and optimizations.

The ARM optimizations are what allowed it to be a success in the smartphone space because they are battery-operated devices where performance per watt is a major metric for a device’s success.

ARM Inside Enterprise

ARM started off as a simpler Instruction Set Architecture (ISA) that was made for devices that didn't require the extreme performance that x86 offered but it was specifically targeted for devices that were battery-operated and relied on those optimizations.

Although ARM started off with smartphones, it found its way into consumer CPUs with the very first success being the Apple M-series chips. We'll talk more about those in a bit but we can safely say that this was a pivotal moment for ARM and Intel.

Through the M-series chips, Apple showed the world that ARM could be a reliable platform for desktop applications. This was an industry-wide signal that started all of the major companies like Google, Amazon, Apple working on their versions of enterprise-ready chips using ARM.

The shift to ARM is control and optimization because companies can tailor chips specific for their needs and because they can license the ARM ISA from ARM Holdings and build use-case optimized chips.

The big-tech is currently bent on developing use-case optimized ARM chips to use in their data center clusters like GCP, Azure and AWS. This won't only significantly impact their margins but it would also provide a lot more control to the individual companies than what they had before.

After Apple, Windows has also taken note of companies like Qualcomm releasing Snapdragon X Elite chips which are ARM chips specifically tailored for laptop processors. The results for these laptops especially in battery optimizations and performance have far outplayed the previous Intel-based processors.

Microsoft is also investing heavily in Windows on ARM and the transition from Intel-based software to ARM. Like Apple's Rosetta, Microsoft has built a run-time translation layer for Intel instructions to ARM. There are also reports of Nvidia working on a general purpose CPU built on ARM architecture

So, the architecture that just started off with a simple vision that initially became a smartphone industry favorite is already becoming a reality for desktop computers both in the laptop and enterprise applications - this challenges x86’s and Intel’s dominance.

AMD Strikes Back

Back in the early 2010s when Intel was up in the arms of the chip industry, AMD, its long-time rival, was struggling hard. The company was losing billions of dollars every year and their products simply couldn't hold up against Intel's. AMD's share, for instance, was trading at just a couple of dollars.

AMD has always been a small company when compared to Intel that mostly iterated what Intel was doing in the early years. They'd try to reverse engineer what Intel was innovating in its good days.

But this doesn't mean AMD itself wasn't innovating. It was the only company that extended the x86 architecture to 64-bit. It was also among the first to use the new x86_64 architecture in their processor.

Early on, AMD was successful in getting the x86 license from Intel and this sort of turned the x86 architecture into a duopoly with only two companies being able to use the x86 architecture in their processors.

AMD's foundry business

Back in 2012, when AMD was struggling, a lesser-known VP was hired to turn AMD around: Lisa Su. Two years after she was the CEO is when AMD started to pick up.

One of the major issues plaguing AMD were its foundry business. Just like Intel, AMD also had its own fabrication division but for a small company like AMD it was hard to focus on both the manufacturing and design of its CPUs.

This issue led AMD to create the foundry business a separate entity by the name of Global Foundries. The Dubai government pitched into the foundry business while AMD started focusing on the chip design itself.

Still AMD wasn't entirely cut off from the foundry business and it still had an agreement with the foundry where AMD would buy all of its chips. The issue here was that Global Foundries manufacturing didn't punch like Intel's foundries.

Global Foundries not being competitive with Intel's chip manufacturing process was also one of the reasons AMD's products were holding back. One of the very first goals for Lisa Su was to get AMD off to a more advanced fab that could keep up with Intel.

In 2006, AMD acquired a GPU company ATI technologies that now became AMD's GPU division and with that AMD had TSMC as its chip partner. This allowed AMD to build experience working with external fab.

For AMD, moving altogether from Global Foundries wasn't an easy thing and it was a gradual process that took many years. With each agreement the goal for AMD was to switch entirely to the advanced fab of TSMC.

This shift to the 7nm manufacturing process wasn't easy and even Intel struggled to adopt the new standard. Meanwhile Global Foundries straight out refused to adopt the harder shift signalling TSMC as the advanced fab.

This means that advanced sections of the processor were made by TSMC while Global Foundries manufactured the less sophisticated sections. This went on and the time came when AMD completely shifted to TSMC for their chip manufacturing.

Ryzen and TSMC

TSMC solved the chip manufacturing issue for AMD. With time, AMD was able to completely shift from Global Foundries to TSMC. Now AMD had the 7nm chip capability without having to worry about the manufacturing processes because TSMC was handling it for them.

The shift to TSMC meant that now AMD can fully focus on their processor design. AMD's earlier ‘bulldozer’ design wasn't working and they knew that they had to develop a better design for their CPUs to be successful.

Even before Lisa joined, the failure of Bulldozer design led AMD to start work on Zen, a completely new redesign for their CPUs. AMD also recalled legendary chip designers like Jim Keller who not only worked on the AMD Athlon series of chips but also had worked with Apple on their mobile chips.

Ryzen didn't build on the previous chip design but it was a completely new chip design from scratch. The newer chip design was not just powerful but significantly more power efficient. Ryzen is what turned AMD from an underdog to a top-line competitor for Intel.

The Ryzen design being modular means it is more efficient, scalable and cost-effective to produce because of less defects that can destroy a complete chip.

Ever since the complete overhaul of AMD's chip design it has been slowly but consistently taking desktop CPU market share from Intel. AMD's EPYC chips that are specifically made for servers are now more utilized than Intel's server offerings.

Intel Losing Out On AI & Data Centres

It is no secret that the future of high performance compute is in AI & server-grade applications like the Cloud. The need for compute is ever-increasing. The way LLMs are catching up we need more and more data-centers to power them and that means more and more chips to handle that compute.

AWS, Azure and GCP are the three main players today in the cloud compute space and all of them are working on their own chips that are tailored for their custom needs.

AMD has recently taken a big lead in the server compute space accounting for roughly 30% share down from nowhere. It's no wonder that Intel's data-center sales have hit 15 year lows.

Delayed Entry Into GPUs

Intel is also one of the companies that didn't invest in a GPU division early on. On the other hand, AMD has already established itself as the underdog in the GPU space. After Nvidia, AMD is the biggest GPU maker catering to those that NVIDIA leaves behind.

The rise of LLMs has been possible because of the GPUs that power the underlying calculations that happen each time we prompt our chatbots. These are specialized chips that are not much different to the CPU chips. This industry is what has made NVIDIA the giant it is right now.

NVIDIA has the time and experience that has matured its hardware and software stack. The need for compute is ever-increasing. The way LLMs are catching up we need more and more data-centers to power them and that means more and more chips to handle that compute.

AWS, Azure and GCP are the three main players today in the cloud compute space and all of them are working on their own chips that are tailored for their custom needs.

AMD has recently taken a big lead in the server compute space accounting for roughly 30% share down from nowhere. It's no wonder that Intel's data-center sales have hit 15 year lows. The second-best that is determined to give NVIDIA a hard time in the GPU space. Intel is nowhere to be seen here because it has focused on integrated GPUs for a long time.

GPUs are also similar to CPUs and had Intel invested in them early-on, It could have developed itself as a real competitor to NVIDIA and AMD. The recent AI chips that Intel made like the Gaudi haven't really been a success.

Although Intel was too late to the GPU party, it has recently received significant praise when it released its newer GPU based on its 'Battlemage' architecture. Although the architecture is pretty new, It has a long way to go to getting to a point where the NVIDIA and AMD software stack is.

The 'Battlemage' architecture is currently competing at the budget price segment in consumer level and if Intel doesn't let go of its GPU division it could be a possible third option after NVIDIA and AMD.

The Larger Strategy Problems

The downfall of Intel has largely been a mix of strategic missteps that started with them shifting priorities to branding rather than engineering, missing out on key technologies and losing out to the competition that invested in better foundries, chip design and efficient pricing.

The surprising success that Intel enjoyed for quite a long time turned the company into focusing more on branding, marketing and less on innovation. Instead of taking bets like investing in mobile CPUs, Intel chose to protect its margins and that only worked for so long.

Intel's foundries were processing top-notch nodes of processors that no-one else could compete with but it was only a matter of time when rivals like TSMC, Samsung caught up and dethroned Intel. The arrogance is what led to stagnation.

The edge in the vertical integration of processors that Intel had is what is ailing it today. Their foundries are no longer competing with TSMC in terms of efficiency and performance. Their chip design is lagging behind AMD's newer architecture. The x86 duopoly also seems to be breaking with the rise of ARM.

Intel’s Comeback Plan

Back in 2021, Intel hired its veteran engineer Pat Gelsinger as the CEO to take the company out of the mess it was in. The delayed launch of its advanced chips, the dipping market-share and the engineering issues were the problems he was tasked to solve.

Given his technical background, Gelsinger doubled down on the manufacturing efforts by deploying huge amounts of cash to support new local foundries that would take up the manufacturing of advanced chips.

Gelsinger not only focused on increasing the manufacturing capital but he also envisioned the modular tile-based architecture that made AMD's Ryzen a success.

Uncle Sam also joined in with billions of dollars in grants because making chips in the US is a security concern for the Uncle. Although Gelsinger focused more on local production, using TSMC for some chips was also in the plan.

Fabs and manufacturing efforts take multiple years to culminate. The amount of capital that was being put to the new fabs was awe-inspiring for many. But the investors were not patient enough to wait for this long.

That's why Gelsinger was ousted by the board this year because they simply couldn't wait around for this ambitious plan of his to show itself. Gelsinger was replaced with Lip-Bu Tan.

The new CEO's challenge is to cut Intel's costs by having to layoff thousands while balancing the firm with Gelsinger's projects that are already in the works, all the while keeping pace with unflinching rivals like AMD.

Why Does Intel Matter?

So, we get that Intel is going through a real rough time. We get that they became stagnant, they lost the smartphone revolution, they lost to the underdog AMD, they sort-of lost to themselves.

But that doesn't mean that they should just pack their bags and leave. As you and I, the consumers of tech products, Intel matters because it is kind of the underdog right now (I know it’s funny :p).

We should remind ourselves that what made AMD innovate a new chip design was Intel's unbeatable products of the time. AMD had to go back to the drawing-board and come up with a new CPU design from scratch just because they were struggling to survive.

Not only did AMD innovate in the new CPU design, they had to cut off their subpar foundry and connect with the more advanced TSMC because of the superior Intel chips of the time. They had no choice, They had to innovate to survive.

I don't know why but sometimes we humans really innovate when we're struggling for our lives. AMD knew that they had to revise their CPUs or they'll be irrelevant and Intel is kind of in a similar situation today. They have to innovate or they'll be out of the game.

I guess this quotes sums up what I want to say:

"Necessity is the mother of invention"

Sometimes, it's the push that some of us need to get our S together and I think if Intel is truly committed, it can pull it off. For us consumers, they have to pull this off because if they don't, then we have a monopoly.

Can Intel Make A Comeback?

We don't know the answer to this question but we can make some guesses. There's no doubt that they have the talent. They've always had the talent but they lost because of their priorities.

Intel's success is linked to America's dominance in the CPU space and that's why Uncle Sam has stepped in multiple times with this time buying a 10% stake in the company. Others like SoftBank have also chipped in a couple billion dollars.

Even if Intel's CPUs aren't the best at this point in time, they still make solid products. It's true that the competitor's value is much greater but Intel still has its advantages like laptop chips. This shows that if Intel gets its act together it may survive this phase.

Although we know that in tech, it's hard to catch a wave that is now lost but still Intel has a lot of avenues where it can make a comeback. Take the GPU division for example.

The GPU division of Intel has shown some of the most exciting stuff the whole industry hasn't seen for a long time. The value that their cards are delivering is unmatched even at the cost of the driver issues and quirks that exist.

If the Intel GPU team keeps innovating it can make a real customer-base for itself, this can start with budget gamers that need value GPUs for their gaming rigs but it can further lead Intel to data-center computing as it plans to expand.

In the GPU space, even if Intel doesn't compete directly with NVIDIA's topline products, it still has a wide market of gamers that are now ignored by the giant NVIDIA because AI is just too lucrative for them.

It's hard for Intel to compete directly against NVIDIA in the enterprise GPU domain where NVIDIA is almost 20 years ahead of Intel. But Intel can wait for their GPU platform to mature and pitch to enterprise after that.

The Intel lesson

The big takeaway is that it doesn't matter if you have been the champion for decades. If you let go of the innovation that has made you the champion you'd lose and the gradual decline would seem as if it hit in an instant.

The company that was once called 'Godzilla' is struggling to remain relevant today. The collapsed market-share, the giant layoffs are the results of decades of technical stagnation and misplaced priorities.

The Intel story tells us that innovative products are what matter in the long run. Increased marketing efforts can get your boat floating for some time but it's a ticking bomb. Good engineering just can't be ignored especially if you're in a high-tech business like Intel.

The Intel-AMD monopoly in the x86 CPU space isn't perfect but it's better than a one company monopoly. It doesn't matter if it's Intel or AMD, one company dictating the whole industry is dangerous (Just look at NVIDIA).

I believe that we consumers are better off if the race to build the best product continues between both of the companies. Competition means better products, that's just how the equation works.

So, even if Intel was never a saint, it should exist and that's why it matters because the spirit of competition is what has led us to good products. Without Intel competing with AMD, we're just at the helm of another company.

If we don't want to be trampled under a new CPU monopoly. If we want genuinely innovative products that make our life easier that are priced fairly, then I feel we have to root for Intel to get its act together.