Intel's Stock Drops 9%. Are They Struggling to Remain Relevant?

'Intel used to dominate the U.S. chip industry,' writes CNBC. But now 'it's struggling to stay relevant.'

Intel's long-awaited turnaround looks farther away than ever after the company reported dismal first-quarter earnings. Investors pushed the shares down 9% on Friday to their lowest level of the year. Although Intel's revenue is no longer shrinking and the company remains the biggest maker of processors that power PCs and laptops, sales in the first quarter trailed estimates. Intel also gave a soft forecast for the second quarter, suggesting weak demand... Intel is the worst-performing tech stock in the S&P 500 this year, down 37%.

Meanwhile, the two best-performing stocks in the index are chipmaker Nvidia and Super Micro Computer, which has been boosted by surging demand for Nvidia-based artificial intelligence servers. Intel, long the most valuable U.S. chipmaker, is now one-sixteenth the size of Nvidia by market cap. It's also smaller than Qualcomm, Broadcom, Texas Instruments, and AMD. For decades, it was the largest semiconductor company in the world by sales, but suffered seven straight quarters of revenue declines recently, and was passed by Nvidia last year.

Intel's problems 'are decades in the making,' according to CNBC, suggesting that one turning point was Apple's decision not to use Intel's chips in its iPhone. Now nearly every smartphone built uses Arm chips built by Apple and Qualcomm, while Apple's huge orders for TSMC chips 'provided the cash to annually upgrade the manufacturing equipment at TSMC, which eventually surpassed Intel.'
Around 2017, mobile chips from Apple and Qualcomm started adding AI parts to their chips called neural processing units, another advancement over Intel's PC processors. The first Intel-based laptop with an NPU shipped late last year.

Intel has since lost share in its core PC chip business to chips that grew out of the mobile revolution... Apple stopped using Intel in its PCs in 2020. Macs now use Arm-based chips, and some of the first mainstream Windows laptops with Arm-based chips are coming out later this year. Low-cost laptops running Google ChromeOS are increasingly using Arm, too...

AMD made over 20% of server CPUs sold in 2022, and shipments grew 62% that year, according to an estimate from Counterpoint Research last year. AMD surpassed Intel's market cap the same year.

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