The former CEO of Intel Corporation (NASDAQ:INTC), Pat Gelsinger, raised alarm over too much dependence on Taiwan for chips and also provided insights into the reasons behind the chipmaker’s decline.
Gelsinger Warns on Taiwan Risks
In an interview with the “All-In Podcast” cohost Jason Calacanis, Gelsinger cautioned that Taiwan faces significant risks if China were to completely cut off the island’s energy supplies, highlighting its vulnerability amid Beijing’s territorial claims, reported Business Insider on Thursday.
“When you turn off a fab, it doesn’t come back on for 90 days, said Gelsinger.
“The economic impact of a brownout of Taiwan is greater than the Great Depression in the world,” h.e added.
Gelsinger’s comments come at a time when Intel’s stock has been under pressure. Investors have reacted to Taiwan Semiconductor Manufacturing Company Ltd.’s (NYSE:TSM) stronger-than-expected capital spending plans, which triggered broad profit-taking across semiconductor stocks on Thursday.
After losing ground to rivals like TSMC and Samsung Electronics Co. (OTC:SSNFL), Intel has staged a strong comeback over the past year, though. The turnaround was fueled by President Donald Trump‘s decision for the U.S. government to acquire a roughly 10% stake in the chipmaker and Nvidia Corp.’s (NASDAQ:NVDA) purchase of more than $5 billion in Intel shares, giving it an approximately 4% stake. Intel shares have surged over 320% in the past year, driven by these moves and broader U.S. efforts to strengthen domestic chip manufacturing amid concerns over Taiwan-based TSMC’s geopolitical risks.
Intel’s Costly Leadership Mistakes
Gelsinger also attributed the decline of the company to its non-technical leadership. He claimed that when he rejoined the company in 2021, he was the “first technical leader in essentially 15 years associated with it.”
He criticized his predecessors for their non-technical backgrounds, stating that making significant technical decisions that impact billions of dollars cannot be done through a spreadsheet. He emphasized that such an approach is a poor investment unless the technology trends justify it.
Additionally, Gelsinger expressed concern over Intel’s financial strategy before his tenure. He pointed out that the company had returned approximately $79 billion to shareholders through stock buybacks and dividends from 2015 to 2020, which he implied was excessive.
Meanwhile, Intel recently hit a key milestone with its ASML chipmaking machine. ASML Holding N.V. (NASDAQ:ASML) CEO Christophe Fouquet said Intel is already producing commercial chips using the company’s next-generation High-NA EUV lithography systems, marking a major milestone for the technology. The announcement signals that the advanced, roughly $400 million machines have moved beyond future promise into commercial semiconductor manufacturing.
Benzinga’s Edge Rankings place Intel Corporation in the 98th percentile for momentum. Benzinga’s screener allows you to compare INTC’s performance with its peers.
INTC Price Action: On a year-to-date basis, Intel stock surged 146.27%, as per Benzinga Pro. On Thursday, the stock fell 5.84% to close at $96.98.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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