Bill Gates was once the embodiment of the computer industry. Though the co-founder and former CEO of Microsoft retired over a decade ago to pursue full-time philanthropy, people still listen when he talks — and in a recent interview, he talked about Intel.

Intel is having a rough time of late. The chipmaker’s stock is practically in freefall. It’s had high-profile failures for its most powerful CPUs, and rivals AMD and especially Nvidia are kicking its silicon butt in the AI arms race. In December, the company’s CEO Pat Gelsinger stepped down after working for Intel on-and-off for decades. Yeah, it’s bad.

Intel is also one of Microsoft’s most important partners, so it’s no surprise that the company’s woes came up in an interview with the Associated Press. “I am stunned that Intel basically lost its way,” Gates said.

“They missed the AI chip revolution, and with their fabrication capabilities, they don’t even use standards that people like Nvidia and Qualcomm find easy.

I thought Pat Gelsinger was very brave to say, ‘No, I am going to fix the design side, I am going to fix the fab side.’ I was hoping for his sake, for the country’s sake, that he would be successful. I hope Intel recovers, but it looks pretty tough for them at this stage.”

It’s a bleak snippet in an otherwise positive interview, and it doesn’t offer any realistic paths for Intel to make up ground. The company’s most recent desktop and laptop chips have been met with more acclaim, and its new discrete GPUs are positioned to thrive in a budget space that has been woefully underserved for the last few years.

But you can’t make hundreds of billions in profit selling cards to cash-strapped PC gamers… and with Nvidia still standing strong even after taking a hard knock from the DeepSeek news, that’s definitely the measure of success for modern chipmakers.

Don’t take this for hyperbole. Intel isn’t in danger of an imminent collapse. But after dominating the market for both consumers and enterprises for decades, the company simply isn’t the powerhouse it was a few years ago. The most recent development is that the stock price got a welcome shot in the arm following rumors of an acquisition, something that would have been unthinkable not so long ago.

Bill Gates’ statement that “Intel lost its way” reflects broader concerns about Intel’s strategic missteps and declining dominance in the semiconductor industry. Here’s a breakdown of the context, reasons, and implications of his remarks:

Context of Gates’ Statement

Bill Gates made this comment during a 2023 interview, highlighting Intel’s struggles to maintain its leadership in chip innovation and manufacturing. As a co-founder of Microsoft and a key player in the tech ecosystem, Gates has closely observed Intel’s role in powering PCs and servers for decades. His critique aligns with industry-wide observations about Intel’s challenges in recent years.

Why Did Intel “Lose Its Way”?

1. Failure to Innovate in Manufacturing
   • Intel was once the undisputed leader in semiconductor manufacturing, pioneering advancements like the x86 architecture and Moore’s Law. However, delays in transitioning to 10nm and 7nm process nodes allowed rivals like TSMC (Taiwan Semiconductor Manufacturing Company) and Samsung to surpass it in chip efficiency and performance.
   • Competitors like AMD capitalized on TSMC’s advanced manufacturing to produce faster, more efficient CPUs (e.g., Ryzen processors), eroding Intel’s market share.
2. Missed Opportunities in Mobile and AI
   • Intel underestimated the shift toward mobile devices and failed to compete with ARM-based chips (used in smartphones and tablets). Companies like Apple (with its M-series chips) and Qualcomm dominated this space.
   • In artificial intelligence (AI) and GPUs, Intel lagged behind NVIDIA and AMD, which now lead in data center and AI-optimized hardware.
3. Leadership and Strategic Instability
   • Frequent CEO changes and shifting strategies (e.g., exiting the 5G modem business) created uncertainty.
   • While AMD and NVIDIA focused on vertical integration and partnerships, Intel struggled to pivot beyond its core PC/server CPU business.
4. Supply Chain and Execution Issues
   • The global chip shortage exposed weaknesses in Intel’s supply chain management.
   • Foundry customers (like Apple) began designing their own chips, reducing reliance on Intel.

Gates’ Broader Critique

Gates’ criticism likely stems from Intel’s failure to adapt to two key trends:

1. The Rise of Custom Silicon: Companies like Apple, Amazon (AWS Graviton), and Google now design their own chips for specific workloads, bypassing Intel.
2. Geopolitical Shifts: The U.S.-China tech war and TSMC’s dominance in advanced manufacturing have reshaped the semiconductor landscape, leaving Intel scrambling to catch up.

Intel’s Response

Under CEO Pat Gelsinger (appointed in 2021), Intel is attempting a comeback through:

• IDM 2.0 Strategy: Investing $20 billion in new U.S. fabs (e.g., in Ohio and Arizona) to compete with TSMC/Samsung.
• Foundry Services: Offering manufacturing services to third-party chip designers.
• R&D Focus: Prioritizing next-gen technologies like RibbonFET transistors and PowerViainterconnects for future nodes.

However, skeptics question whether Intel can regain its edge, given TSMC’s decade-long lead in advanced nodes (e.g., 3nm/2nm).

Implications for the Tech Industry

1. Diversification of Chip Suppliers: Companies are reducing dependence on Intel by embracing ARM, RISC-V, and custom silicon.
2. U.S. Semiconductor Ambitions: Intel’s struggles highlight the urgency of rebuilding America’s chip-making capabilities amid geopolitical tensions.
3. Innovation vs. Execution: Gates’ critique underscores the need for tech giants to balance long-term R&D with agile execution.

Key Takeaway

Bill Gates’ remark encapsulates a pivotal moment for Intel: once the heart of the computing revolution, the company now faces existential pressure to reinvent itself. Its ability to reclaim leadership hinges on executing Pat Gelsinger’s vision while navigating fierce global competition. For the broader tech ecosystem, Intel’s trajectory serves as a cautionary tale about the cost of complacency in fast-moving industries.