Last week’s Intel Q4/2025 analyst call was a disaster that has a single root cause but no solution. SemiAccurate has been screaming about what is going on for years and nothing is changing.
For those not into long stories, the problem is simple, the Intel board. In the dark days of the late 2000’s, it was hard to imagine a less competent bunch than AMD’s board at the time. Oh how the bar has lowered. This isn’t anything new, we have been a tad critical of that lot for a while now, but things were obvious for years before we made our feelings public. In our eyes things are way past incompetence and well into actively detrimental but we understand if you have a different point of view. You would be wrong but you are welcome to that opinion.
So what is the problem? The board fired Pat Gelsinger for doing the right thing in late 2024, ostensibly his speed in selling off units and overspend on foundry/capacity were the issues. Months earlier, current CEO Lip-Bu Tan was, at least according to SemiAccurate sources, shown the door for wanting to carve up Intel like a chicken and split off the foundry into a separate company. Pat was said to have resisted this and in the summer of 2024 the board backed him over Lip-Bu.
Just over a quarter later, the board fired Pat for the same ‘offenses’, essentially not wanting to split up the company and not selling off units as fast as they would like. They then hired Lip-Bu Tan as CEO to do the same thing. Schizophrenic? Reactionary without a clue? Who knows but good for Intel? Definitely not. Then again this pales in comparison to their not holding previous CEOs accountable and letting them bury multi-billion dollar debacles like the Snow Ridge Nokia/Ericsson/ZTE 5G silicon failure and the 10nm ‘slight miss’. If investors had any idea how many billions were spent papering these failures over, there would be pitchforks and torches outside Intel HQ. Go back and read this while asking yourself how it was kept quiet. And then ask how every FPGA person in Europe got their fancy new cars? It was pointed out in the financial statements, right? Worse than the sheer ‘dark’ spend was the utter lack of accountability or consequences.
Back to the point, the current situation. Last week Intel said they have massive server demand and are at capacity limits, a good thing even with some missed opportunity. Some pundits blame this on low yields, especially low 18a yields, both of which are not true. Intel 4/3 yields are just fine and the first 18a server part is a 2027 item so… Demand is high and Intel capacity is finite. Building a fab is a 3-5 year undertaking so anything started now will not have relevance to any process currently in demand.
A little over a year ago, Gelsinger was fired for overspending on, wait for it, fab capacity. Almost like he realized that it takes years to make a fab and by the time you are at capacity limits, it is far too late to do anything about the problem. He was trying to avoid future problems and was fired for being proactive. The accusations of spending money like a drunken sailor may or may not be justified, the author isn’t a finance oriented person so make up your own opinion here, this one could be right. :)
The problem is a result of several prior CEOs underspending on capacity, a problem that is quite evident now. Instead they spent money on papering over problems, burying critical problems, and paying massive bonuses in schemes that were actively detrimental to Intel. If product X ships in quarter Y, you get a new BWM. If there is a problem that will mean a bad or failed product who’s fix would result in a 1Q delay, guess which path is taken? This is one thing Gelsinger was actively rooting out and the results were positive. Prior to Pat however, those priorities, top to bottom, were a tad out of whack. Was Intel ‘overspending’ on capacity or just digging themselves out of a hole? In SemiAccurate’s opinion, if you look at the flaming turd that was Intel in the early 2020s, Gelsinger knowingly stepped on it to do the right thing and fix it. He was fired for doing the right thing and taking the spears in the back that none of his predecessors or the board were willing to acknowledge much less address. It looks like accountability has consequences, just not the right ones.
Then there is the bit about spinning out parts of Intel at speeds the board deemed unsuitable. Some things were spun out or sold but others were not. During MWC 2023, SemiAccurate was told by multiple C-level execs that Intel was offering to sell the networking division to them. The price was low and Intel was willing to deal further but all said no for cause. There was no value in that division according the sources regardless of price. The board was unhappy because Gelsinger could not sell a division that had no value. There are other similar stories but the short version is that Intel was trying to sell but buyers were not interested. Again, who’s fault is this, and who took the fall?
Then in late 2024 the Intel board fired Pat for overspending on capacity, not splitting up the company, and not spinning out units fast enough. They put in the latest fall guy, Lip-Bu Tan to do those things, fair enough. Soon after taking power, Lip-Bu did indeed reign in the spending and has made some very smart decisions that were long overdue as well. While we may argue with tact and timing of some of those things, we can’t argue that some specific decisions were very correct.
And then there is the splitting up the company bit. Talk of that which was so prevalent a year ago seems to have come to a screeching halt. Any guesses why? Almost as if the numbers were run, potential buyers were contacted, and reality hit all parties in the face. Without the foundry, Intel would die and die quickly. Without Intel, the foundry would die and die quickly. Besides that, know anyone willing to throw tens of billions of dollars into foundry to complete the buildout? Possible payouts starting in a decade if all goes well, what’s not to like?
That brings us to spinning off divisions with all due speed. Networking sold for how much again? And the others, they are… Reality meet face. Changing the person in the hot seat does not change the fundamentals. If something is not selling regardless of price, a new face at the top does not change things, the board seems to be immune to this logic though.
So Intel is trapped. They underinvested for a decade and are now literally caught up by it. Capacity is finite and those limits have been reached, expansion is years away if started now and the starts that were in progress were scaled back. Were they scaled back correctly? Possibly, this depends on your views about spending like a drunken sailor, had that been done five years ago, what would the payout be now? And how would a potential foundry customer view this?
So all of the pieces come down to the board and their lack of competence or worse. The multi-billion dollar skeletons in the closet that were papered over, buried, and never even acknowledged publicly meant no one was ever held accountable. The rot continued and money wasn’t spent on things it should have been. Every FPGA propping up Ericsson et al for 5G base stations was a brick that wasn’t put in a new fab, and so on. As things stand now, Intel has a new CEO in the hot seat but the problem remains on high as the company suffers. Don’t look for real solutions any time soon, just more denials and lack of accountability.S|A
Charlie Demerjian
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