The NVIDIA phenomenon plunges Intel into a nightmare

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The tumble never ends for Intel. After recording the biggest quarterly loss in its history, the American giant loses its place in the prestigious Dow Jones stock index. To the benefit of NVIDIA…

Historic losses

Intel has been going through a period of unprecedented turbulence for many months. Having accumulated a significant delay in the artificial intelligence sector, the company is also suffering from the drop in demand in its preferred sector, the PC. All the more so since it is also losing market share in this sector, while its historic rival, AMD, is gaining strength.

Over the period from July to September, Intel thus recorded a loss of 16.6 billion dollars, the largest in its history. A colossal sum partly attributed to the costs of the restructuring implemented by the company. In addition to laying off thousands of people, it has also decided to shut down several of its projects.

Stock Market Downgrade

On the heels of Intel's quarterly earnings release, the company was replaced by NVIDIA in the Dow Jones Industrial Average, the world's oldest and most widely followed stock index. Used as a barometer of the overall health of the U.S. economy, it tracks the performance of 30 major publicly traded companies in the country.

The move represents a major shift in the semiconductor industry, and officially downgrades Intel, which had dominated the industry for many years. NVIDIA is now the undisputed leader in artificial intelligence (AI) chips, with demand for them exploding to meet the rise of generative AI.

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Although Intel has moved into developing AI accelerators, the gap with its competitors now seems difficult to close. The contrast is striking: while NVIDIA's market capitalization has been soaring spectacularly for months, Intel's has fallen by 50% since the beginning of the year. And the bad news could still pile up for the manufacturer, because Jensen Huang's firm is now eyeing the PC chip market…

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Subsidies that are slow to come

A reason for hope for Intel, the American Chips Act is also slow to get going. Aimed at increasing local production of semiconductors, this law will grant significant public subsidies to manufacturers.

Intel is the biggest beneficiary, with the American Department of Commerce having promised it aid of $8.5 billion and $11 billion. The problem is that, in addition to significant delays in the payment of this amount, the outcome of the presidential election risks redistributing the cards, although the text was voted on in a bipartisan manner.

« We are disappointed by the length and slowness of the distribution of funds, which has lasted for more than two years. “I've invested $30 billion of capital and we haven't received any funding yet. So we think it's been too slow and we're a little frustrated about it,” Intel CEO Pat Gelsinger said in an interview with Bloomberg.

Despite everything, he remains confident that he will receive the cash due, regardless of which candidate is elected president.

• Intel recorded the worst quarterly loss in its history.
• At the same time, the company was replaced by NVIDIA in the prestigious Dow Jones stock index.
• Intel is counting on government subsidies to get back on track, but they are slow to arrive.

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