Intel took a big hit a few years ago when Apple decided to abandon the x86 architecture in its chips. The US-based maker, as the largest provider of Mac CPUs, had to deal with a great impact on its supply chain. Apple’s ARM-based alternative, the Apple M1, proved to be a success and set the company’s standards for CPUs until today. The success of Apple in the ARM-based computer scene started a new trend for ARM-based computers. Intel as a traditional x86 chipmaker, had to adapt, otherwise it would be left behind. It’s like the old saying, “If you can’t beat them, join them”. That’s exactly what is happening as Intel is improving its fabs to prepare for the manufacture of its first ARM-based chips. However, it seems that the company will need to deal with the ongoing economic crisis first.
Intel and ARM join forces to conquer the market
Intel’s venture has the blessing of ARM. The two strong players are joining forces into a “multigeneration” agreement to optimize Intel’s 18A fabrication process. The big change here is that it will use ARM designs and intellectual property. The deal will not see Intel’s Foundry Services as the producer of the ARM chips. Instead, it will make it easier for ARM licenses, including the likes of Qualcomm and MediaTek, to hire Intel to make chips in the future.
For now, the two firms will focus on the Intel 18A improvements. But in the mid to long-term, Intel and ARM will extend the partnership to silicon designed for use in cars, IoT products, and data centers. Intel will also offer ARM licenses to “packaging, software, and chipsets”. Intel wants to be the one-stop shop for firms that want it to produce their ARM designs. That’s quite a planned comeback for a firm that started later in this ARM race.
Intel is also pointing to the “geopolitical” meaning of this agreement. The firm states that this will enable a more balanced global supply chain for foundry customers working in mobile SoC design on ARM-based CPU cores. As per Counterpoint Research, TSMC produces nearly 70 percent of all chips that are critical to modern phones. However, there are certain military concerns raised between China and Taiwan. China defends the island as part of its territory, while Taiwan itself considers itself an independent territory. The West is pretty much concerned with a possible war, after all, Taiwan is a vital key for the balance of the tech industry.
The US-based chipmaker will need to overcome a financial crisis first
While the ARM deal sounds like a promising comeback for Intel, the company will need to overcome certain constraints first. Early today, the company announced a new wave of layoffs and cost-cutting measures. This is another reflection of this extremely unfavorable moment for the semiconductor giant. Back in April, the firm shared its financial balance for the Q1 of 2023. The data revealed a drop of 133% in the firm’s revenue per share. That takes in mind the same period from the last year and shows an impressive loss of $2.8 billion. That was the biggest quarterly loss for the firm founded in 1968.
To recall, Intel’s first wave of layoffs happened in the last year. The company decided to significantly cut the number of its collaborators. Despite the losses, the move is not exclusive to Intel but seems to be a trend for all big techs. Microsoft, Google, Amazon, Meta, and Twitter also adopted similar measures to counter the ongoing crisis.
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As per analysts, in the next few months, Intel will cut about 10% to 20% of its workforce. That will depend on the need of each of the company’s arms. The departments of Client Computing Group and Data Center Group will likely be the ones suffering most from these layoffs. The former takes care of products such as PCs and Notebooks. It’s one of the largest business arms for the company. It was behind a $5.8 billion revenue during the first quarter of 2023.
Intel has a long-term cost-cutting plan
“Intel is working hard to speed up its strategy. We are venturing through a challenging economic environment. We are focused on identifying ways to reduce costs and raise efficiency through several initiatives. These include reductions in the workforce of all our business arms.
We will continue to invest in the key areas of our business. These include the installation of more fabs in the US. The goal is to ensure more growth opportunities in the long term. For now, we’re going through hard decisions, but we have the commitment to treat our collaborators with dignity and respect”.
Besides the layoffs, Intel also plans to go through other cost-cut measures. For example, the firm will reduce the salaries and bonuses for a brief period. Furthermore, it will reduce the earnings for shareholders.
Talking about shareholders, during its financial report, the company sent a letter to them. As per the firm, it plans to reduce its costs by $3 billion in 2023. Until the end of 2025, the company wants to raise that cost reduction to about $10 billion.
The financial crisis shouldn’t affect the plans for ARM
We are curious to see how Intel will manage the ongoing crisis and its upcoming venture in the ARM scene. Honestly, we don’t think that company will hold from its plans of becoming a strong ARM supplier. The company took a hit when its x86 chips were discarded by Apple. It knows that the future is seemingly going towards ARM, If wants to return to its former glory, becoming a strong supplier of ARM chips seems to be the right way to go, regardless of these cost-cutting measures.
