[사설] Intel’s downfall due to lack of innovation… Dow falls out of the index for the first time in 25 years

intel headquarters

AI semiconductor powerhouse Nvidia joins the top 30 U.S. companies

High-tech industry competition that kills you when you sleep, quick response to changes

The collapsing ‘semiconductor empire’ Intel had no wings. Intel, which recorded the largest loss ever in the third quarter and began large-scale layoffs and sale of major business units, will be kicked out of the Dow Jones Industrial Average on the 8th (local time). It has been 25 years since it was incorporated in 1999. The one who pushed out Intel and took over was Nvidia, which became the first semiconductor company to surpass $3 trillion in market capitalization.

Intel’s exit from the Dow reflects the changing landscape of the semiconductor industry. The Dow Index, which is considered one of the three major indices along with the NASDAQ and S&P 500, is an index calculated based on 30 stocks of blue chip companies listed on the New York Stock Exchange. If it is determined that a specific stock among the 30 stocks can no longer represent the industry, the stock is removed and replaced with stocks of a new company that will represent the industry. This means that the representative player in the U.S. semiconductor industry is now Nvidia, not Intel.

NVIDIA is an absolute leader in the artificial intelligence (AI) semiconductor market. Market share exceeds 80%. Stock prices are racing without hesitation. After rising about 240% last year, it rose more than 170% this year. The market capitalization amounts to $3.321 trillion. On the other hand, Intel’s report card is shabby. The stock price fell 54% this year alone. The market capitalization shrank to $99 billion. The business situation is also at its worst, with net profit turning into a deficit in the third quarter. Last August, it also announced a strong restructuring plan to reduce 16,500 employees.

Intel’s downfall shows how a company can collapse if it becomes complacent and neglects innovation. Intel, which was the unrivaled leader in the central processing unit (CPU) market for personal computers (PCs), formed the ‘Wintel (Windows + Intel) Alliance’ with Microsoft (MS) and expanded the semiconductor market by the mid-2010s with the ‘Intel Inside’ strategy. commanded. However, it has not been able to keep up with changes in the semiconductor industry such as mobile and AI. In the late 2000s, it gave up smartphone chip production despite Apple’s request, and kicked up all opportunities to acquire NVIDIA in 2005 and invest in OpenAI, the developer of ChatGPT, in 2017 and 2018. In the PC CPU market, it also fell behind its competitor AMD. The performance of the foundry (semiconductor consignment production) business sector, which entered into three years ago to rebuild the ‘semiconductor empire’, is also minimal.

What runs through this trend of decline is the lack of innovation. Technology develops rapidly, and industry and market paradigms change in an instant. If you focus on improving profitability and neglect investment in research and development (R&D), which involves taking risks in pursuit of immediate profits, you will inevitably be left behind in technological development and the market. Our company, which must maintain a super gap to survive, is no exception. If we look away for a moment and relax, we have no choice but to become the ‘Korean version of Intel.’