Bill Gates Expresses Concern Over Intel's Decline and Future in AI Chip Revolution

Bill Gates Has A Soft Spot For Intel, But Says The Chip Giant Has Lost Its Way -- Questions Whether The Company Can Recover After CEO Exit And Falling Behind In AI - Microsoft (NASDAQ:MSFT), Intel (NASDAQ:INTC)

Intel Corporation INTC, once a leader in the semiconductor industry, is now struggling to stay competitive, and Microsoft Corporation MSFT co-founder Bill Gates might not be that optimistic about its future. What Happened: Earlier this month, in an interview with the Associated Press, Gates expressed his disappointment over Intel's decline, saying he was "stunned" by how the company "lost its way" in chip design and manufacturing. "Gordon Moore always kept Intel at the state of the art. And now they are kind of behind in terms of chip design and they are kind of behind in chip fabrication," Gates said. Intel, which dominated the PC era, missed the shift to smartphones nearly two decades ago and has since struggled to keep up with rivals like AMD and Nvidia. The company failed to capitalize on the AI chip boom, weakening its industry position. See Also: Microsoft's $13 Billion Run Rate And OpenAI Azure Deal Spark Surge In Enterprise Demand For AI Solutions: Just 'First Tranche' Of Future Growth Potential "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," Gates added. The tech billionaire also reflected on Intel's leadership shake-up following the sudden departure of CEO Pat Gelsinger in December. "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," Gates said. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Why It Matters: Intel's decades-long partnership with Microsoft is often called "Wintel." It started in the early 1980s with IBM's first personal computers, which ran on Intel processors and Microsoft's MS-DOS operating system. This alliance fueled an industry-wide shift that made Intel and Microsoft the dominant forces in computing for years. Despite this history, Intel's chip design and manufacturing missteps have put it in a vulnerable position. Its market share has been eroded by competitors like AMD, whose data center chip revenue surpassed Intel's -- an astonishing reversal from 2022 when Intel's data center revenue was three times that of AMD. Nvidia's dominance in AI chips has further sidelined Intel, exposing its failure to anticipate the industry's shift toward GPU-driven AI computing. Financially, Intel is in turmoil. The company released its fourth-quarter earnings last month and reported a drop in revenue by $1.15 billion year-over-year. Intel currently has a market cap of $97.33 billion. Photo by Frederic Legrand - COMEO on Shutterstock Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: JD Vance Says 'Excessive Regulation' Could Kill The Industry As US, UK Refuse To Sign AI Safety Pact Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors. INTCIntel Corp$22.527.39%WatchlistOverviewMSFTMicrosoft Corp$409.68-0.43%Market News and Data brought to you by Benzinga APIs

Bill Gates: 'Intel lost its way'

The former Microsoft CEO said he's stunned at how far behind Intel has fallen compared to Nvidia and Qualcomm. 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 'Stunned' by Intel's Decline

Intel's struggles have not only disappointed PC builders, but also Microsoft co-founder Bill Gates, who's shocked by the US chipmaker's decline. "I am stunned that Intel basically lost its way," the former Microsoft CEO told the Associated Press while discussing his new memoir, Source Code: My Beginnings. Microsoft and Intel helped usher in the PC era, especially in the 1980s and 1990s when consumer computing took off. But Gates lamented the current state of the chipmaker, two months after Pat Gelsinger abruptly resigned as CEO following company-wide layoffs. Intel co-founder "Gordon Moore always kept Intel at the state of the art. And now they are kind of behind in terms of chip design and they are kind of behind in chip fabrication. And both of those are very capital intensive," Gates said. Gates also brought up how Intel is missing out on the AI chip boom as rival Nvidia dominates sales for enterprise-grade GPUs to power generative AI technologies. Intel "missed the AI chip revolution, and with their fabrication capabilities, they don't even use standards that people like Nvidia and Qualcomm find easy," he said. Gates was holding out hope that Gelsinger could turn the ship around before his resignation. "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,'" he said. "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 sounds like Gates isn't even sure Intel can bounce back. It's facing growing competition from AMD, Apple, and Qualcomm, which have been tapping Taiwan's TSMC to build cutting-edge PC chips. Still, Intel is trying to engineer a turnaround with the arrival of "18A," its most advanced chip manufacturing process yet. Expect 18A in Intel code-named "Panther Lake" PC chips during the second half of 2025. As for Gates, he told PCMag in our own interview that he continues to review Microsoft products, including its efforts to harness generative AI. "How do you put AI into Office? I'm pushing," Gates said. "They're never moving as fast as I want, so I'm pushing hard about how Office can do even more with AI, and they have a very aggressive roadmap for that."

Bill Gates says Intel has lost its way, hints that 'brave' Pat Gelsinger exited too soon

Intel has missed several consecutive tech industry megatrends. Being key players in the PC market, Intel and Microsoft have always worked closely as one developed PC hardware, and the other delivered PC software. Thus, we saw the long-running dominance of 'Wintel' PC systems. Despite this success, both Intel and Microsoft missed the smartphone revolution in the late 2000s - early 2010s. But while Microsoft has managed to recover, Intel is struggling. Bill Gates, a co-founder of Microsoft, admitted in an interview with the Associated Press that Intel had lost its way, and it would be tough to resurrect. Gates is particularly shocked that Intel, once known for being at the forefront of innovation, has fallen behind in both chip design and manufacturing. Competitors like Nvidia and Qualcomm lead in AI and smartphone processors, whereas TSMC is ahead in terms of process technologies. These issues, combined with the high costs of modern semiconductor development and production, put Intel in a difficult position. Now, with the recent ousting of CEO Pat Gelsinger in December, concerns about the company's ability to survive have intensified. "I am stunned that Intel basically lost its way," Gates told the Associated Press. "Gordon Moore always kept Intel at the state of the art. And now they are kind of behind in terms of chip design and they are kind of behind in chip fabrication. [...] 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." While both Intel and Microsoft missed the start of the smartphone megatrend some 15 - 18 years ago, both companies took advantage of the cloud computing rise in mid-2010s, which was another industry megatrend. However, the situation was a bit different with 5G and AI megatrends. While Intel rested on its laurels and then missed the entire rise of AI both in terms of hardware and in terms of investment in Open AI and other startups, Microsoft became one of the leaders of the artificial intelligence world. While Intel sells processors for 5G base stations, it did not benefit from the transition to 5G as significantly as other market players. Having missed two out of three industry megatrends and having lost its leadership in semiconductor manufacturing, Intel will have to find its way to recover. Last year the company began to cut its costs and fired some 15,000 employees. While Intel can hardly go bankrupt considering that it owns some of the best semiconductor production facilities in the industry and sells the lion's share of CPUs for PCs and datacenters, how exactly the company's next chief executive will navigate the blue giant is something that remains to be seen.