Intel is on life support. Can anything save it?

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Subscribe to enjoy similar stories. SINCE ITS founding in 1968 Intel has been synonymous with shrinkage. In its first four decades this was high praise.

Every two years or so the American chip pioneer came out with new transistors half the size of earlier ones, a regularity that came to be known as Moore’s law, after one of the company’s founders. Twice as many chips thus fit onto roughly the same silicon wafer—and could be sold profitably for roughly the same price. That allowed Intel to corner the market for memory chips and then, when “memories" became commoditised in the 1980s, for the microprocessors which powered the subsequent PC revolution.

Nowadays when “Intel" and “shrinking" are uttered in the same breath it is no longer a compliment. After two sets of disastrous quarterly earnings the company’s market value has shrivelled to $84bn, less than the value of its plants and equipment, from over $210bn in January. The artificial-intelligence (AI) boom’s voracious appetite for silicon has propelled other chip firms, but Intel’s shares have seldom been this cheap since the late 1990s.

It may be about to be booted out of the Dow Jones Industrial Average, possibly in favour of Nvidia, the champion of AI chips. In early August Pat Gelsinger, Intel’s chief executive, announced that its 125,000-strong workforce would shrink, too, by more than 15,000. So will its annual capital spending, from over $25bn to just $20bn, and its yearly dividend, from $3bn to nothing.

“Our costs are too high, our margins are too low," Mr Gelsinger wrote in a letter to employees. Its share price contracted by a third in the following days. Industrial-policy fans in the Biden administration, eager to revive domestic chipmaking, would be excused