Shortly after taking over as CEO of Intel almost two years ago, Patrick Gelsinger began to force the company to increase its spending on building new facilities and developing advanced lithography technologies. Now that the global economy is in recession, he believes it is important not to abandon long-term investment in productive infrastructure.
At the World Economic Forum in Davos, Intel's CEO used a metaphor to describe the company's investment tactics after a sharp decline in demand for semiconductor components. "I feel like I'm pressing the gas and brake at the same time," said Patrick Gelsinger. On the one hand, he acknowledges that the industry is being forced to cut some costs in the short term due to the post-pandemic drop in demand. On the other hand, the company is ready to continue to invest billions of dollars in the construction of new facilities in the US and outside the country.
According to Gelsinger, the COVID-19 pandemic has created a huge gap between supply and demand, which has led to a shortage of chips. At a time when all market participants were trying to catch up with demand, economic conditions have changed, and no one could have predicted this. Now the industry is in the phase of a decline in demand, as the head of Intel added. At the same time, the company's own plans for building and achieving leadership remain unchanged. “Everyone still believes that the semiconductor industry will double in size this decade,” Gelsinger added.
The head of Intel once again returned to the topic of high concentration of chip production in the Asian region. In three decades, 80% of capacity has moved from the US and Europe to Asia, and it will take decades to correct this imbalance, according to Gelsinger. As he added, Europe should be able to say that it can provide itself with critical components, and the Americans should do the same. “We all need to focus on building a reliable and balanced supply chain. The world had to go through a crisis to understand that we have become dependent on the only suppliers in critical aspects,” concluded Patrick Gelsinger.