[Editorial] Intel, a cautionary tale

In South Korea, Intel and Samsung Electronics used to be mentioned together as the leading examples of innovative frontrunners in the global tech business. Yes, they were; however, they no longer enjoy such flattering comparisons.

Trouble-laden Intel is set to be replaced by Nvidia on the Dow Jones Industrial Average index Friday, a shocking setback for the US-based chipmaker in a changing landscape where even a technology behemoth can get kicked out of the index of blue-chip companies.

The decision came after a host of bad news for Intel. The company’s stock lost more than half of its value this year, reflecting disappointing earnings and a dismal outlook. In August, Intel announced it would lay off 15,000 employees around the world, and the painful process is now underway.

The sweeping changes that Intel has undergone offer a cautionary tale for other technology leaders, including Samsung, which is currently confronting its own issues and uncertain outlook.

At the height of its growth phase, Intel led an eye-popping advance in the global tech industry by churning out faster and faster processors for desktop and laptop computers in regular intervals that set an indisputable standard.

Similarly, Samsung -- though subject to cyclical fluctuations of supply and demand -- also spearheaded its leading position in the global memory chip market with innovative technology and know-how. Samsung, the biggest memory chipmaker in the world, expanded its turf into the global smartphone, TV and home appliance markets.

The two tech heavyweights, however, are in a sorry state. In a not-so-enviable race, Intel has outpaced Samsung in terms of the speed at which it fell into a bottomless pit, due largely to well-known failures -- complacency, strategic misjudgments and shortsighted leadership -- that resulted in missed opportunities in advanced graphics and artificial intelligence, as well as Intel's slow and timid response to new competitors armed with cutting-edge products and solutions.

Intel, saddled with top executives who failed to foresee a drastic shift in technology trends, did not develop new chips for new industries in a timely manner. As a result, the company found itself stranded in a whirlwind of smartphone revolution pioneered by Apple’s iPhone and the AI graphics boom led by Nvidia. Six years ago, it missed a golden chance to invest in OpenAI, the creator of ChatGPT.

At the heart of the problems is Intel’s misguided focus on business and financial outcomes rather than racing to stay ahead in terms of technological innovation, the very foundation of its legendary growth.

Negative assessments of Intel’s performance are not limited to stock investors and tech pundits. South Korean PC gamers are fairly familiar with the stability issues plaguing Intel’s 13th and 14th generation chips. They are now disappointed again at the lackluster performance of Intel’s newly launched 15th generation gaming chips compared to AMD’s powerful chips.

Given the fast-paced shifts in the global technology market, Intel’s deepening woes could be repeated at other technology giants. Samsung, for its part, shows signs of problems in its chip and smartphone businesses. The South Korean chipmaker failed to make it into the supply chain for Nvidia’s AI chips. Samsung also finds it hard to narrow the technology gap with global leader TSMC in the foundry business sector. Even the performance of its memory chip business is not up to market expectations.

In the smartphone market of South Korea, Samsung’s home turf, Apple is fast expanding its share, especially among young people. Samsung is also facing criticism for shamelessly copying what Apple does in areas such as design, packaging and new product presentation. Just like Intel, Samsung has quality issues. For instance, Samsung’s latest earbuds, the Galaxy Buds 3 Pro, sparked a firestorm of user complaints regarding defects when they were launched in July, a result of the company’s poor quality control.

Samsung must shake off complacency and learn a lesson from Intel’s troubles if it does not want to be left behind by blazing competition in the global technology market.