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Intel’s chip problems continue under new CEO

June 30, 2021, 8:51 PM UTC

The honeymoon for new Intel CEO Pat Gelsinger is over.

The semiconductor titan said on Tuesday that it would push production of a planned data center server chip to the first quarter of 2022, instead of debuting the chip later this year. Last summer, Intel delayed another more advanced computer chip, causing its shares to plummet; in contrast, shares of rival Advanced Micro Devices (AMD) skyrocketed on the news.

That stock-trading pattern repeated itself on Wednesday as Wall Street stewed about Intel’s latest stumble. Intel shares were down 1% at end-of-day trading to $55.55 while AMD shares were up nearly 5% to $93.93.

Manufacturing problems pose a significant challenge for Gelsinger, who rejoined Intel in February after serving as CEO of enterprise software firm VMware. Gelsinger is a Silicon Valley veteran who had worked at Intel for 30 years before becoming CEO of VMware, where he was praised for his tenure.

Indeed, analysts were hopeful that Gelsinger’s return to Intel would mean the chip maker would better fend off rivals AMD and Nvidia, which have capitalized from Intel’s chip and technology missteps. Gelsinger’s predecessor, Bob Swan, was a former CFO who knew his way around numbers but not the nitty-gritty of semiconductors and related software. Gelsinger, on the other hand, is a technologist at heart, and his tenure at VMware, whose software powers data centers for companies worldwide, was perceived as a blessing for Intel, which dominates the market for chips that go into data center servers.

But as yesterday’s announcement shows, turning around a legacy company like Intel will take time as will fixing its manufacturing problems.

Still, Gelsinger has only led Intel for a few months, and his plans for the company include spending tens of billions of dollars on new factories. Intel’s manufacturing delays also come at a time of a global shortage of semiconductors, which Gelsinger recently said won’t abate until 2023.

In June, Gelsinger told Fortune he hopes the U.S. government will give the company money to build domestic semiconductor plants. Over the years, U.S. chip production has declined while production in Asia has increased.

Gelsinger blamed the phenomenon on a “lack of clear industrial policy here has led to an outcome that is precarious for our security, for our infrastructure, and for our long-term competitiveness.” The Senate passed a major bill in June that includes $52 billion set aside for U.S. semiconductor manufacturers to expand production and research. Presumably, Intel stands to benefit.

Whatever the case, Intel investors hope Intel’s news U.S. factories open sooner rather than later.

Jonathan Vanian 
@JonathanVanian
jonathan.vanian@fortune.com

NEWSWORTHY

This big-tech cease-fire has ended. After a five-year truce between Microsoft and Google, the two tech giants may now “aim their substantial lobbying firepower against each other,” according to Bloomberg News. From the report: “The cease-fire’s demise and escalating tensions come against the backdrop of stepped-up regulation and antitrust activity against the biggest technology companies, including Google, Apple Inc., Facebook Inc. and Amazon com Inc.—earlier this month U.S. legislators introduced several bills aimed at curbing their dominance and market power.”

Robinhood must pay up. Robinhood will have to pay nearly $70 million as part of a settlement with the Financial Industry Regulatory Authority (FINRA) over allegations that it “misled customers, approved ineligible traders for risky strategies and didn’t supervise technology that failed and locked millions out of trading,” The Wall Street Journal reported. In one egregious example, FINRA said that Robinhood quickly approved a customer with little trading experience “within seconds” of the person updating his account settings to reflect more investing experience after initially being rejected.

Enough with the algorithms already. Twitter fixed a software bug that resulted in users being unable to view their stream of tweets in chronological order, according to Twitter. Numerous Twitter users complained (on Twitter of course), that it seemed as if the company was trying to push people to only use its algorithmic-driven Twitter stream that prioritizes tweets that the company believes could drive engagement, tech publication 9to5Mac reported.

A Zoom conference call won’t cut it. Depositions in the antitrust lawsuit against Google parent Alphabet will be conducted in-person as opposed to a Zoom video conference call, according to Reuters. The government plans to question a Google employee and two former Google workers who live in California, the report said. "We wanted to let the court know that it is our hope to do all or most of these depositions in person," said the Justice Department attorney Kenneth Dintzer. 

Juul’s vaping crisis. As part of a settlement between Juul and North Carolina, the vaping company will pay $40 million, Ars Technica reported. North Carolina alleged that Juul was heavily marketing its addictive products to youth. Although Juul denied it did anything wrong, the settlement will bar the company from using most social media and social media influencers for advertising, from creating ads intended to appeal to children and young adults, and from using anyone under the age of 35 in its marketing, the report said.

FOOD FOR THOUGHT

Broadband’s potential redlining problem. Although redlining—in which firms like banks deny services to people based on their address—is illegal in the U.S., aspects of this discriminatory practice are still happening. Many poor neighborhoods that lack access to speedy Internet services are some of the same “communities that couldn't get mortgage loans in the 1940s,” CNET reported. Internet service providers are more likely to offer better broadband services in more affluent areas because they are more likely to get better returns on their money. With the cost of building fiber connections so expensive, companies are less incentivized to improve Internet connections in poorer communities, raising questions about redlining in the digital age.

From the report: Digital redlining isn't illegal since there aren't regulations that dictate where broadband providers build their networks. But those desirable areas are often affluent, predominantly white communities. Conversely, areas where income is lower tend to be in Black and Hispanic neighborhoods, intrinsically tying this issue to race, consumer advocates say. It's because of those complexities that it's difficult to truly gauge the magnitude of the problem. 

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BEFORE YOU GO

Who loves the sun? NASA revealed some breathtaking photos of the International Space Station. The composite image is made of seven frames that show the space station’s path across the sun, looking like a little gnat flying across an orange.

NASA photographer Joel Kowsky captured the images and shared a Tweet that compiles the photos in a time-lapse.

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