“We didn’t get into this mud hole because everything was going great,” Intel CEO Pat Gelsinger told the Wall Street Journal. “We had some serious issues in terms of leadership, people, methodology, et cetera that we needed to attack.”

A confluence of factors may have caused Intel’s setback. In recent years, companies that were smaller than Intel by market capitalization have gained more ground in semiconductor manufacturing. Intel has also struggled to attract business as a “foundry” that manufactures chips designed by other companies, the Journal reported.

Intel’s tumultuous era has hurt its business—the tech company reported its largest quarterly loss in history in the first three months of 2023 with revenue down 36% and a 133% dip in earnings per share compared to the same period last year. Its expectations for the second quarter fell short of analyst expectations, too. The company also kicked off cost-cutting measures including trimming the pay of Gelsinger and other executives.  

Intel declined Fortune’s request for comment.

A.I. boom

Even though troubles at Intel have continued over several years, its performance is especially striking at a time when its chipmaking peers have cashed in on the artificial intelligence and spending boom that’s driving demand in the industry. 

Nvidia, the graphics-chip maker, also based in Santa Clara, briefly hit a valuation of $1 trillion this week, boosted by the interest in A.I. and its launch of new partnerships. It also forecasted profits for the current quarter to be at least 50% higher than Wall Street expectations, reflecting optimism about its growth in the next few months. Other big players—including Taiwan Semiconductor Manufacturing Company and Samsung—have also cemented their position as leaders in advanced chipmaking over time. 

But the competition is not stopping Intel from dreaming big about its future.  

“Is TSMC going to keep growing between now and the end of the decade?” Gelsinger said. “Yes. Will Samsung grow? Yes. Will Intel grow? I hope a lot faster than either of those two.”

As the chip market grows rapidly, Gelsinger says, Intel becoming a leader in its own right is “not optional,” according to the Journal.

Intel is aiming to climb to the No. 2 spot in the semiconductor industry—standing just behind TSMC, whose market value is over four times that of Intel’s presently. And to be sure, even though other players have secured their lead, the chipmaking space is still facing challenges owing to excess inventories and a demand slump in contrast to COVID-19 times. For instance, Samsung’s profits dropped 95%, impacted by slow chip demand, in the first quarter of 2023. 

“If you don’t have a little bit of boldness, you shouldn’t be in the semi industry,” Gelsinger said. 

Intel’s rocky ride

Some of Intel’s recent issues can be traced back to the pandemic, when chips were in short supply due to the boom in demand for personal gadgets. But it faced other major setbacks along the way, like losing its chips contract with Apple and a delay in the launch of one of its new chips.  

When Gelsinger took office in 2021, he faced the mountainous task of turning the company’s chipmaking business around. And to do so, his plan involved Intel focusing on manufacturing chips that were designed by other customers—a departure from decades of using its factories solely to make its own chips. The decision was initially met with excitement from investors, but that soon changed into skepticism.

“The investors are negative and everybody is cheering us on,” Gelsinger told analyst Ben Thompson last February. “Put your freaking money where your mouth is if you’re going to say it.” 

As the company embarks on what is a “multiyear journey,” according to Gelsinger, to reclaim a leading role among rivals, Intel has to still face the demand/supply mismatch in semiconductors. Geopolitical tension between the U.S. and China is another consideration as the chips industry is in the firing line of new export curbs, but Intel continues to see the region as key to its business.

Update, 1 June, 2023: This article has been updated with a response from Intel.