Intel follows easy fixes with the hard ones

Trapped for years in a vicious spiral of declining market share, rising investment needs and fading technological superiority, Intel’s turnaround began with the most obvious, rushed fixes. Former boss Pat Gelsinger pushed through hefty job cuts and scrapped the company’s dividend as he sought to build immensely expensive new chip fabrication facilities, with hopes of becoming a contract manufacturer that could challenge ascendant rival Taiwan Semiconductor Manufacturing 2330.TW. Rapidly declining profitability left little financial room for maneuver, though, so Gelsinger agreed to two major deals, with private-capital giants Brookfield Asset Management and Apollo Global Management APO.N, to sell stakes in projects for new production facilities.

Current CEO Lip-Bu Tan followed up with more cuts and the sale of a majority stake in subsidiary Altera for $4.5 billion. All of this, however, was just a stopgap. The actual measure of success would be returning to growth that could support sustainable investment in keeping up with TSMC.