Intel had a major shareholder meeting. It did not go smoothly.

The company said at its annual shareholder meeting in San Francisco that it won’t be able to make chips in the future without assistance from the U.S. and EU.

Patrick Gelsinger, chief executive officer of Intel Corp., right, speaks with U.S. President Joe Biden

“The Intel turnaround train is leaving the station, and I hope you all get on board," Intel CEO Pat Gelsinger said.

Photo: Yuri Gripas/Abaca/Bloomberg via Getty Images

Intel’s been struggling to right its business for years, but you would never know that from its shareholder meeting.

Lattes with its corporate logo stenciled into the foam were available to order, and executives finished the day with investors on the 39th floor of a posh downtown San Francisco hotel with expansive views of the Bay Bridge.

On stage and in small rooms crowded by shareholders and financial analysts, Intel executives outlined the company’s strategy for the foreseeable future: to double down on its manufacturing business, which now includes the $5.4 billion acquisition of Tower Semiconductor; to remake its chips to once again become dominant; and to enter new markets for graphics processors and other chips that are currently ruled by Nvidia and AMD.

“I want to double the earnings of this company and double the multiple of this company as you build confidence in what we're doing,” CEO Pat Gelsinger said Thursday. “The Intel turnaround train is leaving the station, and I hope you all get on board. It's an ambitious goal, but I am confident Intel's best days are in front of us.”

But the actual train tracks ahead are still being built, and the company could be in for a rough ride at times. After Intel outlined its strategy for the next five years, the company disclosed that it was delaying the first server chip it planned to make with its most advanced manufacturing process, which it has struggled with for years.

An Intel Sapphire Rapids wafer on display. An Intel Sapphire Rapids wafer on display. Photo: Max A. Cherney/Protocol

Intel is running up against another problem, too: Chip manufacturing is measured in sums of cash numbering in the hundreds of billions of dollars. According to a lesser-known observation from Intel co-founder Gordon Moore, the company — and every other chip manufacturer on the planet — will be unable to afford the equipment needed to make chips, as the costs increase exponentially above revenue. Moore didn’t outline a time frame for it to occur back in 1995 when he first made the observation, but the equipment is steadily getting pricier.

The plans Intel outlined at the shareholder meeting are going to cost $85 billion over the next three years, according to Jefferies chip analyst Mark Lipacis. That sum is the equivalent cost of constructing roughly half of the NFL’s 32 teams a brand-new stadium, like the one recently built in Los Angeles for the Rams and Chargers. Beyond that impressive amount of cash, Intel did not offer up a forecast for its spending plans beyond this year, saying only that its profit will be hurt in the short term as a part of its effort to return to its past glory. But even at that level, Intel said it can’t afford to spend all the money itself: It has enlisted the help of the U.S. and EU, as well as Brookfield, one of the largest asset managers in the world, for the real estate.

At the investor conference, Intel said that roughly 10% of the projected spending will come from outside sources. And in the future, the company said it will rely on governments to make up for the rising cost of chipmaking tools.

More than two-thirds of Intel’s bill for expanding its manufacturing capacity is from buying the thousands of complex tools needed to print chips. The marquee item is an order of machines exclusively made by the Dutch corporation ASML that are used for lithography, the step in the manufacturing process where beams of light draw the features onto silicon wafers. The current generation of extreme ultraviolet lithography tools cost roughly $180 million per machine. The next generation of high-numerical aperture EUV machines cost double the amount.

Each factory requires several EUV machines, depending on how big a manufacturing facility is. Typically lithography tools are the bottleneck for manufacturing capacity, since the hundreds of other machines needed are less costly and easier to build.

“This is where governments are stepping in,” Intel Chief Global Operations Officer Keyvan Esfarjani said. “It’s not just grants, it's the infrastructure … To preserve the industry, we need to make sure this goes beyond just Intel.”

Esfarjani said that the cost of accomplishing what Intel and other chipmakers have planned is understood at the highest levels of governments in the U.S. and Europe. The recognition has arrived largely because of geopolitical concerns coupled with the possibility that chip manufacturers will continue to expand their operations in jurisdictions in Asia and elsewhere that offer subsidies and other incentives for companies to construct facilities.

“The economics [are] going to force this whole industry to Asia and other places where they do give those kinds of offsets,” Esfarjani said. “This isn’t just, ‘Let’s subsidize this.’ Nobody has $20 billion to just go: next one, next one, next one.”

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