Intel Corporation (NASDAQ:INTC), once a leader in the semiconductor industry, is now struggling to stay competitive, and Microsoft Corporation (NASDAQ:MSFT) co-founder Bill Gates might not be that optimistic about its future.

What Happened: Earlier this month, in an interview with the Associated Press, Gates expressed his disappointment over Intel's decline, saying he was "stunned" by how the company "lost its way" in chip design and manufacturing.

"Gordon Moore always kept Intel at the state of the art. And now they are kind of behind in terms of chip design and they are kind of behind in chip fabrication," Gates said.

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Intel, which dominated the PC era, missed the shift to smartphones nearly two decades ago and has since struggled to keep up with rivals like AMD and Nvidia. The company failed to capitalize on the AI chip boom, weakening its industry position.

"They missed the AI chip revolution, and with their fabrication capabilities, they don't even use standards that people like Nvidia and Qualcomm find easy," Gates added.

The tech billionaire also reflected on Intel's leadership shake-up following the sudden departure of CEO Pat Gelsinger in December. "I thought Pat Gelsinger was very brave to say, ‘No, I am going to fix the design side, I am going to fix the fab side.' I was hoping for his sake, for the country's sake, that he would be successful," Gates said.

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Why It Matters: Intel's decades-long partnership with Microsoft is often called “Wintel.” It started in the early 1980s with IBM's first personal computers, which ran on Intel processors and Microsoft's MS-DOS operating system.

This alliance fueled an industry-wide shift that made Intel and Microsoft the dominant forces in computing for years. Despite this history, Intel's chip design and manufacturing missteps have put it in a vulnerable position.

Its market share has been eroded by competitors like AMD, whose data center chip revenue surpassed Intel's—an astonishing reversal from 2022 when Intel's data center revenue was three times that of AMD.

Nvidia's dominance in AI chips has further sidelined Intel, exposing its failure to anticipate the industry's shift toward GPU-driven AI computing.

Financially, Intel is in turmoil. The company released its fourth-quarter earnings last month and reported a drop in revenue by $1.15 billion year-over-year. Intel currently has a market cap of $97.33 billion.

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This article Bill Gates Has A Soft Spot For Intel, But Says The Chip Giant Has Lost Its Way — Questions Whether The Company Can Recover After CEO Exit And Falling Behind In AI originally appeared on Benzinga.com