Pat Gelsinger Tells Chip Executives Their Industry Has Grown Complacent

Gelsinger was speaking at the International Trade Partners Conference organised by SEMI, the chip industry trade association, to an audience that included representatives of most of the leading semiconductor companies. His argument was that the AI boom has created record demand across every part of the chip supply chain while stretching existing technologies close to their limits.

The warning carries weight because it comes from someone who ran the largest American chipmaker and now invests in its would-be successors. Chipmakers are earning record revenue from AI demand, which reduces the pressure to take risks on unproven technologies just as the methods that delivered past gains are running out of room.

According to Semafor's account of the slides, Gelsinger said everything from the lithography used to print circuits onto chips, to the links that connect chips to each other, to the cooling systems in server racks is starting to run into the boundaries set by physics. One slide was titled "Stop waiting for the physics to break."

He pointed to advances in optics, power management and cooling that the industry has yet to adopt, and named several young companies working on them, including some backed by Playground Global, the venture capital firm where he now works. "We need AI to be 10,000X better," the presentation said. "That's the opportunity. Not a better chip, but an entirely new kind of system."

Gelsinger left Intel in December 2024 after a turnaround effort that centred on rebuilding the company's manufacturing business. His pitch to the SEMI audience, that the next large gains will come from whole systems rather than individual chips, matches the investment thesis of the start-ups he named, and the presentation did not say which established companies he believes are falling behind.