I would be careful assuming that a lack of performance was responsible for the internships not converting.

At my company, I've recently seen a lot of cases where interns don't get return offers. Maybe they're all underperforming for pre-entry-level, but I seriously doubt that.

I will also point out that hiring is rarely skill based. I mean seriously. You can be great and not get hired, and you can be a liability and get hired anyway. This was true even before the post-COVID squeeze.