Intel 2.0 Reboot

by Jean-Louis Gassée

Intel CEO Pat Gelsinger possesses a wide range of unusual skills grounded in a strong cultural background. He’ll need all of it as he confronts the challenge of renewing the company’s design and manufacturing processes and business model.

Last week, we looked at Intel’s recent history, from the misguided decision to reject Apple’s iPhone overtures, through the messy and avoidable layoffs and even messier executive melodrama, and on to the mishandling of everything ARM. This is the history and culture that has been bequeathed to Pat Gelsinger, Intel’s newly (re)hired CEO

With the company’s history in mind, Gelsinger’s daring March 23 declaration, “Engineering the Future”, isn’t just an ambitious outline of “Intel 2.0”. In his video keynote, Gelsinger has promised a restoration of Intel’s glory days:

“We’re bringing back the execution discipline of Intel. I call it the Grovian culture that we do what we say we will do. That we have that confidence in our execution. That our teams are fired up. That we said we’re going to do x, we’re going to 1.1x, every time that we make a commitment. That’s the Intel culture that we are bringing back.”

How will Gelsinger make good on this promise?

Intel will create an independent division, Intel Foundry Services, that fabricates chips for other architectures and companies — including Intel’s competitors — and will spend $20B (!) to build its first two foundries in Arizona.To speed up its lagging x86 development process, Intel will drop its Immersion Lithography process and move to Extreme UV (EUV) Lithography, a process used by more successful competitors such as TSMC and, we’re told, Samsung.A bit esoteric: Intel will aggressively pursue a System In a Package (SIP) as a competitive alternatives to the widely used System On a Chip (SOC).Geopolitics: Given the increasing concern over China’s ambitions in general and its views on Taiwan (TSMC’s home) in particular, Intel’s recommitment to its traditional ventures as well as its strong push into the foundry business is good news for the US.

There’s more, such as the commitment to transfer manufacturing of some of the company’s CPU chips to external, commercial foundries. Or the reference to ARM and RISC-V architectures for chips Intel could make for its Intel Foundry Services customers, Apple included.

You get the idea: Gelsinger isn’t returning to his employer of 30 years to fine tune a few processes or organizations, he says he wants to lead a real Intel 2.0 revolution.

If Gelsinger were a young entrepreneur I would dismiss his blueprint as an overly broad “Strategy Of Everything”, the sign of a nervous inventor who wants to place enough bets to ensure survival in case a project or two doesn’t pan out. As an investor, I would suggest that he stick to a single initiative, either the new x86 manufacturing process or building new foundries — something that would lure customers, Apple comes to mind, away from industry leader TSMC.

But after reading about Intel’s new CEO (mostly from his Wikipedia bio) and particularly after reading his book (which we’ll get to in a moment) I’m convinced that Gelsinger has what it takes — technically, personally, culturally — to reinvigorate Intel .

Raised on a farm in the heart of Pennsylvania Amish country, Gelsinger earned an associate degree from Lincoln Tech in New Jersey when he was 18 and immediately began work as a quality-control technician at Intel, a company he would stay with for 30 years. While holding his Intel job, he earned a bachelor’s degree in electrical engineering from Santa Clara University, followed by a master’s degree from Stanford.

Climbing the corporate ladder, Gelsinger became a design engineer on the company’s 80386, and then an architect on the 80486, and on to General Manager of Intel’s Desktop Product Group in 1989 when he was just 28. (Regrettably, I didn’t meet him at the time when I was President of Apple’s Products Division.) In 2001, Gelsinger was named Intel’s first Chief Technology Officer. Beyond remarkable.

After 30 years at Intel and eight as CTO, Gelsinger left to become president of EMC and then CEO of VMware before returning to Intel as CEO this year.

Gelsinger and his wife have an active and admirable personal and spiritual life. He’s kept good on his promise to give increasingly more of his gross annual income to charity — he’s now up to 50%. In 2013 Gelsinger co-founded Transforming the Bay with Christ (TBC), a Christian organization aimed at converting a million people in the following decade. If that weren’t enough, he also wrote a book, The Juggling Act: Bringing Balance to Your Faith, Family, and Work, that sheds light on the author’s intellectual, physical, and psychic energy.

In his book, we learn that Gelsinger’s goal, at the time in 2008, was to become president of Intel…only to depart the following year and return as Intel’s CEO after a 12-year “leave of absence”.

You see where this is going. While Gelsinger’s proposed turnaround is extraordinarily ambitious, he’s uncommonly equipped for it.

Gelsinger restores a technical legitimacy to the CEO office, a legitimacy that’s been lacking for at least the past three years. (The previous CEO, Bob Swan, had been Intel’s CFO until he was pressed into service after the Brian Krzanich fiasco.) With regard to the x86, no one could argue with Gelsinger’s goal of changing the way the chips are designed and fabricated. The old ways have made Intel a laggard and Gelsinger’s old CTO stripes speak for his authority on the matter.

Bringing Intel into the highly competitive foundry business is a trickier matter. Making the proper moves to compete with TMSC — which is also investing in a very large Arizona plant — could take all of Gelsinger’s attention and energy, which explains why he’s appointed a proven player, Dr. Randhir Thakur, to be the head of the independent Intel Foundry Services.

Speaking of TSMC, the geopolitical aspect of Gelsinger’s pitch isn’t so much a direct goal as it is the outcome of a successful reboot. A more broadly competitive Intel will obviously be good for the country as we face a more capable and aggressive China.

Culturally, Gelsinger isn’t pulling punches. As a well-documented authority on diplomatic niceties (and their absence), I might have been be tempted to recommend against words like “We’re bringing back the execution discipline of Intel”. In ordinary times, a new boss who walks in and accuses his charges of being slackers would create resentment and demotivation. But these aren’t ordinary times for Intel: The company is in trouble. Gauging from his past record and from his book, Gelsinger has the cultural legitimacy to make this call to arms.

For today, Gelsinger has set up some very tough goals for the organization he inherits and rejoins. Next week, I hope to analyze what Gelsinger didn’t discuss in “Engineering the Future”: Wintel 2.0 challenges.

PS. I’ve purposefully avoided comparisons with the Apple 2.0 turnaround. The parallel is tempting: An energetic former leader with historic legitimacy returns, intent on shaking things up. But there’s an important difference. Apple was dangerously close to bankruptcy when Steve Jobs returned. Intel, while having fallen behind in the chip design and manufacturing race, is still a rich company with the considerable x86 money flywheel.

Intel 2.0 Reboot was originally published in Monday Note on Medium, where people are continuing the conversation by highlighting and responding to this story.

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