February 12, 2025 • 17 mins
Intel invented computer processors and was a dominant supplier of chips for decades. Now AI is fuelling record demand for next-generation chips. But Bloomberg’s Ian King says Intel is no longer the go-to partner for the global tech industry, and the company is at risk of disappearing. What went wrong?
Today on the show: The rise and fall of Intel, and where it could go from here.
Read Ian King’s coverage of Intel.
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Speaker 1 (00:03):
Bloomberg Audio Studios, podcasts, radio news. It's hard to overstate
the historic importance of Intel to the US technology industry.
Speaker 2 (00:15):
What lets you learn about the world.
Speaker 3 (00:17):
In a whole new way The Intel Pentium processor.
Speaker 1 (00:22):
After it was founded in nineteen sixty eight, Intel pioneered
the chips that made modern computing possible, and for decades
the company was one of the crown jewels of Silicon.
Speaker 3 (00:32):
Valley the Intel Pendium processor.
Speaker 1 (00:39):
But in the last decade Intel has lost its technological
lead and huge amounts of market share. At the start
of twenty twenty, Intel had a market cap close to
two hundred and fifty billion dollars, more than twice that
of Nvidia. As of this week, Intel's cap was below
one hundred billion dollars and in Vidia's was thirty eight
(01:00):
times bigger. As Bloomberg, ce And King says, Intel is
at a crossroads.
Speaker 3 (01:05):
This is a company that I think is symbolic of
so many things are important to one country, in one industry,
but suddenly they just can't do it.
Speaker 1 (01:15):
In December, Intel CEO Pat Gelsinger was forced out after
a disastrous year.
Speaker 2 (01:20):
Breaking news. Intel the stock so far this year down
by more than fifty percent. This headline will not be
a surprise. Intel announcing the retirement of the CEO, Pakausinker.
The board has formed a search committee for his successor.
Speaker 1 (01:35):
He had been considered by many to be Intel's best
hope to get the company back to the pinnacle of
the chip business. But now some in the tech industry
you're asking, is Intel at risk of disappearing entirely? I'm
David Gerra, and this is the big take from Bloomberg
(01:56):
News Today on the show The Rise and Fall of
Intel with Bloomberg Tech reporter Ian King, who's covered the
company for decades, a clear eyed look at the challenges
Intel faces, what it would mean if Intel went away? Ian,
(02:17):
what was the innovation that really made this company take
off at the beginning?
Speaker 3 (02:20):
Remarkably for an important company that's been dominant for so long,
they've actually had more than one life. They started off
in computer memory. They saw that, hey, we need fast
computer memory. So that was their first big breakthrough and
they really kind of revolutionized and made that, you know,
an industry. Then the PC came along right at the
beginning of the eighties.
Speaker 1 (02:39):
The IBM personal computer. Not only can it help you
plan ahead, it'll balance your books and give you more
time to make.
Speaker 3 (02:46):
Do Intel was the brains of that. Pc IBM chose
an Intel part to be the new guts of this
thing that was really going to change basically modern life
in so many different ways. In Intel were there right
at the bidding and and of that and saw this
particular type of product, the microprocessor, was going to be
(03:07):
a huge deal, and then did it was.
Speaker 1 (03:09):
As Intel grew, it maintained its advantage by being the
best at making the semiconductor components on a computer chip
smaller and smaller each one. Was a technological marvel that
for decades left Intel's competitors scrambling to keep up.
Speaker 3 (03:25):
Semiconductors are basically tiny electronic switches known as transistors. Those
transistors are either on or they're off. It's either a
one or a zero, and that is the basic unit
of storage of information in the electronic world. The way
that you put more transistors on a chip is to
shrink the line width on those transistors. Now, a modern
(03:49):
in video chip has literally hundreds of billions of these
transistors on something that's not much bigger than your thumbnail,
and that has an incredible feat from where we started
off when these guys started the company.
Speaker 1 (04:02):
Ian says much of Intel's initial success came down to
how its founders and early CEOs ran the company. People
like Gordon Moore and Robert Noyce who started it, and
Andy Grove, who eventually became its chief executive. They worked
hard to develop a company culture that helped Intel maintain
a formidable scientific and commercial lead.
Speaker 3 (04:23):
Frankly, all of the structures of come into being that
determine how the industry and tech in general work largely
stemmed from a lot of the observation, a lot of
practices that these guys put in place a lot time ago.
Speaker 1 (04:38):
They were path breakers, pioneers. How did they corner the
market so effectively? And after it took off and there
was this kind of broader awareness that chips were going
to be important, why was it so difficult for other
companies to give Intel a run for its money?
Speaker 3 (04:53):
Look, design an extremely hard work, but I think fundamentally
that the understanding of vlume economics and the understanding of
the brutality of the industry in that you have to
make enormous bets. Right now, a chip plant costs twenty
billion dollars, probably more you have to run that twenty
four to seven because guess what, in five years it's
(05:15):
going to be obsolete. Right, So there's a tremendous upfront
capital cost. So one of the things that they understood
was the economics. They also understood marketing.
Speaker 1 (05:25):
That's the Pentium processor from Intel, the computer.
Speaker 3 (05:29):
Inside Intel inside. Everybody knows what Intel inside is. I mean,
this is a component company, right that made its brand
one of the biggest in the world. They made consumers
associate quality in computers, not with Dell, not with HP,
not with any other computer manufacturer, book with Intel, with
the components that nobody ever saw.
Speaker 1 (05:47):
So Intel had the best marketing, the best chip design,
and the best manufacturing. But as Ian says, it was
a less tangible factor that kept Intel on top for
its first few decades, the notorious discipline that Andy Grove
put in place.
Speaker 3 (06:02):
He established a culture in that company, you know, the
famous only the paranoid survived, But lots of other things
that he instilled were basically designed to keep Intel on
the edge of its seat, to make sure they never
got happy, flat and lazy. Things like constructive confrontation, the
idea that you're in a meeting, you hear something, it
doesn't matter who you are, you call it out if
(06:23):
you think it's wrong. The idea that if you're a leader,
you listen right, you take action. He made people sign
in at a am every morning because he didn't want
the semiconductor industry to be this happy, go looky science project.
He wanted it to be a real business. So that
kind of rigorous culture was definitely a conscious effort.
Speaker 1 (06:41):
But at the same time that Intel was riding high,
a company called Taiwan Semiconductor Manufacturing Company TSMC was founded.
Intel designs and manufactures its chips. TSMC made its big
bet on manufacturing chips that other firms designed well. That
model created an opportu twunity for companies like Nvidia. They
(07:02):
could design and sell their own chips and compete directly
with Intel without having to invest in production.
Speaker 3 (07:09):
TSMC created a new sector of the industry, one that
Intel frankly laughed at publicly, and many others agreed with
Intel the idea that you could outsource the core amount
of production, that the idea of decoupling completely the design
process from the manufacturing process was possible and made sense.
(07:29):
Intel laughed at that. TSMC said no, no, this is
the way of the future. And guess what, TSMC were
right and they have enabled many of Intel's perstwhile weakling
competitors to be just as good as Intel, if not better.
Speaker 1 (07:49):
When we come back, how Intel started to lose its
competitive edge just as AI came onto the scene and
the hopes it placed in a new chief executive to
turn things around. By the turn of the millennium, Intel
(08:12):
was at the top of its game and an undisputed
leader in the computing industry. The company dominated the chip market,
both for PCs and data centers, but then in the
two thousands, its dominance started to slip. When Steve Jobs
began to scout chips for the iPhone, he thought Intel's
chips were too expensive, so those first orders went to
(08:33):
a rival, Samsung. Then in the twenty tens, the technical
momentum that Intel had built, its ability to make the
components on its chips smaller and smaller, well, that started
to falter and it opened the door to competitors like Nvidia.
Speaker 3 (08:48):
Intel had promised that it was going to bring this,
you know, the next generation of its process technology in
in twenty fifteen light clockwork like we're going to be
here We're going to make that advance and it didn't happen.
It didn't happen, and then people were like, well where
is it? And there were lots of conference calls. Well,
don't worry, it's coming, it's coming. Twenty fifteen rolls past,
(09:11):
this new technology doesn't emerge. Two and nineteen comes along
and we still not got it. At this point, the
numbers are still great. Intel's still making money hand over fist.
But guess what the next big thing is four years
too late? This is not Intel, This is not who
they are when it comes to AI.
Speaker 1 (09:31):
Was Intel naive to what the demands would be for
chips that could do the kind of computation that is necessary?
Did they just fail to embrace it? Did they fail
to understand the seriousness of it? Did they not see
that that was the direction which things were going? So
what explains the edge that Nvidia has today?
Speaker 3 (09:46):
Intel had no excuse for not seeing this coming. So
what happened? Right? It's really hard and I think dangerous
to place the blame or the root cause of any
one massive issue we have at the feet of one person.
But guess what a lot of people blame. Brian Krasanich
the former CEO for having created the situation that has
(10:10):
led to the current impasse.
Speaker 1 (10:12):
Let me tease that out a little bit more so,
if that's the case that they're making, is what is
the direct criticism? What do they think that he failed
to do well?
Speaker 3 (10:19):
Our reporting shows Krisanitch comes in in twenty thirteen as
supposedly the joint sort of leader of this company with
a woman called Rene James, who was also a long
term Intel person. His pitch publicly was like, yeah, we're
going to embrace all of these new markets. We're going
to just run towards whatever we can and not be
you know, snobs and dominant. What happened behind the scenes
(10:42):
was he was banging his fist on the table, telling
people that they were stupid people who were pointing out
to him that hey, we need to embrace this new
kind of technology and manufacturing or else we're going to
lose our edge. And a lot of the people that
Intel had sort of brought up in this established management
program that they have to create these strong leaders not
just at the very top but across had left had
(11:03):
just said I can't deal with this anymore. I'm out
of here. So that, according to our reporting is what
went wrong, and that is what led to the situation
that they are in now.
Speaker 1 (11:14):
In twenty twenty one, Intel hires Pat Gelsinger to turn
the company around. Tell us a bit about who he
was and why he was an attractive candidate to run
the company.
Speaker 3 (11:22):
There is nobody more Intel than Pat Gelsinger was and
still is. He was a personal alcolyte of Andy Grove.
He joined the company as a teenager, went to technical college,
then went to university to get the kind of degrees
that were necessary for Intel for working at Intel. Started
off in kind of low level engineering jobs and worked
(11:43):
his way up. He was the first ever CTO at Intel.
He was the kind of point person for all of
their presentations. He was the evangelist for their technology. You know,
he loved Intel. Then it got to the twenty tens
and part of the decision making process for who was
going to lead the company. According to Pat Glsinger, he
(12:04):
went to the then chairman, Andy Brien and said, Hey,
I've got a shot here. Got told no, you don't,
and took his business elsewhere. I became the CEO of VMware.
Fast forward to twenty twenty one, when by this point
the finances are starting to creak, the products aren't flying
off the shelves anymore. The company needs somebody who was
going to come back and embrace its culture and revitalize
(12:25):
it and be on the mountaintop saying we need to
be back to the old Intel. And you know, he's
the ideal person, and they brought him back.
Speaker 1 (12:32):
Then when did it become clear that the board and
investors were growing impatient with him and his plan for
turning it around.
Speaker 3 (12:39):
I mean, there are a couple of ways to look
at this. It takes a year maybe more to design
a chip, to bring it to market, to get it
through the manufacturing process. I mean, the finances were clearly
getting worse. You know, Intel became a loss making company.
To his credit, he said this was going to happen,
(13:00):
and people just didn't listen. He said it was going
to take five years. They didn't give him five years, right.
He said, leadership won't come easy, it'll be expensive, it'll
cost us a lot of money. And so there was
became a situation where there was a disconnect where they
felt that he'd lost kind of touch with the reality
of the moment, that maybe the message he was selling
(13:21):
wasn't connected to the reality that wall Street was seeing.
Maybe the message he was selling was necessary internally to
rally the troops. Maybe it was necessary for Washington to
rally the government behind his efforts for the Chips Act
and give him money. But that wasn't the right message
for wall Street. And that was where the disconnect came in.
And obviously the share price went through some disastrous one
(13:43):
day performances, which was very difficult for a board to
sit there and look at.
Speaker 1 (13:48):
You mentioned the Chips Act. This was legislation passed to
sort of ensure that the US would always have access
to semiconductors. And I know that Intel has benefited from
from some of that money, from some of that funding.
How helpful has it been to to Intel's fortunes And.
Speaker 3 (14:02):
It hasn't yet. It's a lot of money for you
and me, but it's not even half the price of
one factory, right. It's the way to look at it
is that it makes the costs of building factories, of
building leading edge facilities in the United States comparable to
building them in say South Korea or Taiwan or China
(14:22):
for that matter. It's basically reducing the costs of setup,
it's not paying for anything. So far, it's helped Intel
a little bit, but not really.
Speaker 1 (14:33):
Then at the end of last year, Pat Gelsinger resigned.
Bloomberg reported that Intel's board told Gelsinger he was being replaced,
and Gelsinger decided to step down immediately. The company is
currently being led by two interim CEOs while Intel tries
to find a replacement. On their fourth quarter earnings call
the end of January, Michelle Johnston Holthouse, one of those
(14:55):
two interim code chiefs, said there were no quick fixes,
that they were dedicated to rebuilding Intel's credibility and making
the company's business simpler and leaner. While the search for
a permanent CEO continues, what.
Speaker 3 (15:08):
We can say from the outside is that who they
put in place, the type of person that they choose,
will really tell us almost instantly what the board has
in mind for the future of Intel. And the biggest
I think question mark there is whether Intel actually continues
as Intel, whether it is still this company that designs
and manufactures chips, that sells chips, and also operates this
(15:32):
massive factory network. Right now, Wall Street and the bankers
are betting that that will not be the case, That
the company will be split up.
Speaker 1 (15:41):
Just wrapping up here, is there a real risk today
that Intel as we know it, as we have known
it could disappear?
Speaker 3 (15:49):
You have to say that there is absolutely a risk
that Intel as we know it will cease to exist,
that might not be here at the end of the year.
Speaker 1 (15:57):
So we should see that if it happens as much
more than just a symbolic loss.
Speaker 3 (16:02):
It'll be hard to see it as anything other than
an enormous blow to national prestige, to the capabilities that
this country has to lead a crucial industry, and there'll
be lots of questions about who will carry that torch
going forward. This is a company that I think is
symbolic of so many things that are important to one
(16:23):
country and one industry, but suddenly just can't do it.
I've spoken to some of Intel's bitterest enemies, to executives
at companies who've suffered for years at the hands of Intel,
have frankly hated Intel, who say openly we cannot as
an industry afford to have Intel failed. We need to
(16:44):
have Intel back, And it's just it's been remarkable to
see that.
Speaker 1 (16:55):
This is the big take from Bloomberg News I'm David Gurat.
This episode is produced by Alex tie. It was edited
by Aaron Edwards, Patty Hirsch, and Gillian Ward. It was
fact checked by andrean Atapia and mixed and sound designed
by Alex Sagura. Our senior producer is Naomi Shaven. Our
senior editor is Elizabeth Ponso. Our executive producer is Nicole
Beamster Boor Sage Bauman is Bloomberg's head of podcasts. If
(17:18):
you liked this episode, make sure to subscribe and review
The Big Take wherever you listen to podcasts. It helps
people find the show. Thanks for listening. We'll be back
tomorrow
Bloomberg Audio Studios, podcasts, radio news. It's hard to overstate
the historic importance of Intel to the US technology industry.
Speaker 2 (00:15):
What lets you learn about the world.
Speaker 3 (00:17):
In a whole new way The Intel Pentium processor.
Speaker 1 (00:22):
After it was founded in nineteen sixty eight, Intel pioneered
the chips that made modern computing possible, and for decades
the company was one of the crown jewels of Silicon.
Speaker 3 (00:32):
Valley the Intel Pendium processor.
Speaker 1 (00:39):
But in the last decade Intel has lost its technological
lead and huge amounts of market share. At the start
of twenty twenty, Intel had a market cap close to
two hundred and fifty billion dollars, more than twice that
of Nvidia. As of this week, Intel's cap was below
one hundred billion dollars and in Vidia's was thirty eight
(01:00):
times bigger. As Bloomberg, ce And King says, Intel is
at a crossroads.
Speaker 3 (01:05):
This is a company that I think is symbolic of
so many things are important to one country, in one industry,
but suddenly they just can't do it.
Speaker 1 (01:15):
In December, Intel CEO Pat Gelsinger was forced out after
a disastrous year.
Speaker 2 (01:20):
Breaking news. Intel the stock so far this year down
by more than fifty percent. This headline will not be
a surprise. Intel announcing the retirement of the CEO, Pakausinker.
The board has formed a search committee for his successor.
Speaker 1 (01:35):
He had been considered by many to be Intel's best
hope to get the company back to the pinnacle of
the chip business. But now some in the tech industry
you're asking, is Intel at risk of disappearing entirely? I'm
David Gerra, and this is the big take from Bloomberg
(01:56):
News Today on the show The Rise and Fall of
Intel with Bloomberg Tech reporter Ian King, who's covered the
company for decades, a clear eyed look at the challenges
Intel faces, what it would mean if Intel went away? Ian,
(02:17):
what was the innovation that really made this company take
off at the beginning?
Speaker 3 (02:20):
Remarkably for an important company that's been dominant for so long,
they've actually had more than one life. They started off
in computer memory. They saw that, hey, we need fast
computer memory. So that was their first big breakthrough and
they really kind of revolutionized and made that, you know,
an industry. Then the PC came along right at the
beginning of the eighties.
Speaker 1 (02:39):
The IBM personal computer. Not only can it help you
plan ahead, it'll balance your books and give you more
time to make.
Speaker 3 (02:46):
Do Intel was the brains of that. Pc IBM chose
an Intel part to be the new guts of this
thing that was really going to change basically modern life
in so many different ways. In Intel were there right
at the bidding and and of that and saw this
particular type of product, the microprocessor, was going to be
(03:07):
a huge deal, and then did it was.
Speaker 1 (03:09):
As Intel grew, it maintained its advantage by being the
best at making the semiconductor components on a computer chip
smaller and smaller each one. Was a technological marvel that
for decades left Intel's competitors scrambling to keep up.
Speaker 3 (03:25):
Semiconductors are basically tiny electronic switches known as transistors. Those
transistors are either on or they're off. It's either a
one or a zero, and that is the basic unit
of storage of information in the electronic world. The way
that you put more transistors on a chip is to
shrink the line width on those transistors. Now, a modern
(03:49):
in video chip has literally hundreds of billions of these
transistors on something that's not much bigger than your thumbnail,
and that has an incredible feat from where we started
off when these guys started the company.
Speaker 1 (04:02):
Ian says much of Intel's initial success came down to
how its founders and early CEOs ran the company. People
like Gordon Moore and Robert Noyce who started it, and
Andy Grove, who eventually became its chief executive. They worked
hard to develop a company culture that helped Intel maintain
a formidable scientific and commercial lead.
Speaker 3 (04:23):
Frankly, all of the structures of come into being that
determine how the industry and tech in general work largely
stemmed from a lot of the observation, a lot of
practices that these guys put in place a lot time ago.
Speaker 1 (04:38):
They were path breakers, pioneers. How did they corner the
market so effectively? And after it took off and there
was this kind of broader awareness that chips were going
to be important, why was it so difficult for other
companies to give Intel a run for its money?
Speaker 3 (04:53):
Look, design an extremely hard work, but I think fundamentally
that the understanding of vlume economics and the understanding of
the brutality of the industry in that you have to
make enormous bets. Right now, a chip plant costs twenty
billion dollars, probably more you have to run that twenty
four to seven because guess what, in five years it's
(05:15):
going to be obsolete. Right, So there's a tremendous upfront
capital cost. So one of the things that they understood
was the economics. They also understood marketing.
Speaker 1 (05:25):
That's the Pentium processor from Intel, the computer.
Speaker 3 (05:29):
Inside Intel inside. Everybody knows what Intel inside is. I mean,
this is a component company, right that made its brand
one of the biggest in the world. They made consumers
associate quality in computers, not with Dell, not with HP,
not with any other computer manufacturer, book with Intel, with
the components that nobody ever saw.
Speaker 1 (05:47):
So Intel had the best marketing, the best chip design,
and the best manufacturing. But as Ian says, it was
a less tangible factor that kept Intel on top for
its first few decades, the notorious discipline that Andy Grove
put in place.
Speaker 3 (06:02):
He established a culture in that company, you know, the
famous only the paranoid survived, But lots of other things
that he instilled were basically designed to keep Intel on
the edge of its seat, to make sure they never
got happy, flat and lazy. Things like constructive confrontation, the
idea that you're in a meeting, you hear something, it
doesn't matter who you are, you call it out if
(06:23):
you think it's wrong. The idea that if you're a leader,
you listen right, you take action. He made people sign
in at a am every morning because he didn't want
the semiconductor industry to be this happy, go looky science project.
He wanted it to be a real business. So that
kind of rigorous culture was definitely a conscious effort.
Speaker 1 (06:41):
But at the same time that Intel was riding high,
a company called Taiwan Semiconductor Manufacturing Company TSMC was founded.
Intel designs and manufactures its chips. TSMC made its big
bet on manufacturing chips that other firms designed well. That
model created an opportu twunity for companies like Nvidia. They
(07:02):
could design and sell their own chips and compete directly
with Intel without having to invest in production.
Speaker 3 (07:09):
TSMC created a new sector of the industry, one that
Intel frankly laughed at publicly, and many others agreed with
Intel the idea that you could outsource the core amount
of production, that the idea of decoupling completely the design
process from the manufacturing process was possible and made sense.
(07:29):
Intel laughed at that. TSMC said no, no, this is
the way of the future. And guess what, TSMC were
right and they have enabled many of Intel's perstwhile weakling
competitors to be just as good as Intel, if not better.
Speaker 1 (07:49):
When we come back, how Intel started to lose its
competitive edge just as AI came onto the scene and
the hopes it placed in a new chief executive to
turn things around. By the turn of the millennium, Intel
(08:12):
was at the top of its game and an undisputed
leader in the computing industry. The company dominated the chip market,
both for PCs and data centers, but then in the
two thousands, its dominance started to slip. When Steve Jobs
began to scout chips for the iPhone, he thought Intel's
chips were too expensive, so those first orders went to
(08:33):
a rival, Samsung. Then in the twenty tens, the technical
momentum that Intel had built, its ability to make the
components on its chips smaller and smaller, well, that started
to falter and it opened the door to competitors like Nvidia.
Speaker 3 (08:48):
Intel had promised that it was going to bring this,
you know, the next generation of its process technology in
in twenty fifteen light clockwork like we're going to be
here We're going to make that advance and it didn't happen.
It didn't happen, and then people were like, well where
is it? And there were lots of conference calls. Well,
don't worry, it's coming, it's coming. Twenty fifteen rolls past,
(09:11):
this new technology doesn't emerge. Two and nineteen comes along
and we still not got it. At this point, the
numbers are still great. Intel's still making money hand over fist.
But guess what the next big thing is four years
too late? This is not Intel, This is not who
they are when it comes to AI.
Speaker 1 (09:31):
Was Intel naive to what the demands would be for
chips that could do the kind of computation that is necessary?
Did they just fail to embrace it? Did they fail
to understand the seriousness of it? Did they not see
that that was the direction which things were going? So
what explains the edge that Nvidia has today?
Speaker 3 (09:46):
Intel had no excuse for not seeing this coming. So
what happened? Right? It's really hard and I think dangerous
to place the blame or the root cause of any
one massive issue we have at the feet of one person.
But guess what a lot of people blame. Brian Krasanich
the former CEO for having created the situation that has
(10:10):
led to the current impasse.
Speaker 1 (10:12):
Let me tease that out a little bit more so,
if that's the case that they're making, is what is
the direct criticism? What do they think that he failed
to do well?
Speaker 3 (10:19):
Our reporting shows Krisanitch comes in in twenty thirteen as
supposedly the joint sort of leader of this company with
a woman called Rene James, who was also a long
term Intel person. His pitch publicly was like, yeah, we're
going to embrace all of these new markets. We're going
to just run towards whatever we can and not be
you know, snobs and dominant. What happened behind the scenes
(10:42):
was he was banging his fist on the table, telling
people that they were stupid people who were pointing out
to him that hey, we need to embrace this new
kind of technology and manufacturing or else we're going to
lose our edge. And a lot of the people that
Intel had sort of brought up in this established management
program that they have to create these strong leaders not
just at the very top but across had left had
(11:03):
just said I can't deal with this anymore. I'm out
of here. So that, according to our reporting is what
went wrong, and that is what led to the situation
that they are in now.
Speaker 1 (11:14):
In twenty twenty one, Intel hires Pat Gelsinger to turn
the company around. Tell us a bit about who he
was and why he was an attractive candidate to run
the company.
Speaker 3 (11:22):
There is nobody more Intel than Pat Gelsinger was and
still is. He was a personal alcolyte of Andy Grove.
He joined the company as a teenager, went to technical college,
then went to university to get the kind of degrees
that were necessary for Intel for working at Intel. Started
off in kind of low level engineering jobs and worked
(11:43):
his way up. He was the first ever CTO at Intel.
He was the kind of point person for all of
their presentations. He was the evangelist for their technology. You know,
he loved Intel. Then it got to the twenty tens
and part of the decision making process for who was
going to lead the company. According to Pat Glsinger, he
(12:04):
went to the then chairman, Andy Brien and said, Hey,
I've got a shot here. Got told no, you don't,
and took his business elsewhere. I became the CEO of VMware.
Fast forward to twenty twenty one, when by this point
the finances are starting to creak, the products aren't flying
off the shelves anymore. The company needs somebody who was
going to come back and embrace its culture and revitalize
(12:25):
it and be on the mountaintop saying we need to
be back to the old Intel. And you know, he's
the ideal person, and they brought him back.
Speaker 1 (12:32):
Then when did it become clear that the board and
investors were growing impatient with him and his plan for
turning it around.
Speaker 3 (12:39):
I mean, there are a couple of ways to look
at this. It takes a year maybe more to design
a chip, to bring it to market, to get it
through the manufacturing process. I mean, the finances were clearly
getting worse. You know, Intel became a loss making company.
To his credit, he said this was going to happen,
(13:00):
and people just didn't listen. He said it was going
to take five years. They didn't give him five years, right.
He said, leadership won't come easy, it'll be expensive, it'll
cost us a lot of money. And so there was
became a situation where there was a disconnect where they
felt that he'd lost kind of touch with the reality
of the moment, that maybe the message he was selling
(13:21):
wasn't connected to the reality that wall Street was seeing.
Maybe the message he was selling was necessary internally to
rally the troops. Maybe it was necessary for Washington to
rally the government behind his efforts for the Chips Act
and give him money. But that wasn't the right message
for wall Street. And that was where the disconnect came in.
And obviously the share price went through some disastrous one
(13:43):
day performances, which was very difficult for a board to
sit there and look at.
Speaker 1 (13:48):
You mentioned the Chips Act. This was legislation passed to
sort of ensure that the US would always have access
to semiconductors. And I know that Intel has benefited from
from some of that money, from some of that funding.
How helpful has it been to to Intel's fortunes And.
Speaker 3 (14:02):
It hasn't yet. It's a lot of money for you
and me, but it's not even half the price of
one factory, right. It's the way to look at it
is that it makes the costs of building factories, of
building leading edge facilities in the United States comparable to
building them in say South Korea or Taiwan or China
(14:22):
for that matter. It's basically reducing the costs of setup,
it's not paying for anything. So far, it's helped Intel
a little bit, but not really.
Speaker 1 (14:33):
Then at the end of last year, Pat Gelsinger resigned.
Bloomberg reported that Intel's board told Gelsinger he was being replaced,
and Gelsinger decided to step down immediately. The company is
currently being led by two interim CEOs while Intel tries
to find a replacement. On their fourth quarter earnings call
the end of January, Michelle Johnston Holthouse, one of those
(14:55):
two interim code chiefs, said there were no quick fixes,
that they were dedicated to rebuilding Intel's credibility and making
the company's business simpler and leaner. While the search for
a permanent CEO continues, what.
Speaker 3 (15:08):
We can say from the outside is that who they
put in place, the type of person that they choose,
will really tell us almost instantly what the board has
in mind for the future of Intel. And the biggest
I think question mark there is whether Intel actually continues
as Intel, whether it is still this company that designs
and manufactures chips, that sells chips, and also operates this
(15:32):
massive factory network. Right now, Wall Street and the bankers
are betting that that will not be the case, That
the company will be split up.
Speaker 1 (15:41):
Just wrapping up here, is there a real risk today
that Intel as we know it, as we have known
it could disappear?
Speaker 3 (15:49):
You have to say that there is absolutely a risk
that Intel as we know it will cease to exist,
that might not be here at the end of the year.
Speaker 1 (15:57):
So we should see that if it happens as much
more than just a symbolic loss.
Speaker 3 (16:02):
It'll be hard to see it as anything other than
an enormous blow to national prestige, to the capabilities that
this country has to lead a crucial industry, and there'll
be lots of questions about who will carry that torch
going forward. This is a company that I think is
symbolic of so many things that are important to one
(16:23):
country and one industry, but suddenly just can't do it.
I've spoken to some of Intel's bitterest enemies, to executives
at companies who've suffered for years at the hands of Intel,
have frankly hated Intel, who say openly we cannot as
an industry afford to have Intel failed. We need to
(16:44):
have Intel back, And it's just it's been remarkable to
see that.
Speaker 1 (16:55):
This is the big take from Bloomberg News I'm David Gurat.
This episode is produced by Alex tie. It was edited
by Aaron Edwards, Patty Hirsch, and Gillian Ward. It was
fact checked by andrean Atapia and mixed and sound designed
by Alex Sagura. Our senior producer is Naomi Shaven. Our
senior editor is Elizabeth Ponso. Our executive producer is Nicole
Beamster Boor Sage Bauman is Bloomberg's head of podcasts. If
(17:18):
you liked this episode, make sure to subscribe and review
The Big Take wherever you listen to podcasts. It helps
people find the show. Thanks for listening. We'll be back
tomorrow
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