Intel CEO vs. Intel Decision
CEO changes too frequently
Intel has only had eight CEOs in the past sixty years; but the next five Intel CEOs have all been in office for a short period of time. The tenure of the CEO and his performance are usually directly proportional. This is a norm in the capital market.
Compared with technology companies such as Microsoft, Alphabet, and Amazon, Intel’s CEO changes too frequently. Jensen Huang has been the CEO of Nvidia since 1993, when it was founded, and has no intention of retiring at all. Zuckerberg just turned 40 this year and is in his prime. Broadcom’s Tan Hock Eeng has been Broadcom’s CEO from 2006 to the present, and his performance has received strong praise from all walks of life.
Incompetent CEOs
To say that Intel is in such a state today, the appointment of multiple unfit CEOs can be said to be the number one reason–and what’s even worse is that the performance of the “recent five consecutive” CEOs is disappointing. Shake his head.
In Intel’s sixty years, the company has only had eight CEOs. But there are only two kinds of these eight: extremely good and terrible. The performance of these two types of Intel CEOs can be said to be very different: Intel decisions during their respective tenures resulted in the current miserable state of Intel we see.
The first three CEOs are legend
The first three can be said to be godfather figures recorded in the history of semiconductors in the global semiconductor industry.
The world regards all three of them as the founders of Intel and the triumvirate of business leaders. Noyce is responsible for technology development, Moore is responsible for technology implementation, and Grove is responsible for commercialization and management, leading Intel for 30 years from 1968 to 1998.
The eight CEOs in Intel history
- The first CEO: Robert Noyce (1968~1975): After Noyce founded Intel, he proposed the microprocessor in 1971. Later generations respectfully called him “Silicon Mayor” or “Silicon God Father”. Noyce and Texas Instruments engineer Jack Kilby are both co-inventors of the integrated circuit (IC).
- The second CEO: Gordon Moore (1975~1987): Moore proposed the famous “Moore’s Law” in 1965. Moore revised the prediction in 1975, pointing out that in the next 10 years, the number of chips on the chip will increase. The number of transistors will double every two years, which also lays the foundation for the development of the semiconductor industry.
- The third CEO: Andrew Grove (1987~1998): the third employee of Intel. Grove decided to discontinue the development of DRAM-related products and instead develop its own 386 processor, establishing its unquestioned leadership position in the early 1990s. Grove was selected as Person of the Year by Time magazine in 1997. He also wrote a book about his management journey and said the classic famous saying “Only the Paranoid Survive”.
- The fourth CEO: Craig Barrett (1998~2005): Market segmentation of Intel’s processor products, making it difficult for competitors to shake its position in the low-price market; the second is to enter the Internet from the field of computers and computer science server.
- The fifth CEO: Paul Otellini (2005~2013): Transformed Intel from a technology-oriented company to a performance-oriented company, placing more emphasis on sales and marketing than technology, which laid the foundation for Intel’s later years.
- The sixth CEO: Brian Krzanich (2013~2018): Shifted the company’s focus to the Internet of Things (IoT) and cloud markets. In terms of process technology, it began to lag behind TSMC and Samsung.
- The seventh CEO: Bob Swan (2019~2021): Under his leadership, Intel’s market dominance has gradually declined to equal that of AMD, and is being caught up in some markets. In addition, Apple announced the launch of its own Home develops processor M1 and abandons Intel.
- The eighth CEO: Pat Gelsinger (2021~): Since the first three CEOs are mainly engaged in operations or finance, it remains to be seen whether he can save Intel after he takes office. Time will tell.
Key investments achieve nothing
Intel has long ago established the Intel Capital department, which focuses on venture capital investment business. It has enviable resources and the support of the company’s internal management.
Unlike the stories of IBM and Cisco, Intel has a very keen sense of emerging fields and has not slackened in its investment in new technologies. Almost all of them can get access to most key investment opportunities in the industry before other competitors. At its peak, Intel’s R&D spending alone accounted for 30% of the semiconductor industry.
However, this kind of Intel did not seize these investment opportunities well. It always got the upper hand at the beginning, but later it did not pay attention or work hard. Almost all the companies acquired by Intel were at the peak of their glory when they were acquired. Intel also spent astronomical amounts of money.
But all the mergers and acquisitions ended badly. The ending of these companies was downhill, sold off at a low price, or shelved; in the end, Intel missed out on almost all emerging technologies except its PC. The reason is still caused by the company’s culture and poor management by the management.
Among them, the amount is relatively large and has great influence in the technology industry. The more famous cases include: Altera, Mobileyes, Nervana, McAfee, mobile phone modems, Optane, drones, etc.
In short, Intel has been a spectator at the center of the technology stage for decades. It is not surprising that Intel has almost been kicked off the stage due to its indifferent attitude.
Mobile computing is a flop
Reject iPhone
In 2005, Otellini received a cooperation order from Apple to equip Mac with Intel chips. However, Apple later asked Intel if it was willing to supply iPhone semiconductors. Otellini misjudged the demand prospects and believed that the cost was not met, so he gave up the deal with Apple and missed the 2007 iPhone. The initial stage of action brought about by listing.
Sold ARM processor division
On June 27, 2006, Otellini announced the sale of its XScale PXA mobile processor assets. Selling the ARM processor division to Marvell for US$600 million was tantamount to giving up the ARM processor computing platform that later became the mainstream of mobile computing.
Endoresement of wrong communication protocol
Preferring WiMAX over LTE is the worst decision ever made regarding a 4G mobile protocol. One of the big choices Intel made around 2009 was to commit to WiMAX as the future 4G standard. Qualcomm is going in the opposite direction, prioritizing LTE. After spending countless resources and budget, the result is now known to everyone, LTE has won a big victory.
Shut down Mobile Computing Group
In December 2011, Intel established a new mobile computing division. The company spends billions of dollars developing the right processors and modems to power its various mobile businesses.
The mounting costs of the multi-billion-dollar campaign—losses of $3.1 billion in 2013 and $4.3 billion in 2014—eventually forced Intel to combine its campaign and PC earnings reports to hide its unproductive spending.
After years of losses in the mobile computing department, coupled with the fact that the mobile computing department was squeezed out internally by Intel (please see the Atom processor section at the end of this article), and under the difficult circumstances of internal and external pressure, it was still unable to overtake its competitors. Forced to close the mobile computing department, even though the tablet business has achieved market dominance as the world’s third largest hardware platform, it can only abandon the mobile phone and tablet business.
Sold the modem division to Apple
Intel spent $1.4 billion to acquire Infineon Technologies’ wireless chip business in January 2011, a deal that closed in January. This division later became Intel’s mobile communications modem division.
Finally, after Apple and Qualcomm made peace, Intel’s mobile communications modem division lost its only major customer, Apple, and had to sell it to Apple for US$1 billion.
Chip process delays repeatedly
Don’t trust EUV
Otellini, the fifth CEO, began investing heavily in EUV lithography machines, investing US$4.1 billion in Esmore’s EUV project, which was more than TSMC’s US$1.4 billion and Samsung’s US$974 million combined.
The sixth executive, Krzanich, did not believe that the exposure function could achieve economies of scale and gave up on the production of ASML’s first-generation EUV equipment. Therefore, it delayed many times on the 10-nanometer process, making its advanced process technology fall behind. TSMC and Samsung have even had their market share eroded by rival AMD, which has switched to TSMC as its chip foundry.
As early as 2017, Intel acquired the first EUV lithography machine, but it has been placed in the company’s warehouse and will not see the light of day until 2021. Meanwhile, Intel also took the lead in launching 14nm process chips in the industry in 2014, and everything looks good.
After the launch of 14nm, Intel’s proud “tick-tock” – a two-year process iteration cycle magic similar to a pendulum model – gradually failed, and it was not until 2019 that 10nm was launched. Process products. This iteration cycle has been lengthened from two years to five years. Intel is stuck with 7 generations of products at the 14nm node!
Foundry service suffered serious losses
Intel announced the results of its foundry service BU on April 25, 2024, announcing a loss of US$7 billion in its foundry business in 2023, which was further worsened than the loss of US$5.2 billion in the previous year. Intel CEO Pat Gelsinger predicted that the foundry business would reach breakeven in 2027, causing Intel’s stock price to plummet.
Asking rival to manufacture core products
TSMC’s revenue from Intel may reach US$8-9 billion in 2025, which will make Intel the second largest customer of TSMC’s N3 process. Lunar Lake computing chips (including CPUs, GPUs, NPUs, etc.) are manufactured using TSMC’s N3B process node.
Note: TSMC has long manufactured many products for Intel, including non-core products such as independent display chips. But it is only in recent years that Intel began to ask its rival TSMC to manufacture core products such as Meteor Lake, Lunar Lake, Arrow Lake, etc.
Funding rivals
Spending a lot of money, they keep saying they want to catch up with TSMC. However, Intel actually began to outsource its core desktop and notebook processors to competitors, outsourcing about 30% of its production capacity to TSMC. This is tantamount to accomplishing nothing, spending a lot of time and resources, and making no progress at all. Instead, it uses money to fund its opponents. This move further angers investors and makes them uncontrollable. It also led investors to take Intel to court.
Missing out on artificial intelligence
Missing out on OpenAI
Intel discussed investment options with OpenAI executives from 2017 to 2018, , Intel had the opportunity to hold 30% of OpenAI’s shares, but Swan, the seventh executive, believed that generative AI models would be difficult to commercialize in the short term and would not make money, which ultimately led to the deal falling through.
Useless startup acquisitions
Ironically, Intel spent a lot of money to acquire a number of artificial intelligence chip startups during the same period, but now it seems that most of these artificial intelligence chip startups have not brought significant revenue to the company.
Krzanich, the sixth executive, led the acquisition of Nervana during his tenure, which was Intel’s fourth attempt in the field of artificial intelligence. However, in 2019, Krzanich took the blame and resigned, and Nervana died unexpectedly.
After the seventh executive Swan, who had no engineering background, took over, he acquired the AI chip company Habana Labs and transferred all resources that should have been invested in Nervana to Habana Labs.
Now Intel is competing with Nvidia and AMD. The Gaudi series of chips for artificial intelligence data centers are products that have been improved and launched based on Habana. But due to changes in the management process, delays in schedule, and insufficient resource investment, it was too late. Seeing Nvidia and AMD taking away all the market, Intel’s Gaudi series had almost no visibility and performance in the market also worse.
Don’t pay attention to software
Intel has had a characteristic for decades, that is, the company does not pay attention to software and integration, and ignores the power of software. This is why Huida can rely on the CUDA software platform to strengthen Huida’s moat in the field of artificial intelligence, while Intel still insists on relying only on the computing power of hardware chips.
Processor performance lags behind
Losing computer processor orders from Apple
Due to repeated delays in Intel’s chip manufacturing process, its advanced process technology has lagged behind TSMC and Samsung. This has also impacted Apple’s computer division’s product launch schedule, and the performance of Intel processors no longer meets Apple’s expectations.
During the period of seventh CEO Bob Swan, Apple announced the launch of its own development processor M1 and abandoned the Intel processors used since 2005–this caused Intel to lose about 10% of the world’s computer processor orders. In addition to the processor market share that has been repeatedly eroded by AMD, it will undoubtedly give Intel another fatal blow.
Cancel Discrete GPU
Intel was dissatisfied with the cancellation of the Larrabee project in 2010, which would have been an early general-purpose graphics processor (GPU). This project caused a huge stir when it was canceled.
Intel originally planned to launch Larrabee in both the consumer market and the high-performance computing market, but first the consumer market plan was canceled, and finally the entire GPU research and development project was cancelled.
Xeon Phi is the successor of Larrabee and is still positioned as a general-purpose GPU. But Intel’s idea changed from designing a new GPU to giving the CPU computing power comparable to that of the GPU. Due to high costs, Xeon Phi had almost no customers during its extremely limited product cycle. Coupled with the difficulty in producing 10nm, the plan was eventually axed in 2017.
If Intel had successfully promoted the GPU research and development project back then, it would not have lost so much to Huida when it joined the AI arms race.
Atom was squeezed out
The Atom processor, which uses x86 architecture with low power consumption and focuses on the mobile terminal market, was released in 2008, the second year after the iPhone was launched. This processor is mainly designed for smart phones. However, at that time, most of the smart phone chips were ARM architecture chips.
The first smartphone equipped with Intel chips was released in 2012. In a period when it should have been pursuing victory and iterating rapidly, Atom was waiting for five years of standing still. Coupled with strong criticism from competitors for Atom’s poor performance in terms of power consumption, Atom’s market momentum quickly faded.
However, Atom still has many advantages that ARM-based chip mobile devices cannot have: for example, it can run all Windows programs, and the processor performance is also better. Therefore, in addition to its poor performance in mobile phones, Atom was once the third largest hardware platform in the field of small laptops and tablets, and its performance was actually not bad. The vitality of this chip is not bad. Some old Tesla models are equipped with Atom processors.
Atom will really be stillborn. One of the unspeakable reasons is Intel’s internal competition. During the period of Atom’s existence, Intel’s chip manufacturing process began to fall behind its competitors, and the launch schedule was repeatedly delayed. Atom’s priority within the company has always been behind departments with larger revenue such as servers and laptops. As a result, Atom’s power consumption and function improvement plans have not been significantly improved.
Another reason is that because Atom can run Windows programs, Intel’s traditional notebook and personal departments are worried that Atom, which focuses on cost-effectiveness, will affect the market of their own products. As a result, any plans for Atom are squeezed out and they are unable to obtain the desired product launches. Time schedule, production capacity can never be grabbed, and Intel’s internal resource feeding priority has been repeatedly ranked lower. However, due to limited progress, the smartphone chip department was shut down in 2016.
Conclusion
As I have emphasized repeatedly in my book and this blog, Lip-Bu Tan’s reasons for quitting the board of directors were stated in my post of “Will Intel go bankrupt?” It is repeated in “Intel’s problem is corporate culture, not technology“. If the corporate culture that has been too comfortable in the past sixty years is not changed, and if the boss mentality and culture of the company and employees are not completely removed, all efforts will be in vain.
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