Last fall, while Intel was enduring an unprecedented manufacturing crisis, it went to an old friend to ask for help.
Manufacturing defects had delayed three generations of new Intel microprocessors, costing the company its technological lead – perhaps forever. Things were so bad Intel was publicly contemplating outsourcing its advanced manufacturing to rivals in Asia.
That’s when Intel called Pat Gelsinger, who had been at the company for 30 years before stepping away in 2009. He later became president of cloud computing software giant VMware.
In November, Intel asked Gelsinger to join the company’s board. So, Gelsinger told The Oregonian/OregonLive last week, he began reading up on his old company and pitching ideas for how Intel might change.
Then, on Dec. 23, Gelsinger said Intel’s board approached him about becoming CEO.
“That’s when things went from leisurely to chaotic,” said Gelsinger, 60. While he contemplated leaving VMware, and upending his family life, Gelsinger said he crafted a strategic reversal.
Instead of outsourcing manufacturing, Gelsinger said he proposed “redoubling on manufacturing” to regain Intel’s technological edge. And instead of ceding ground to the contract manufacturers, called foundries, Gelsinger said he told the board Intel should become a contract manufacturer itself and open up its own factories to make chips for other companies.
That meant tens of billions of dollars in new spending to build new factories and a risky bet on the foundry business. Gelsinger said he also insisted that board members commit, unanimously, to the new strategy as part of the deal to hire him.
When Intel’s board presented Gelsinger its offer, he said “It was sort of like the Hollywood Squares,” with each board member arrayed on a Zoom call. He accepted their offer – which Intel valued at $116 million – and started work Feb. 15. He announced Intel’s new strategy March 23.
Gelsinger sold Intel’s board on his plan but hasn’t yet convinced the company’s investors.
The company’s stock jumped more than 20% in the days after Gelsinger’s hiring but has dropped by 10% since he unveiled the new strategy in March.
The next day, Susquehanna International Group semiconductor analyst Christopher Rolland called Gelsinger’s plan “uneventful” and dismissed the company’s effort to get into the foundry business, noting that Intel failed when it tried several years ago.
“It didn’t work last time. It won’t work this time,” Rolland wrote. “But Intel may garner some US-based tax incentives in the endeavor.”
Intel faces other challenges.
A shortage of key components for semiconductor manufacturing is constraining Intel’s production, leading the company to forecast lower sales despite a global chip shortage. And last month the company reported disappointing sales to data centers, its most profitable business, alarming investors who fear Intel is losing market share to rival AMD.
On Wednesday, though, Gelsinger insisted he has the wind at his back even as he acknowledged “it’s going to take us years to see if” his new strategy pays off.
“The amount of energy that’s released inside of the company as well as the industry and the ecosystem has been palpable, dramatic,” Gelsinger said. “People are, I’ll say, very quickly getting on board with this path to the future.”
-- Mike Rogoway | mrogoway@oregonian.com | twitter: @rogoway | 503-294-7699
The Link LonkMay 08, 2021 at 08:40PM
https://ift.tt/3bcA8N0
Pat Gelsinger pitched a strategic reversal to Intel’s board. They liked it so much, they made him CEO - OregonLive
https://ift.tt/2YXg8Ic
Intel
No comments:
Post a Comment