After eight years running VMware, technology pundits often tossed Pat Gelsinger’s name into the ring for Intel CEO. The company finally lured him back in 2019.
Gelsinger has quickly moved to revamp Intel, committing to mid-to-high double-digit growth across PC, data center and network/edge businesses, Mobileye, and foundry. He has also vowed to fix Intel’s manufacturing problems and design premium, high-performance chips.
Intel’s Future is Software
While the Oregon engineering icon still rules the data center and PC business, its foundry division is struggling. It has a long way to go to regain its pole position.
That’s why Intel brought Gelsinger back, the former CTO who left a decade ago to run VMware. His return is a bold gamble with little margin for error. He is betting that Intel can restore its dominance by resetting its engineering culture, ditching legacy baggage and reinventing itself for the future.
Gelsinger outlined the company’s future at the Intel Innovation 22 conference in San Jose this week. He painted a picture of a world economy that is powered by data processors. He described the five superpowers that will dominate the future: compute, connectivity, infrastructure, AI and sensing.
The X86 chip continues to dominate the datacenter, but he also emphasized the importance of mobile computing, big data and co-designing hardware and software. He pushed back against the idea that Intel is slow to innovate.
In the past he often argued that Intel would eventually catch up to AMD with its newer products. However, he conceded that the gap is closing. Intel has been late to introduce new microprocessors based on its 14nm and 10nm technologies, which were both delayed due to manufacturing problems.
But he insisted that inventory levels are healthy and that the 10nm process is on track to start production this year. He said Intel would work to optimize its factories so it can make more chips with fewer defects.
He also hinted at a future where Intel would open up its foundry services to outside designers. This could allow them to tap into Intel’s technology while using a different foundry to build specialized processors that address their unique requirements.
On the political front, Gelsinger has been working the phones and enlisting former colleagues to help with his comeback effort. In addition to Hinton, he has recruited Sunil Shenoy, the head of Intel’s design engineering group in Oregon, to join him at the company. The plan is to rebuild the company in the tradition of its founders and former CEO Andy Grove.
Intel’s Future is Artificial Intelligence
Pat Gelsinger has a lot on his mind as he formally returns to Intel this week. The Oregon native and company veteran who resigned as CEO in 2012 to run VMware, a software-focused cloud computing business that thrived under his watch, faces a challenge of restoring the chipmaker to its former pole position, one it lost amid a series of manufacturing setbacks.
He’s betting on the future of artificial intelligence and putting his stamp on a new generation of Intel processors with built-in AI coprocessors. The chips will enable computers to perform tasks like vision, natural language processing and deep learning, without slowing down the main CPU or consuming a lot of energy. The company also plans to spin off its Israeli autonomous driving business, Mobileye, and aim it at a $50 billion valuation.
The big question is whether Gelsinger’s ambitious plan can succeed in a market where other chipmakers, including Apple, Arm and Nvidia, are working on their own versions of these technologies. It’s not clear how fast they can push ahead, but if they do so successfully, Intel will be left behind, just as it has been in recent years when competing with TSMC and Samsung.
Intel is betting that its integrated approach to designing computer chips and building them at its factories in Hillsboro will give it a competitive edge over competitors who specialize in one or the other. It’s an approach that has proved successful in the past, but this time around, it’s a gamble with little margin for error.
Intel slashed its capital spending budget this year and is cutting jobs to save money, while investing in new technology. It is also announcing plans to return the company’s headquarters to Oregon, where it spent decades as one of the state’s biggest employers. It’s a bold move that could help re-energize the company and its famous engineering culture. But it’s a risky strategy with only about two years to prove its viability. It will be very interesting to see how it plays out.
Intel’s Future is Mobility
Intel’s mobile processor business remains the company’s best growth opportunity. Last month, Gelsinger said that PC inventory levels are healthy and the company will grow its mobile business in mid- to high-double-digits through 2026. Half of that growth will come from the traditional PC, data center & network/edge businesses, with the rest coming from advanced graphics, high-performance computing and Mobileye. That’s a pretty competitive growth rate for a $70 billion-plus chipmaker.
Intel is also investing in new factories to build leading-edge chips in Europe and elsewhere. Those facilities will employ advanced technologies including high numerical aperture lithography. The company is also accelerating efforts to improve the efficiency of power delivery within chips. That will help Intel make processors consume less power and run cooler.
Those investments could pay off if Intel continues to push Moore’s Law forward. The company is working on a technology called gate all around, which miniaturizes transistors and helps to keep Moore’s Law ticking along. Other manufacturing improvements like backside power delivery and logic stacking can allow Intel to pack more functionality into smaller, denser packages. Gelsinger believes that the combination of these technologies will help Intel maintain its lead.
That’s an ambitious goal, and one that will require a lot of discipline from Intel’s leadership team. If the company can keep moving at a fast pace, it may be able to avoid getting squeezed off the leading edge and left behind by rivals like AMD.
The company is still dealing with several headwinds, though. It faces slowing economic growth, political unrest and security risks, the impact of trade disputes, natural disasters, health concerns (including the COVID-19 pandemic) and inflation. Intel also faces competition from TSMC, the world’s largest chipmaker, which has been rapidly catching up in manufacturing technology.
But Gelsinger has a clear vision of where the company is going. He joined Intel at age 18 and told employees last month that he wants to be at the top of the industry for a long time to come. And if Intel can pull off its strategy, it might be able to restore itself to a place of prominence that it had lost over the past decade.
Intel’s Future is Cloud
Intel’s new approach to PCs and mobile devices is an attempt to create a “virtuous cycle” of open standards, innovation and adoption similar to the one that created the Internet. The virtuous cycle started with the development of PCs that were compatible with the Web, which in turn led to more innovation and more adoption of computers, leading to an explosion in computing capability and, ultimately, the Internet itself.
Intel wants to replicate that success with cloud computing. Using its existing technologies and its strength in software, the company hopes to create a similar virtuous cycle to drive adoption of its processors and cloud services.
That starts with the developer ecosystem. Intel has improved its Developer Cloud to make it easier for developers to use Intel’s newest processors, and it has added new capabilities like artificial intelligence framework support and GPU acceleration. Intel also has begun to add new accelerators to its Xeon processor line to speed up specific cloud workloads.
This is a significant shift for Intel, which has traditionally focused on the data center and high-performance gaming. But it’s also an important sign that Intel is taking cloud seriously.
The company will continue to be a major player in the data center, where it has a strong position in compute, memory and networking. But it has moved beyond a narrative of competing with AMD to focusing on its strengths in connectivity and AI.
Intel is still a long way from recovering from a disastrous 2020 that saw the chipmaker lose market share to AMD, but it’s moving in the right direction. Gelsinger’s comeback plan appears to be paying off. He’s made some good strategic choices, and Intel is starting to see the fruits of its labors in the form of a growing developer base and new cloud business. It’s a start, but it will take time for Intel to regain its lost market share in the data center and return to being a growth leader.