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semicon101 · 16 days ago

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One of the most popular topics on the SemiWiki forum is Intel, which I understand. Many of us grew up with Intel, some of us have worked there, and I can say that the vast majority of us want Intel to succeed. The latest Intel PR debacle is the abrupt departure of CEO Pat Gelsinger. To me this confirms the answer to the question, “What is wrong with Intel?”. But first let’s look at the big picture.

Hopefully we can all agree that AI will change the world over the next decade. It has already started, AI has made it down from the cloud into our cars, homes, laptops and phones. AI is also being weaponized and is a critical technology powering conflicts around the world. Clearly the leaders of the AI race will also be the leaders of the new AI infused world.

We should also be able to agree as to the importance of semiconductor technology and the importance of controlling the semiconductor supply chain. The pandemic fueled semiconductor shortages should still be fresh in our minds and if you think it could not happen again you are wrong.

When speaking about semiconductors you can separate them into two categories: logic and memory. Currently the majority of the leading-edge logic chips come from Taiwan (TSMC) with Intel and Samsung a distant second and third. The majority of the memory chips come from South Korea (Samsung and SK Hynix) with a distant third being U.S. based Micron and relatively new memory chip makers in China. To be clear, without memory logic is useless and without logic memory is useless.

My personal mantra has always been to plan for the worst and hope for the best so you will not be disappointed. Best case is that Taiwan and South Korea continue as they have for the last 50+ years. Worst case is that they won’t and the semiconductor supply chain is fractured and life as we know it is over. We may not go back to prehistoric days but to the younger generations it will seem like it.

There are two companies that are critical to semiconductor manufacturing in the United States: Intel (logic) and Micron (memory). Both are semiconductor legends, and both are critical to the survival of semiconductor manufacturing in the United States.

We can discuss Micron another time but a recent podcast with Intel’s Dr. Tahir Ghani (Mr. Transistor) reminded me of how important Intel is to the semiconductor industry. This week I am at IEDM, the premier semiconductor conference that showcases semiconductor innovation, and Intel is again front and center. This is a much longer technology discussion so I will simply say that Intel is critical to the semiconductor industry and the United States of America. If you think otherwise post it in the SemiWiki forum and thousands of working semiconductor professionals will explain it to you in painful detail.

This brings us back to the question: What is wrong with Intel? In my opinion Intel has had the worst board of directors in the history of the semiconductor industry. The hiring/firing of the three previous CEOs is a clear example. Seriously, we are talking about 20 years of bad decisions that have destroyed a semiconductor legend.

I posted a blog about The Legend of Intel CEOs in 2014 and updated it after Pat Gelsinger was hired and I will have to update it yet again. To me the bad board decisions started when they hired Paul Otellini (finance/sales/marketing) and then made an even worse pick with Brian Krzanich (manufacturing). The firing of Krzanich was even worse. How could the board have not properly vetted a man whose entire career was at Intel? The stated reason for the firing was absolute nonsense. Krzanich was the worst Intel CEO of all time and that is why he was fired. I would liken it to Pat Gelsinger’s “refirement” announcement. Why are board of directors allowed to reimagine CEO firings? They are heavily compensated employees of a publicly traded company. Intel pays these people millions of dollars in salary and stock options to safeguard the company. Where are the activist investors now?!?!

I also questioned the hiring of Robert Swan (finance) as Intel CEO. As it turns out Swan signed the megadeal with TSMC that saved the company from the Intel 10nm debacle and he was later fired for it. I do believe that if Swan stayed as CEO Intel would be fabless which is a very bad idea for the reasons stated above.

In regards to Pat Gelsinger, I was a big fan at the beginning but I told my contacts at Intel that the strategy should be to “speak softly and carry a big stick”. Intel’s culture has been based on being a virtual monopoly for so many years it really got the best of them. Making overly optimistic statements is a very risky proposition. At some point in time those statements will come back to haunt you unless you have the revenue to back them up. Intel did not, so Pat was out, just my opinion.

Let’s be clear, Intel is an IDM foundry like Samsung. TSMC is a pure-play foundry with hundreds of customers and partners collaborating on R&D and business strategy. No one company is going to compete with that. If you compare Intel Foundry to Samsung Foundry you get a very favorable result. The challenging TSMC head-to-head strategy has been tried before (Samsung and Globalfoundries) and billions of dollars were wasted. How did a seasoned board of directors allow this to happen?

As for the rumors of Intel being acquired, in my opinion Broadcom is the only company that qualifies. I’m confident Hock Tan could turn Intel around. I do not know how the finances would work but Hock’s management style would get Intel back into the green without a doubt.

Selling off the manufacturing part of Intel is ridiculous. Do you really think Intel Design can compete with Nvidia or even AMD without intimate ties to manufacturing? I was really excited when Intel signed the agreement with TSMC because it was a head-to-head design shootout with AMD, Nvidia, and Intel on the same process technology for the very first time. You tell me how that turned out. Are the new Intel products disruptive? The entire leading edge semiconductor industry is using TSMC N3. Will Intel really be relevant without manufacturing?

The quick fix for Intel is to be acquired by Broadcom. Bringing back Pat 2.0 and replacing the board of directors is another option. A third option is for the U.S. Government to step in and make semiconductor manufacturing a priority. Maybe Elon Musk can help Intel sort things out (kidding/not kidding).

Bottom line: Some very difficult decisions have to be made by some very qualified people. Take a look at the current Intel Board of Directors and convince me that they are the right ones to do it. You have an open invitation to be a guest on our podcast or post a written response to this blog.

I started SemiWiki 14 years ago to give semiconductor professionals a voice, a platform to participate in conversations for the greater good of the semiconductor industry. Let’s use it to help Intel become an industry leader again.

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