Bloomberg Studio 1.0: Intel CEO Pat Gelsinger
Also having a study of a direct line to the president now. Well he's enthusiastic. Obviously the project is significant and a lot of interest around it. But you know it's also he says hey I really want your views. You know I want to know what your views on the semiconductor industry are on the shortage you know how to be a more effective partner with business. Some of the geopolitical topics. So over we have a date planned to get together again. When you talk to him do you feel like he'll learn something like why do you take away from Converse conversation. Know I gave him
a 20 minute briefing when someone said you know as you know how there is he. But he was engaged. He was asking questions seeking to understand excited about the benefits to the region. And I'll tell you Emily this this idea of the silicon heartland it just pulled on something deeper in the nation. And you're all right. You know the plans have sort of been under work. And all of a sudden you know hey you know let's get this allows then what a what a kick in the pants for the chip site.
That's Intel CEO Pat Gilson you're leaning in with President Biden at the White House unveiling a plan to invest tens of billions of dollars in the American heartland of Ohio create thousands of jobs and bring chip manufacturing back to U.S. soil. It's part of an ambitious effort to revitalize a lagging company and wrest control of an industry from Asia. The question remains will it work. Joining me on this edition of Bloomberg Studio 1.0 Intel CEO Pat Gettelfinger.
So good to be here with you. It's always a joy Emily to be with you. Thank you for having me. And here at the Intel Museum which is obviously a sign of the legacy engineer part ISE because he worked here for 30 years. Yeah. Yeah. Thirty years. You know an 11 year vacation. And then now back for just about a year. So tell me about that call. When you got asked to come back as CEO we're coming up on the one year anniversary. It was right before Thanksgiving a year plus ago. And the request was. Would you consider joining the board. So I asked Michael. Right. Michael what do you think. Right. He says hey they need help. Go help
him. Yeah. Oh that Michael and. Yeah. The um. We're bored was OK. Yeah. You know. You know if Michael supporting it we're OK with that. So why interview to join the board for the month of December. They said would you consider being the CEO. So it just ruined my Christmas season
last year. Your eighth grandchild was on the way. You know the VM weird gig. And I wanted to get the public offering of the um we're done and everything. So it was sort of like wow or wow. And how was I going to play. So three weeks of chaos and then obviously the January 15th announcement you know on the idea of coming home you know being a successful CEO coming back now to the company that I was born and raised in. So I like to say I went through puberty before I started so young. And now the opportunity to lead and really help the resurgence and re-establishment of this iconic company that really is the honor of a lifetime. What is it like to return to a company that has so much history which you were part of but also knowing you needed to shake things up. The first the first staff meeting you know February 15th was the year she started that night. And I
started the first one at 7:00 a.m. And the first pull of the first slide we will have a torrid pace. Right. Just setting the bar. It has a new word intel vocabulary. The industry is moving rapidly. Massive shortages. The competitors are performing well. Hey what we've been doing any work in team we have to set a new course for the future. And that's gotten underway very rapidly. We've gotten a lot done over the first year. But you don't change. You don't fix. You don't re-establish after a decade of bad decisions and poor execution. It's going to take a while but we're well on our way after year one. You took the job in the middle of a pandemic in the middle of a supply crisis. Two themes that are still with us today. If you could give yourself
an honest one year report card what would you say. Give yourself a grade. Well let me give you two. Let me give you two grades. The board gives me an A. Myself. I give myself an A minus. Right now in some regards we're ahead of where I thought we'd be. In some areas we're not as far as I thought we'd be. And it really is more a statement of the massive challenge in front of us. And we still got analysts out here some of whom piss me off right. I call them my bears and my perma bears at that sort of say yes
the right strategy Pat but I'm not sure if I need to invest for a year to go yet. You know once you go to start materializing in the marketplace as well. So good progress. It's a good year behind us. And people are really getting excited about the new old. And do you ever have it out with the perma bears. Of course. You know we'll debate on different aspects. And hey I appreciate divergent views. Yeah well that's part of the Intel culture right. Yo Andy would argue every thing as I would say if you were ninety five percent right. With the ending you were wall. Well you know something about hardware because you grew up on a farm. You have a zone yet I say. And you know between Redding and Hershey halfway is Rob Zone. And we were five miles
outside of town. So when you got nowhere we were five more miles. Tell me about your upbringing. How do you go from farmer in the middle of Pennsylvania to engineer in Silicon Valley. My dad number nine of 10 kids and grandpa said you know we have enough farms in the family. Just work with your siblings. I'm the oldest boy. Had we had a farm I'd be a farmer because that's what the oldest boy does. Sixteen years old accidentally took a scholarship exam and won. So I ended up having the opportunity to go get a technician's degree you know community college. And so at 16 years old Skip my last year and a half of high school
finished my associates degree and Intel came interviewing for technicians. So here I am 18 years old. Intel on the West Coast invites me to come for an interview. I've never been on an airplane never been to the West Coast. How long you think it set took for me to say yes I'll fly to California. Right. It's like two nanoseconds. And they offered me a job. And the interview interviewer. Said in the interview he said smart aggressive arrogant. He'll fit right in. You actually became the chief
architect of the forty six processor Intel's 486 processor. Right. Yes. Yes. And you had to pitch that to Steve Jobs. I want to hear about that mean jobs in India. They had argued early and jobs went off on a different path. Right. And because of that they were using other microprocessors. And so I tried to convince Steve come back to Intel. Right. So and I tried to sell him on the 386. He sort of threw us out. I tried to sell him the forty six and he threw us out at the time and eventually we won him over with the sentry. No product some number of years later. But it was also his insatiable detailed demand for engineering
and industrial engineering excellence. And to me that's just what set him apart. You know literally I was nudged out of the company at the time and I was much that pushed out. You became Intel's first CTO. When did you know you wanted to be a CEO that you wanted something more. So in my 20s. I had my first patent. I had my first book being written program in the eighty three eighty six. It was a bestseller. And I had gotten to be a V.P. of the company right at the youngest V.P. ever. And it was sort of like OK I don't want to do next. Right. And then through that was sort of the soul searching time and I wrote my mission statement that said Become CEO of Intel. And here I am
25 26 year olds. Being CEO you've got gotta be kidding me right. What are you talking about. And but it became this driving force in me that I'd be in meetings with Andy Grove Bob Noyce sort of. I was arm chair CEO wing for a decade and a half as I'm sitting in the room you know with these industry legends and all the time it was making me better. A lot of people thought you would be a shoo in for the CEO job when that job came up. So why did you leave. If this was your dream job. Yeah. You know there was a period of time under totally NDA leadership where he had a different view of leadership but different view of what he wanted his successor to look like. And you know literally I was nudged out of the company at the time and I was such that I pushed out let's say somewhere between those two you know that 11 year period by the way Steve Jobs was outside of Apple for 11 years. All right. There's something interesting. Yeah. You know being away and I
call it the death of a vision. Your period where you really have to sort of look and say OK why am I pursuing this. Why wasn't I ready for that job out of these circumstances. What am I going to learn. I've also seen the VM where in the Dell and the EMC culture up close. I just feel so much more equipped now. And had I stayed on the linear path to CEO. I wouldn't have been the
leader that I am today. So those eight years as CEO of VM where hugely value you wouldn't change a thing. I wouldn't change a thing. Right. And I learned the value of software. And hey Intel's gonna do a whole lot more software the future I promise you. But it was also a period of personal development as well you know developing humility confidence insights on how to be a leader at this scale. Moore's Law has guided the development of the chip industry for decades. It's not a law per say but it's
been critical to the development of semiconductors. We might even go Super Moore's Law this decade. And know for reasons I said best case we know how to build transistors that we can see them scale for the next decade. We have power delivery. How do you get the power in and out of the chip with our power veto technology. Third we have the lithography. We also see that packaging. We'll call two and a half in 3-D which is becoming much more like wafer building. As we look to the future. So here we are. One hundred billion transistor chip will be our largest chip that we do today or parts of Vecchio for high performance
computing by the end of the decade. We will deliver the trillion transistor chip. And I just say with utter confidence I sit here and say my team is going to make that happen. So industry. Buckle up. Hang on. We are going for a ride. So what happens after a decade. I mean do you think Moore's Law can continue forever. To be Moore's Law has always been about a decade right. Where we can see in front of us the core technologies the barriers over lining up the things that will allow us to do it.
So five years from now we'll have the next interview Emily and you'll say are you still good for a decade. And I hope to be able to answer that question. Yes. So we have a date in five years. There we go. Absolutely. Your strategy involves doing multiple things that Intel has never been able to pull off before. At the same time moving into foundry for example. Why do all of these things at once. These are reinforcing strategies. It's not like this one is in conflict or separate from the others but they are making each other better. And let's talk about the foundry as an example of that. If I open my foundry
doors up that means I have customers benchmarking my process technology every day. Right. I'm not an internal guy anymore. Instead of just saying here's my chip or you can go to external foundries almost like let's go together and we'll bring some of your stuff. We'll optimize some of our stuff. You'll also some of the new business series that we're launching. Hey we've been in internal graphics forever. Now we're gonna do discrete graphics. We're gonna build on things that we're already doing and doing well. Now investors seem to be really excited about the ambition the speed the aggression the torrid pace if you
will. But they're not excited about how much it's going to cost. And they want to know about margins. And I know you've said five years. That's when you know those historically high margins will return. That's right. It's gonna be on a couple of. Investment and I am proud of making those investments. We're not being managed on a quarterly Wall Street view. All right. We are
investing for a long term return and I'm pretty darn proud of that. And you've budgeted up to twenty eight billion dollars here but your rival Samsung TSMC they're planning to spend way more than that. So is there a chance this could cost even more than you're planning. Well what we've said you know we said the 28 billion for this year and it could go up next year and the year after. This is big business. This is the capital investments is a big manufacturing expansion. We're pretty proud
of the position. And boy having doubled my you know my capital investments year on year. We're not being bashful about the big steps forward that we're taking. And with the announcements that we've laid out you know we believe that we'll be back in fundamental process leadership by 2025. So I think I saw you wearing a Christmas sweater taking some shots at least as you
and Andy I believe you said they're already in the rearview mirror. They're never going to be in the windshield again. I asked her about this and she she said you know we're playing our own game and we feel good about it. He didn't even say the word. What's your reaction to that. Well Lisa's done a good job with a MDA as a company. And hey you know I think we're back to a
leadership position on the client and server. Hey we got a little bit more work to do in that area. Is it possible the industry's in an arms race that will lead to spending itself into an oversupply. I mean that has happened before. We we've looked at this very carefully and you know the digitization of everything. Tell me what aspect of your life Emily isn't becoming more digital. Well you're trying to prevent that but it's happening.
And Covid has accelerated that. The industry cost five hundred billion dollars last year. The semiconductor industry overall and estimates are a trillion dollars a doubling by the end of the decade. At that point I believe those estimates is not that there's not going to be some blips and turns on the way. And the majority of that is driven by leadership process technology of which only three companies can satisfy that need. Intel Samsung TSMC and we are destined to grow faster than the market to
accomplish that objective over that time. CEO of Apple recently said on the earnings call that it's because of the Apple design chips that more customers are buying Macs. How does it feel if Intel's being designed out. Do you feel you're getting as much support as your Asian rivals are getting from their governments. You know I think in the past clearly they've gotten more right. Unquestionably. And I think what we've seen over the last number of months is really that the entire political infrastructure in the US realizes how critical this is. This isn't just any industry. Right. This is the heart of what the automotive industry needs of what the industrial industry needs. What the medical industry needs. The
consumer industry. The cloud industry. Every one of those relies on semiconductors. The national security relies on semiconductors. This is a priority for the nation. Well speaking of national security tension between the US and China is escalating daily. The US is your home market. China is your biggest market. Isn't that a risk to Intel's future. The U.S. China relationship now very critical. Big market for us. So you know we're in China. We're navigating that carefully U.S. global
market. Big important for us. And I'll say you know how do you navigate that. Careful. Right. It requires you to be tough thoughtful engaged with the political leaders the business leaders on both sides. Definitely consumes a lot of our energy. And we have to navigate it well. Intel asked suppliers to avoid Shin Jong an area that the US has accused China of human rights
abuses. Huge backlash from China. Intel apologized for the trouble that it caused. Why not stand up to China in that moment. If you believe human rights are at risk we'd all source out of Shin John. You know there's no reason for us to be calling one out over any other. We shouldn't be calling out individual things. You know it's not our job right in that respect. We're here to build great chips and we have a consistent global policy with regard to human rights expectations of our suppliers. And that's what we've reinforced. And we feel confident that that's the right way to balance the views that we would have across the globe in this regard. Your customers are starting to make their own silicon. Microsoft
Apple Amazon Alphabet. How do you turn back that trend. You know these companies are at such scale now. They can say oh we can hire another hundred engineers. Let's go start a silicon project. And that's part of my foundry strategy as well. That's right. You know Google Amazon and Microsoft do it with us. All right. Come and use our foundry. And when you do that you know when you show up to use our foundry. Right. We're going to allow our IP to be used by your designers or let's design together.
Right. And let's bring together your innovations with our innovations and our leading edge process technology and manufacturing capacity. So we are creating better products that meet your unique needs. Tim Cook CEO of Apple recently said on the earnings call that it's because of the Apple design chips that more customers are buying Macs that MAC sales went up 25 percent for a year earlier. How does it feel if Intel's being designed out. Yeah very sad because you know they designed a better chip for their purposes than we were giving to them. So what's my mantra to my team. Design a better chip. Right. We have to create products and technologies that Apple says oh that's better than I could have done myself. So you think you
can get that business back. Oh yeah yeah. If we do what I said build better chips obviously you know winning the microprocessor back. You know they've made those decisions about every decade you know. So I'm not expecting this. We have a number of years to get our act together at that point. Back in 2019 you said Bitcoin was bad design.
Extreme and climate intolerant. Do you still feel that. Indeed I do. A single ledger entry in Bitcoin consumes enough energy to power your house for almost a day. That's a climate crisis right. At that point the more you use it. So if we produce a technology that consumes that much energy. Wow. That's not OK. And then you sort of say most of the uses when I said that were illicit. Now that doesn't mean it's not a good technology but we're not using it good yet. Well Intel's about to bring forward a block change chip. You know that's dramatically better. What about the metaverse. What's. How are you going to use the metaphors. Right. I don't know. Yes.
And and I do think that there's going to be you know a set of I'll say business to business applications and the metaverse as well as consumer applications. Well in the consumer applications the nearest embodiment of that would be advanced gaming. So many of our graphics initiatives and P.C. initiative absolutely are going to place this in the metaverse. We're also going to help the build the back cloud infrastructure from metaverse. We're moving into our lightning round. We are going to move at a torrid pace. Yes. These are some rapid fire questions. I hear you are a late night radio deejay. That indeed. What were you spinning back in the day. Oh this was easy listening music. Can you give us your intro. This is Pat Gets Your W FMC
Allentown. Good morning to everybody in the Lehigh Valley. I love it. What's the latest TV show you Binge. We're running out of things to watch for my wife and I Linda. So it was aliens was our last bean. OK. Best piece of advice that you would give someone in their 20s relationships more important than results. Best piece of advice for someone in their 40s. Mentors. How much does faith guide your decisions every day. Every way.
I'm working for something much bigger and more important than just being the CEO of Intel. Speaking of that you have how many kids these days for kids great grand kids who are getting tapped to babysit. We are with the kids or have the kids most weekends. Right. Between three different families. You know my wife you know she
is like Grammy of the year if not the century. How do you do that and be a CEO and grandkids. Hey Saturday is Sunday. You know we find ways to fit it in. And as I would always say you know your pride your life doesn't make room for your priorities. You make room for your priorities. I hear you climb Mount Kilimanjaro to raise money for one of your charities. Do you
still give away half of your money going up every year. Favorite family meal to cook for the kids and grandkids. Oh I'm the grill master. Anything on the grill will go. And you know a great steak on the grill. You know salmon on the grill. We just had ribs on the grill. I've been waiting for this. Why do you still have the VM where you know. I don't really know. It was one of those month long time to. My wife said if it ain't God before our vacation I'm ripping it off of your. I love it. Since you said the farthest ahead that you can see is ten years. Take me to ten years. We're going to
go on a growth journey as a company that is going to establish us as one of the largest companies on the planet. We will become a very substantial provider of foundry services. I said the number two company in the industry for foundry over all major business feel we're going to be the unquestioned leader in delivering compute to the planet including things like A.I. graphics. Accelerated high performance computing will be you know the company that's creating entire categories like
autonomous vehicles Tesla Intel unquestioned. So it's gonna be a torrid 10 years. Are you going to be here in 10 years. Are you gonna be with those eight grandkids. Well we took the job. We said there's a five year assignment as well that we're done in five years. But we knew it wasn't less than five years. So we'll see where we are at the five year mark and decide how much longer and how much more energy I have. But right now we're quite enjoying the journey. All right. Intel CEO Pat Coulson thank you so much for joining us. Fascinating.
So much enthusiasm. It's been great to be here. Thank you Emily.