Intel’s incoming CEO tips ‘IDM-lite’ position
Gelsinger was recently announced as the replacement for Bob Swan, starting in the CEO’s role on February 15 (see Gelsinger returns to lead Intel) and as CEO-in-waiting was invited on to the conference call to discuss Intel’s 4Q20 financial results.
Gelsinger said that he has already had a chance to review progress on Intel’s own 7nm manufacturing process and that he is confident that the majority of Intel’s products will be manufactured internally in 2023.
“At the same time, given the breadth of our portfolio, it’s likely that we will expand our use of external foundries for certain technologies and products. We will provide more details on this and our 2023 roadmap once I fully assess the analysis that has been done and the best path forward,” he said.
Because of Gelsinger’s experience as a CTO and chip designer with Intel, it had been speculated that he was being brought in to re-invigorate Intel as a semiconductor manufacturer, where it was once the world leader but an area where it has fallen behind in the last decade (see Intel goes foundry for 7nm due to yield issues).
And on the call Gelsinger left no doubt why he has been brought in. He stressed that in his first spell of duty at Intel, of 30 years, he operated under the company’s first three CEOs; Bob Noyce, Gordon Moore and Andy Grove. He also said he sees promising signs that a manufacturing rejuvenation has already begun. “I was . . . very pleased to see some of the long-term innovations coming out of TD [technology development] as we work to close any gaps with external foundries, as well as leap ahead. And clearly we’re not interested in just closing gaps. We’re interested in resuming that position of the unquestioned leader in process technology and that’s our commitment.”
Next: Let’s hear from Pat
Speaking as much as outgoing CEO Swan on the call, Gelsinger gave a nuanced position about how Intel must operate and hinted at the significance of advanced packaging which might mean that some chiplets or semiconductor tiles are manufactured internally while others – memory being one example but also other forms of logic – would be manufactured externally. Gelsinger stressed that having the best product was the most important goal and this would be based on a mix of design, internal and external manufacturing and software.
“We’re committed to the IDM model, we’re committed to leadership products, but also innovation that fundamentally has us leading the industry on a consistent basis and sometimes that may happen outside of the company, sometimes it will be inside of the company,” he said. “With the IDM model, we believe we have the right combination of being able to deliver supply to meet our customers’ requirements by leveraging internal and external capabilities which our competition doesn’t have and between all of these capabilities, we believe we are striking the right balance of internal and external to deliver an unquestioned leadership product in the marketplace.”
Gelsinger also said that while being CEO of Intel was for him a dream job there was a patriotic aspect to the opportunity. He said Intel is a national asset. “This company needs to be healthy for the technology industry, for technology in America, and to me it’s an opportunity to help and to unquestionably put Intel and the United States in a technology leadership position.”
Gelsinger inherits a relatively healthy balance sheet with Intel posting a 4Q20 net profit of $5.9 billion on revenue of $20 billion that was ahead of expectations. For the whole year Intel made a net profit of $20.9 billion on annual revenue of $77.9 billion, up 8 percent compared with 2019.
Next: How much capex?
Intel, which is still the market leader in PC processors, despite its recent design loss in Apple computers (see More details emerge of Apple’s eviction of Intel processors from PCs) benefited from the stay-at-home and work-from-home trends that resulted from the Covid-19 pandemic. For the coming quarter Intel is forecasting revenue of $18.6 billion, which would be down year-on-year 6.1 percent.
The company did not give an indication of expected capital expenditure for the year. Its capex in 2020 was $14.3 billion, approximately half what foundry TSMC is planning on for 2021 (see US fab part of TSMC capex surge to $28 billion).
Related links and articles:
Gelsinger returns to lead Intel
Intel goes foundry for 7nm due to yield issues
Gelsinger must take the long view to re-engineer Intel
Opinion: Intel is on the path to chip manufacturing exit
More details emerge of Apple’s eviction of Intel processors from PCs
Report: Fab-lite Intel outsourcing starts with Core i3
US fab part of TSMC capex surge to $28 billion