Intel’s CEO envisions its place in the semiconductor industry from the perspective of a seasoned finance executive, tempering ambition with restraint.
Following the unplanned departure of CEO Brian Krzanich in June 2018, CFO Bob Swan was appointed as Intel’s interim CEO. The semiconductor industry pioneer launched a CEO search, assessing internal and external candidates for what would be only its seventh leader in 50 years. Then in January, Swan accepted a permanent appointment. The change in leadership comes at a trying time for the chipmaker, as it adapts to a changing computer hardware landscape.
Intel’s long-held business model is based on co-founder Gordon Moore’s famous observation that computing power doubles every two years as the number of transistors on a microchip increases. Product development that progressively increases this number while decreasing the size of chips has been a winning formula. Intel is the market leader in chips for desktop PCs and for the more lucrative server chips used in data centres. Unlike PC chips, demand for server chips is growing with the proliferation of connected devices.
Intel’s successes have been dampened by some miscalculations in more recent years, however. It underestimated the takeover of the smartphone as a go-to device, and subsequent declines in PC sales. It was also late to stake a claim in GPUs, the specialised chips designed for gaming which are increasingly used as accelerator chips for AI and scientific computing.
There have also been glitches in Intel’s famed manufacturing technology. In 2018 it came to light that its new generation of microprocessors, built on its “10 nanometre” (10 nm) manufacturing process, would not come to the mass market until late 2019. The products were initially due in 2016. The delay is unprecedented in Intel’s history, and it has enabled competitors such as Samsung and TSMC to catch up. The balance of power in the semiconductor industry appears to be shifting.
Some suggest that Moore’s Law has run its course. According to The Economist, “performance gains from shrinking chips are not what they were, and the cost of doing so keeps rising.” This, along with cloud computing, is having a significant impact on computer hardware. No longer able to rely on performance gains from general purpose chips such as Intel’s, companies like Microsoft, Facebook and Tesla are designing their own custom accelerator chips.
These custom chips are not a direct threat, and Intel is certainly not without resources. As both a designer and manufacturer of chips, it is in a unique position to go after the accelerator market as well as data centres. To this end, the firm has made acquisitions such as Altera in 2015 and Mobileye In 2017. It has also been stepping up R&D investment. Swan wants to continue his predecessor’s strategy of diversification – but as someone building on a long and successful career as a finance executive, he wants to pursue such ambitions with restraint.