1
00:00:03,080 --> 00:00:09,639
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. It's hard to overstate

2
00:00:09,640 --> 00:00:14,800
Speaker 1: the historic importance of Intel to the US technology industry.

3
00:00:15,280 --> 00:00:17,560
Speaker 2: What lets you learn about the world.

4
00:00:17,239 --> 00:00:21,160
Speaker 3: In a whole new way The Intel Pentium processor.

5
00:00:22,000 --> 00:00:25,880
Speaker 1: After it was founded in nineteen sixty eight, Intel pioneered

6
00:00:25,880 --> 00:00:29,320
Speaker 1: the chips that made modern computing possible, and for decades

7
00:00:29,400 --> 00:00:32,440
Speaker 1: the company was one of the crown jewels of Silicon.

8
00:00:32,120 --> 00:00:35,280
Speaker 3: Valley the Intel Pendium processor.

9
00:00:39,120 --> 00:00:42,760
Speaker 1: But in the last decade Intel has lost its technological

10
00:00:42,840 --> 00:00:46,680
Speaker 1: lead and huge amounts of market share. At the start

11
00:00:46,720 --> 00:00:49,400
Speaker 1: of twenty twenty, Intel had a market cap close to

12
00:00:49,479 --> 00:00:52,800
Speaker 1: two hundred and fifty billion dollars, more than twice that

13
00:00:52,960 --> 00:00:56,400
Speaker 1: of Nvidia. As of this week, Intel's cap was below

14
00:00:56,440 --> 00:01:00,000
Speaker 1: one hundred billion dollars and in Vidia's was thirty eight

15
00:01:00,120 --> 00:01:03,880
Speaker 1: times bigger. As Bloomberg, ce And King says, Intel is

16
00:01:03,920 --> 00:01:04,840
Speaker 1: at a crossroads.

17
00:01:05,400 --> 00:01:08,840
Speaker 3: This is a company that I think is symbolic of

18
00:01:08,959 --> 00:01:12,080
Speaker 3: so many things are important to one country, in one industry,

19
00:01:12,720 --> 00:01:14,679
Speaker 3: but suddenly they just can't do it.

20
00:01:15,040 --> 00:01:19,240
Speaker 1: In December, Intel CEO Pat Gelsinger was forced out after

21
00:01:19,280 --> 00:01:20,560
Speaker 1: a disastrous year.

22
00:01:20,680 --> 00:01:24,319
Speaker 2: Breaking news. Intel the stock so far this year down

23
00:01:24,360 --> 00:01:26,800
Speaker 2: by more than fifty percent. This headline will not be

24
00:01:26,840 --> 00:01:31,199
Speaker 2: a surprise. Intel announcing the retirement of the CEO, Pakausinker.

25
00:01:31,720 --> 00:01:34,640
Speaker 2: The board has formed a search committee for his successor.

26
00:01:35,080 --> 00:01:37,960
Speaker 1: He had been considered by many to be Intel's best

27
00:01:38,040 --> 00:01:40,600
Speaker 1: hope to get the company back to the pinnacle of

28
00:01:40,640 --> 00:01:44,000
Speaker 1: the chip business. But now some in the tech industry

29
00:01:44,000 --> 00:01:53,960
Speaker 1: you're asking, is Intel at risk of disappearing entirely? I'm

30
00:01:54,000 --> 00:01:56,160
Speaker 1: David Gerra, and this is the big take from Bloomberg

31
00:01:56,200 --> 00:01:59,000
Speaker 1: News Today on the show The Rise and Fall of

32
00:01:59,120 --> 00:02:02,960
Speaker 1: Intel with Bloomberg Tech reporter Ian King, who's covered the

33
00:02:03,000 --> 00:02:06,600
Speaker 1: company for decades, a clear eyed look at the challenges

34
00:02:06,640 --> 00:02:17,400
Speaker 1: Intel faces, what it would mean if Intel went away? Ian,

35
00:02:17,440 --> 00:02:19,839
Speaker 1: what was the innovation that really made this company take

36
00:02:19,840 --> 00:02:20,639
Speaker 1: off at the beginning?

37
00:02:20,919 --> 00:02:23,960
Speaker 3: Remarkably for an important company that's been dominant for so long,

38
00:02:24,000 --> 00:02:26,280
Speaker 3: they've actually had more than one life. They started off

39
00:02:26,280 --> 00:02:29,000
Speaker 3: in computer memory. They saw that, hey, we need fast

40
00:02:29,040 --> 00:02:31,760
Speaker 3: computer memory. So that was their first big breakthrough and

41
00:02:31,800 --> 00:02:34,320
Speaker 3: they really kind of revolutionized and made that, you know,

42
00:02:34,360 --> 00:02:38,000
Speaker 3: an industry. Then the PC came along right at the

43
00:02:38,000 --> 00:02:39,720
Speaker 3: beginning of the eighties.

44
00:02:39,680 --> 00:02:43,000
Speaker 1: The IBM personal computer. Not only can it help you

45
00:02:43,040 --> 00:02:46,079
Speaker 1: plan ahead, it'll balance your books and give you more

46
00:02:46,080 --> 00:02:46,760
Speaker 1: time to make.

47
00:02:46,720 --> 00:02:52,520
Speaker 3: Do Intel was the brains of that. Pc IBM chose

48
00:02:52,639 --> 00:02:55,760
Speaker 3: an Intel part to be the new guts of this

49
00:02:55,800 --> 00:02:59,680
Speaker 3: thing that was really going to change basically modern life

50
00:02:59,680 --> 00:03:02,359
Speaker 3: in so many different ways. In Intel were there right

51
00:03:02,360 --> 00:03:04,560
Speaker 3: at the bidding and and of that and saw this

52
00:03:04,600 --> 00:03:07,320
Speaker 3: particular type of product, the microprocessor, was going to be

53
00:03:07,560 --> 00:03:09,160
Speaker 3: a huge deal, and then did it was.

54
00:03:09,639 --> 00:03:12,920
Speaker 1: As Intel grew, it maintained its advantage by being the

55
00:03:12,960 --> 00:03:16,280
Speaker 1: best at making the semiconductor components on a computer chip

56
00:03:16,560 --> 00:03:21,200
Speaker 1: smaller and smaller each one. Was a technological marvel that

57
00:03:21,360 --> 00:03:25,120
Speaker 1: for decades left Intel's competitors scrambling to keep up.

58
00:03:25,400 --> 00:03:31,160
Speaker 3: Semiconductors are basically tiny electronic switches known as transistors. Those

59
00:03:31,200 --> 00:03:33,800
Speaker 3: transistors are either on or they're off. It's either a

60
00:03:33,800 --> 00:03:37,080
Speaker 3: one or a zero, and that is the basic unit

61
00:03:37,280 --> 00:03:41,360
Speaker 3: of storage of information in the electronic world. The way

62
00:03:41,400 --> 00:03:44,400
Speaker 3: that you put more transistors on a chip is to

63
00:03:44,480 --> 00:03:48,960
Speaker 3: shrink the line width on those transistors. Now, a modern

64
00:03:49,160 --> 00:03:52,760
Speaker 3: in video chip has literally hundreds of billions of these

65
00:03:52,760 --> 00:03:56,560
Speaker 3: transistors on something that's not much bigger than your thumbnail,

66
00:03:56,760 --> 00:03:59,720
Speaker 3: and that has an incredible feat from where we started

67
00:03:59,720 --> 00:04:01,640
Speaker 3: off when these guys started the company.

68
00:04:02,520 --> 00:04:05,600
Speaker 1: Ian says much of Intel's initial success came down to

69
00:04:05,680 --> 00:04:09,880
Speaker 1: how its founders and early CEOs ran the company. People

70
00:04:09,920 --> 00:04:13,119
Speaker 1: like Gordon Moore and Robert Noyce who started it, and

71
00:04:13,120 --> 00:04:16,919
Speaker 1: Andy Grove, who eventually became its chief executive. They worked

72
00:04:16,920 --> 00:04:20,080
Speaker 1: hard to develop a company culture that helped Intel maintain

73
00:04:20,240 --> 00:04:22,680
Speaker 1: a formidable scientific and commercial lead.

74
00:04:23,240 --> 00:04:27,280
Speaker 3: Frankly, all of the structures of come into being that

75
00:04:27,720 --> 00:04:31,440
Speaker 3: determine how the industry and tech in general work largely

76
00:04:31,480 --> 00:04:33,520
Speaker 3: stemmed from a lot of the observation, a lot of

77
00:04:33,560 --> 00:04:36,560
Speaker 3: practices that these guys put in place a lot time ago.

78
00:04:38,320 --> 00:04:41,240
Speaker 1: They were path breakers, pioneers. How did they corner the

79
00:04:41,279 --> 00:04:44,640
Speaker 1: market so effectively? And after it took off and there

80
00:04:44,720 --> 00:04:46,640
Speaker 1: was this kind of broader awareness that chips were going

81
00:04:46,680 --> 00:04:50,200
Speaker 1: to be important, why was it so difficult for other

82
00:04:50,240 --> 00:04:52,760
Speaker 1: companies to give Intel a run for its money?

83
00:04:53,320 --> 00:04:57,880
Speaker 3: Look, design an extremely hard work, but I think fundamentally

84
00:04:57,920 --> 00:05:02,040
Speaker 3: that the understanding of vlume economics and the understanding of

85
00:05:02,160 --> 00:05:05,440
Speaker 3: the brutality of the industry in that you have to

86
00:05:05,480 --> 00:05:09,240
Speaker 3: make enormous bets. Right now, a chip plant costs twenty

87
00:05:09,279 --> 00:05:12,760
Speaker 3: billion dollars, probably more you have to run that twenty

88
00:05:12,839 --> 00:05:15,560
Speaker 3: four to seven because guess what, in five years it's

89
00:05:15,600 --> 00:05:19,120
Speaker 3: going to be obsolete. Right, So there's a tremendous upfront

90
00:05:19,160 --> 00:05:22,040
Speaker 3: capital cost. So one of the things that they understood

91
00:05:22,120 --> 00:05:24,720
Speaker 3: was the economics. They also understood marketing.

92
00:05:25,040 --> 00:05:30,039
Speaker 1: That's the Pentium processor from Intel, the computer.

93
00:05:29,680 --> 00:05:32,880
Speaker 3: Inside Intel inside. Everybody knows what Intel inside is. I mean,

94
00:05:32,920 --> 00:05:35,400
Speaker 3: this is a component company, right that made its brand

95
00:05:35,560 --> 00:05:38,480
Speaker 3: one of the biggest in the world. They made consumers

96
00:05:38,560 --> 00:05:42,360
Speaker 3: associate quality in computers, not with Dell, not with HP,

97
00:05:42,560 --> 00:05:45,919
Speaker 3: not with any other computer manufacturer, book with Intel, with

98
00:05:45,960 --> 00:05:47,520
Speaker 3: the components that nobody ever saw.

99
00:05:47,920 --> 00:05:50,800
Speaker 1: So Intel had the best marketing, the best chip design,

100
00:05:51,000 --> 00:05:54,479
Speaker 1: and the best manufacturing. But as Ian says, it was

101
00:05:54,520 --> 00:05:57,640
Speaker 1: a less tangible factor that kept Intel on top for

102
00:05:57,680 --> 00:06:01,440
Speaker 1: its first few decades, the notorious discipline that Andy Grove

103
00:06:01,640 --> 00:06:02,320
Speaker 1: put in place.

104
00:06:02,640 --> 00:06:06,640
Speaker 3: He established a culture in that company, you know, the

105
00:06:06,680 --> 00:06:09,840
Speaker 3: famous only the paranoid survived, But lots of other things

106
00:06:09,839 --> 00:06:13,479
Speaker 3: that he instilled were basically designed to keep Intel on

107
00:06:13,520 --> 00:06:15,320
Speaker 3: the edge of its seat, to make sure they never

108
00:06:15,360 --> 00:06:18,680
Speaker 3: got happy, flat and lazy. Things like constructive confrontation, the

109
00:06:18,720 --> 00:06:21,000
Speaker 3: idea that you're in a meeting, you hear something, it

110
00:06:21,040 --> 00:06:23,240
Speaker 3: doesn't matter who you are, you call it out if

111
00:06:23,279 --> 00:06:26,039
Speaker 3: you think it's wrong. The idea that if you're a leader,

112
00:06:26,160 --> 00:06:30,120
Speaker 3: you listen right, you take action. He made people sign

113
00:06:30,160 --> 00:06:32,240
Speaker 3: in at a am every morning because he didn't want

114
00:06:32,240 --> 00:06:36,000
Speaker 3: the semiconductor industry to be this happy, go looky science project.

115
00:06:36,080 --> 00:06:38,200
Speaker 3: He wanted it to be a real business. So that

116
00:06:38,320 --> 00:06:41,360
Speaker 3: kind of rigorous culture was definitely a conscious effort.

117
00:06:41,760 --> 00:06:44,120
Speaker 1: But at the same time that Intel was riding high,

118
00:06:44,440 --> 00:06:49,239
Speaker 1: a company called Taiwan Semiconductor Manufacturing Company TSMC was founded.

119
00:06:49,960 --> 00:06:54,520
Speaker 1: Intel designs and manufactures its chips. TSMC made its big

120
00:06:54,560 --> 00:06:58,720
Speaker 1: bet on manufacturing chips that other firms designed well. That

121
00:06:58,839 --> 00:07:02,280
Speaker 1: model created an opportu twunity for companies like Nvidia. They

122
00:07:02,279 --> 00:07:05,000
Speaker 1: could design and sell their own chips and compete directly

123
00:07:05,040 --> 00:07:07,880
Speaker 1: with Intel without having to invest in production.

124
00:07:09,160 --> 00:07:13,240
Speaker 3: TSMC created a new sector of the industry, one that

125
00:07:13,320 --> 00:07:17,320
Speaker 3: Intel frankly laughed at publicly, and many others agreed with

126
00:07:17,400 --> 00:07:20,840
Speaker 3: Intel the idea that you could outsource the core amount

127
00:07:20,880 --> 00:07:25,320
Speaker 3: of production, that the idea of decoupling completely the design

128
00:07:25,400 --> 00:07:29,320
Speaker 3: process from the manufacturing process was possible and made sense.

129
00:07:29,920 --> 00:07:32,680
Speaker 3: Intel laughed at that. TSMC said no, no, this is

130
00:07:32,680 --> 00:07:36,040
Speaker 3: the way of the future. And guess what, TSMC were

131
00:07:36,120 --> 00:07:40,640
Speaker 3: right and they have enabled many of Intel's perstwhile weakling

132
00:07:40,720 --> 00:07:43,559
Speaker 3: competitors to be just as good as Intel, if not better.

133
00:07:49,320 --> 00:07:52,080
Speaker 1: When we come back, how Intel started to lose its

134
00:07:52,120 --> 00:07:55,920
Speaker 1: competitive edge just as AI came onto the scene and

135
00:07:55,960 --> 00:07:58,640
Speaker 1: the hopes it placed in a new chief executive to

136
00:07:58,680 --> 00:08:12,080
Speaker 1: turn things around. By the turn of the millennium, Intel

137
00:08:12,240 --> 00:08:14,720
Speaker 1: was at the top of its game and an undisputed

138
00:08:14,800 --> 00:08:18,600
Speaker 1: leader in the computing industry. The company dominated the chip market,

139
00:08:18,680 --> 00:08:21,880
Speaker 1: both for PCs and data centers, but then in the

140
00:08:21,920 --> 00:08:26,280
Speaker 1: two thousands, its dominance started to slip. When Steve Jobs

141
00:08:26,320 --> 00:08:29,280
Speaker 1: began to scout chips for the iPhone, he thought Intel's

142
00:08:29,320 --> 00:08:33,080
Speaker 1: chips were too expensive, so those first orders went to

143
00:08:33,160 --> 00:08:37,760
Speaker 1: a rival, Samsung. Then in the twenty tens, the technical

144
00:08:37,800 --> 00:08:40,680
Speaker 1: momentum that Intel had built, its ability to make the

145
00:08:40,679 --> 00:08:44,040
Speaker 1: components on its chips smaller and smaller, well, that started

146
00:08:44,040 --> 00:08:47,680
Speaker 1: to falter and it opened the door to competitors like Nvidia.

147
00:08:48,760 --> 00:08:51,160
Speaker 3: Intel had promised that it was going to bring this,

148
00:08:51,880 --> 00:08:55,640
Speaker 3: you know, the next generation of its process technology in

149
00:08:55,640 --> 00:08:58,400
Speaker 3: in twenty fifteen light clockwork like we're going to be

150
00:08:58,440 --> 00:09:01,000
Speaker 3: here We're going to make that advance and it didn't happen.

151
00:09:01,640 --> 00:09:04,600
Speaker 3: It didn't happen, and then people were like, well where

152
00:09:04,640 --> 00:09:07,120
Speaker 3: is it? And there were lots of conference calls. Well,

153
00:09:07,240 --> 00:09:11,319
Speaker 3: don't worry, it's coming, it's coming. Twenty fifteen rolls past,

154
00:09:11,640 --> 00:09:16,360
Speaker 3: this new technology doesn't emerge. Two and nineteen comes along

155
00:09:16,440 --> 00:09:18,679
Speaker 3: and we still not got it. At this point, the

156
00:09:18,760 --> 00:09:21,440
Speaker 3: numbers are still great. Intel's still making money hand over fist.

157
00:09:21,480 --> 00:09:25,440
Speaker 3: But guess what the next big thing is four years

158
00:09:25,480 --> 00:09:27,960
Speaker 3: too late? This is not Intel, This is not who

159
00:09:27,960 --> 00:09:30,280
Speaker 3: they are when it comes to AI.

160
00:09:31,000 --> 00:09:34,200
Speaker 1: Was Intel naive to what the demands would be for

161
00:09:34,360 --> 00:09:38,000
Speaker 1: chips that could do the kind of computation that is necessary?

162
00:09:38,440 --> 00:09:40,040
Speaker 1: Did they just fail to embrace it? Did they fail

163
00:09:40,080 --> 00:09:42,080
Speaker 1: to understand the seriousness of it? Did they not see

164
00:09:42,120 --> 00:09:43,760
Speaker 1: that that was the direction which things were going? So

165
00:09:43,880 --> 00:09:46,160
Speaker 1: what explains the edge that Nvidia has today?

166
00:09:46,520 --> 00:09:50,880
Speaker 3: Intel had no excuse for not seeing this coming. So

167
00:09:50,920 --> 00:09:54,079
Speaker 3: what happened? Right? It's really hard and I think dangerous

168
00:09:54,160 --> 00:09:58,320
Speaker 3: to place the blame or the root cause of any

169
00:09:58,320 --> 00:10:02,439
Speaker 3: one massive issue we have at the feet of one person.

170
00:10:02,559 --> 00:10:06,120
Speaker 3: But guess what a lot of people blame. Brian Krasanich

171
00:10:06,440 --> 00:10:10,480
Speaker 3: the former CEO for having created the situation that has

172
00:10:10,559 --> 00:10:12,160
Speaker 3: led to the current impasse.

173
00:10:12,640 --> 00:10:14,320
Speaker 1: Let me tease that out a little bit more so,

174
00:10:14,480 --> 00:10:17,120
Speaker 1: if that's the case that they're making, is what is

175
00:10:17,120 --> 00:10:19,000
Speaker 1: the direct criticism? What do they think that he failed

176
00:10:19,040 --> 00:10:19,920
Speaker 1: to do well?

177
00:10:19,920 --> 00:10:23,240
Speaker 3: Our reporting shows Krisanitch comes in in twenty thirteen as

178
00:10:23,280 --> 00:10:26,360
Speaker 3: supposedly the joint sort of leader of this company with

179
00:10:26,640 --> 00:10:29,800
Speaker 3: a woman called Rene James, who was also a long

180
00:10:29,920 --> 00:10:33,280
Speaker 3: term Intel person. His pitch publicly was like, yeah, we're

181
00:10:33,280 --> 00:10:35,640
Speaker 3: going to embrace all of these new markets. We're going

182
00:10:35,679 --> 00:10:38,120
Speaker 3: to just run towards whatever we can and not be

183
00:10:38,440 --> 00:10:42,240
Speaker 3: you know, snobs and dominant. What happened behind the scenes

184
00:10:42,400 --> 00:10:44,640
Speaker 3: was he was banging his fist on the table, telling

185
00:10:44,640 --> 00:10:47,480
Speaker 3: people that they were stupid people who were pointing out

186
00:10:47,480 --> 00:10:49,959
Speaker 3: to him that hey, we need to embrace this new

187
00:10:50,040 --> 00:10:52,280
Speaker 3: kind of technology and manufacturing or else we're going to

188
00:10:52,320 --> 00:10:54,160
Speaker 3: lose our edge. And a lot of the people that

189
00:10:54,240 --> 00:10:57,760
Speaker 3: Intel had sort of brought up in this established management

190
00:10:58,160 --> 00:11:00,760
Speaker 3: program that they have to create these strong leaders not

191
00:11:00,880 --> 00:11:03,680
Speaker 3: just at the very top but across had left had

192
00:11:03,720 --> 00:11:05,880
Speaker 3: just said I can't deal with this anymore. I'm out

193
00:11:05,880 --> 00:11:09,920
Speaker 3: of here. So that, according to our reporting is what

194
00:11:09,960 --> 00:11:12,720
Speaker 3: went wrong, and that is what led to the situation

195
00:11:12,800 --> 00:11:13,680
Speaker 3: that they are in now.

196
00:11:14,200 --> 00:11:17,120
Speaker 1: In twenty twenty one, Intel hires Pat Gelsinger to turn

197
00:11:17,160 --> 00:11:19,760
Speaker 1: the company around. Tell us a bit about who he

198
00:11:19,880 --> 00:11:21,959
Speaker 1: was and why he was an attractive candidate to run

199
00:11:22,000 --> 00:11:22,440
Speaker 1: the company.

200
00:11:22,760 --> 00:11:26,679
Speaker 3: There is nobody more Intel than Pat Gelsinger was and

201
00:11:26,760 --> 00:11:30,120
Speaker 3: still is. He was a personal alcolyte of Andy Grove.

202
00:11:30,200 --> 00:11:34,199
Speaker 3: He joined the company as a teenager, went to technical college,

203
00:11:34,240 --> 00:11:36,800
Speaker 3: then went to university to get the kind of degrees

204
00:11:37,000 --> 00:11:40,600
Speaker 3: that were necessary for Intel for working at Intel. Started

205
00:11:40,600 --> 00:11:43,559
Speaker 3: off in kind of low level engineering jobs and worked

206
00:11:43,559 --> 00:11:47,960
Speaker 3: his way up. He was the first ever CTO at Intel.

207
00:11:48,040 --> 00:11:50,079
Speaker 3: He was the kind of point person for all of

208
00:11:50,120 --> 00:11:53,920
Speaker 3: their presentations. He was the evangelist for their technology. You know,

209
00:11:53,960 --> 00:11:58,800
Speaker 3: he loved Intel. Then it got to the twenty tens

210
00:11:58,840 --> 00:12:01,520
Speaker 3: and part of the decision making process for who was

211
00:12:01,559 --> 00:12:04,200
Speaker 3: going to lead the company. According to Pat Glsinger, he

212
00:12:04,280 --> 00:12:06,520
Speaker 3: went to the then chairman, Andy Brien and said, Hey,

213
00:12:06,559 --> 00:12:08,760
Speaker 3: I've got a shot here. Got told no, you don't,

214
00:12:09,200 --> 00:12:12,199
Speaker 3: and took his business elsewhere. I became the CEO of VMware.

215
00:12:12,559 --> 00:12:15,720
Speaker 3: Fast forward to twenty twenty one, when by this point

216
00:12:15,800 --> 00:12:19,080
Speaker 3: the finances are starting to creak, the products aren't flying

217
00:12:19,080 --> 00:12:22,559
Speaker 3: off the shelves anymore. The company needs somebody who was

218
00:12:22,640 --> 00:12:25,800
Speaker 3: going to come back and embrace its culture and revitalize

219
00:12:25,800 --> 00:12:28,839
Speaker 3: it and be on the mountaintop saying we need to

220
00:12:28,840 --> 00:12:30,960
Speaker 3: be back to the old Intel. And you know, he's

221
00:12:30,960 --> 00:12:32,559
Speaker 3: the ideal person, and they brought him back.

222
00:12:32,559 --> 00:12:35,600
Speaker 1: Then when did it become clear that the board and

223
00:12:35,679 --> 00:12:38,240
Speaker 1: investors were growing impatient with him and his plan for

224
00:12:38,559 --> 00:12:39,280
Speaker 1: turning it around.

225
00:12:39,640 --> 00:12:41,480
Speaker 3: I mean, there are a couple of ways to look

226
00:12:41,520 --> 00:12:45,840
Speaker 3: at this. It takes a year maybe more to design

227
00:12:45,880 --> 00:12:48,320
Speaker 3: a chip, to bring it to market, to get it

228
00:12:48,320 --> 00:12:53,440
Speaker 3: through the manufacturing process. I mean, the finances were clearly

229
00:12:53,600 --> 00:12:56,920
Speaker 3: getting worse. You know, Intel became a loss making company.

230
00:12:57,360 --> 00:13:00,000
Speaker 3: To his credit, he said this was going to happen,

231
00:13:00,000 --> 00:13:02,559
Speaker 3: and people just didn't listen. He said it was going

232
00:13:02,640 --> 00:13:05,400
Speaker 3: to take five years. They didn't give him five years, right.

233
00:13:05,440 --> 00:13:08,960
Speaker 3: He said, leadership won't come easy, it'll be expensive, it'll

234
00:13:08,960 --> 00:13:11,360
Speaker 3: cost us a lot of money. And so there was

235
00:13:11,840 --> 00:13:14,679
Speaker 3: became a situation where there was a disconnect where they

236
00:13:14,720 --> 00:13:18,320
Speaker 3: felt that he'd lost kind of touch with the reality

237
00:13:18,360 --> 00:13:21,040
Speaker 3: of the moment, that maybe the message he was selling

238
00:13:21,600 --> 00:13:24,440
Speaker 3: wasn't connected to the reality that wall Street was seeing.

239
00:13:24,640 --> 00:13:28,240
Speaker 3: Maybe the message he was selling was necessary internally to

240
00:13:28,440 --> 00:13:31,400
Speaker 3: rally the troops. Maybe it was necessary for Washington to

241
00:13:31,559 --> 00:13:34,720
Speaker 3: rally the government behind his efforts for the Chips Act

242
00:13:34,760 --> 00:13:37,880
Speaker 3: and give him money. But that wasn't the right message

243
00:13:37,880 --> 00:13:40,480
Speaker 3: for wall Street. And that was where the disconnect came in.

244
00:13:40,559 --> 00:13:43,800
Speaker 3: And obviously the share price went through some disastrous one

245
00:13:43,840 --> 00:13:47,480
Speaker 3: day performances, which was very difficult for a board to

246
00:13:47,520 --> 00:13:49,160
Speaker 3: sit there and look at.

247
00:13:48,960 --> 00:13:51,560
Speaker 1: You mentioned the Chips Act. This was legislation passed to

248
00:13:51,559 --> 00:13:53,600
Speaker 1: sort of ensure that the US would always have access

249
00:13:53,640 --> 00:13:56,360
Speaker 1: to semiconductors. And I know that Intel has benefited from

250
00:13:57,040 --> 00:13:59,040
Speaker 1: from some of that money, from some of that funding.

251
00:13:59,360 --> 00:14:02,360
Speaker 1: How helpful has it been to to Intel's fortunes And.

252
00:14:02,400 --> 00:14:05,240
Speaker 3: It hasn't yet. It's a lot of money for you

253
00:14:05,320 --> 00:14:07,719
Speaker 3: and me, but it's not even half the price of

254
00:14:07,880 --> 00:14:11,120
Speaker 3: one factory, right. It's the way to look at it

255
00:14:11,160 --> 00:14:15,120
Speaker 3: is that it makes the costs of building factories, of

256
00:14:15,160 --> 00:14:19,000
Speaker 3: building leading edge facilities in the United States comparable to

257
00:14:19,080 --> 00:14:22,480
Speaker 3: building them in say South Korea or Taiwan or China

258
00:14:22,560 --> 00:14:26,240
Speaker 3: for that matter. It's basically reducing the costs of setup,

259
00:14:26,360 --> 00:14:30,680
Speaker 3: it's not paying for anything. So far, it's helped Intel

260
00:14:31,080 --> 00:14:32,880
Speaker 3: a little bit, but not really.

261
00:14:33,600 --> 00:14:36,840
Speaker 1: Then at the end of last year, Pat Gelsinger resigned.

262
00:14:37,240 --> 00:14:40,960
Speaker 1: Bloomberg reported that Intel's board told Gelsinger he was being replaced,

263
00:14:41,320 --> 00:14:45,520
Speaker 1: and Gelsinger decided to step down immediately. The company is

264
00:14:45,560 --> 00:14:49,040
Speaker 1: currently being led by two interim CEOs while Intel tries

265
00:14:49,080 --> 00:14:52,040
Speaker 1: to find a replacement. On their fourth quarter earnings call

266
00:14:52,160 --> 00:14:55,240
Speaker 1: the end of January, Michelle Johnston Holthouse, one of those

267
00:14:55,280 --> 00:14:58,800
Speaker 1: two interim code chiefs, said there were no quick fixes,

268
00:14:59,160 --> 00:15:02,560
Speaker 1: that they were dedicated to rebuilding Intel's credibility and making

269
00:15:02,600 --> 00:15:05,960
Speaker 1: the company's business simpler and leaner. While the search for

270
00:15:06,000 --> 00:15:08,640
Speaker 1: a permanent CEO continues, what.

271
00:15:08,560 --> 00:15:10,920
Speaker 3: We can say from the outside is that who they

272
00:15:10,960 --> 00:15:13,400
Speaker 3: put in place, the type of person that they choose,

273
00:15:13,800 --> 00:15:17,120
Speaker 3: will really tell us almost instantly what the board has

274
00:15:17,160 --> 00:15:20,000
Speaker 3: in mind for the future of Intel. And the biggest

275
00:15:20,080 --> 00:15:24,160
Speaker 3: I think question mark there is whether Intel actually continues

276
00:15:24,480 --> 00:15:27,880
Speaker 3: as Intel, whether it is still this company that designs

277
00:15:28,160 --> 00:15:32,680
Speaker 3: and manufactures chips, that sells chips, and also operates this

278
00:15:32,840 --> 00:15:37,440
Speaker 3: massive factory network. Right now, Wall Street and the bankers

279
00:15:37,560 --> 00:15:39,480
Speaker 3: are betting that that will not be the case, That

280
00:15:39,520 --> 00:15:40,920
Speaker 3: the company will be split up.

281
00:15:41,360 --> 00:15:44,520
Speaker 1: Just wrapping up here, is there a real risk today

282
00:15:44,560 --> 00:15:47,760
Speaker 1: that Intel as we know it, as we have known

283
00:15:47,800 --> 00:15:48,760
Speaker 1: it could disappear?

284
00:15:49,320 --> 00:15:51,520
Speaker 3: You have to say that there is absolutely a risk

285
00:15:51,600 --> 00:15:54,400
Speaker 3: that Intel as we know it will cease to exist,

286
00:15:55,240 --> 00:15:57,320
Speaker 3: that might not be here at the end of the year.

287
00:15:57,800 --> 00:15:59,840
Speaker 1: So we should see that if it happens as much

288
00:15:59,880 --> 00:16:02,400
Speaker 1: more than just a symbolic loss.

289
00:16:02,160 --> 00:16:04,800
Speaker 3: It'll be hard to see it as anything other than

290
00:16:04,800 --> 00:16:09,560
Speaker 3: an enormous blow to national prestige, to the capabilities that

291
00:16:09,640 --> 00:16:13,000
Speaker 3: this country has to lead a crucial industry, and there'll

292
00:16:13,040 --> 00:16:15,560
Speaker 3: be lots of questions about who will carry that torch

293
00:16:15,640 --> 00:16:19,720
Speaker 3: going forward. This is a company that I think is

294
00:16:20,520 --> 00:16:23,360
Speaker 3: symbolic of so many things that are important to one

295
00:16:23,400 --> 00:16:27,120
Speaker 3: country and one industry, but suddenly just can't do it.

296
00:16:27,320 --> 00:16:31,400
Speaker 3: I've spoken to some of Intel's bitterest enemies, to executives

297
00:16:31,400 --> 00:16:35,320
Speaker 3: at companies who've suffered for years at the hands of Intel,

298
00:16:35,560 --> 00:16:41,360
Speaker 3: have frankly hated Intel, who say openly we cannot as

299
00:16:41,360 --> 00:16:44,200
Speaker 3: an industry afford to have Intel failed. We need to

300
00:16:44,200 --> 00:16:47,560
Speaker 3: have Intel back, And it's just it's been remarkable to

301
00:16:47,600 --> 00:16:48,080
Speaker 3: see that.

302
00:16:55,160 --> 00:16:57,840
Speaker 1: This is the big take from Bloomberg News I'm David Gurat.

303
00:16:58,040 --> 00:17:00,960
Speaker 1: This episode is produced by Alex tie. It was edited

304
00:17:01,000 --> 00:17:04,159
Speaker 1: by Aaron Edwards, Patty Hirsch, and Gillian Ward. It was

305
00:17:04,200 --> 00:17:07,280
Speaker 1: fact checked by andrean Atapia and mixed and sound designed

306
00:17:07,280 --> 00:17:10,760
Speaker 1: by Alex Sagura. Our senior producer is Naomi Shaven. Our

307
00:17:10,800 --> 00:17:14,440
Speaker 1: senior editor is Elizabeth Ponso. Our executive producer is Nicole

308
00:17:14,440 --> 00:17:18,600
Speaker 1: Beamster Boor Sage Bauman is Bloomberg's head of podcasts. If

309
00:17:18,640 --> 00:17:21,119
Speaker 1: you liked this episode, make sure to subscribe and review

310
00:17:21,160 --> 00:17:23,639
Speaker 1: The Big Take wherever you listen to podcasts. It helps

311
00:17:23,640 --> 00:17:26,600
Speaker 1: people find the show. Thanks for listening. We'll be back

312
00:17:26,600 --> 00:17:27,040
Speaker 1: tomorrow