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Bill Gates reminder on Intel struggles: One can get 'annihilated' if you miss a turn in the market

Daniel Nenni

Admin
Staff member
Bill Gates on Intel.jpg


Microsoft (MSFT) co-founder Bill Gates vividly remembers Intel (INTC) firing on all cylinders back when he was a young coder.

But getting back to that point will be brutally hard, if it can happen at all.

"Well, it'd be great for the United States if their process, technology arm could be a credible alternative to Taiwan Semiconductor (TSM) and Samsung. They're trying to do that, but that takes time and a lot of capital so that is a very, very hard thing," Gates told me on Yahoo Finance's Opening Bid podcast (video above; listen in below).

Continued Gates, "Technology is full of these cautionary tales. When I was growing up, IBM (IBM) dominated the big computers. They were the computer industry. IBM is still around, but you know, IBM is tiny compared to Microsoft ... So you have to be very humble about, wow, if you miss a turn in the road, you can be annihilated."

Intel has done a lot of surprising in the past year — all on the downside.

The tech icon parted ways with embattled CEO Pat Gelsinger on Dec. 1.

Gelsinger led aggressive efforts to turn around the troubled US chipmaker for more than three years. Those efforts included slashing thousands of jobs, improving costs, securing CHIPS Act funding, building chip foundries, and promising fast AI chips that compete with Nvidia (NVDA) and AMD (AMD).

Intel named CFO David Zinsner and former head of client computing Michelle Johnston Holthaus as the interim co-CEOs. Holthaus was also named Intel Products CEO.

Intel will likely fill the CEO role by bringing in a top name from outside the company, Wall Street sources have told Yahoo Finance since Gelsinger's departure.

Any permanent CEO will have a mess to clean up. That starts with repairing trust with investors after missed financial targets and deciding whether to continue chasing a foundry business. It also requires immediately stabilizing the financials.

Intel's fourth quarter sales fell 7% year over year to $14.3 billion. Net earnings plunged 76%.

The company forecasts it will only break even on the profit line this year.

"From day one, we have been working closely together alongside the board to drive better execution of our strategy. There are no quick fixes," Holthaus said on Intel's earnings call.

Wall Street's lack of confidence in Intel is seen in its ratings. Of the 45 analysts that cover Intel, Yahoo Finance data shows 80% rate the stock a Hold.

Shares of Intel have plunged 55% in the past year, badly lagging the 21% advance for the Nasdaq Composite (^IXIC). Meanwhile, shares of rival chip player Nvidia have surged 78% over the past year as the company takes a wide lead on artificial intelligence chip innovation compared to Intel and AMD.

"We continue to believe Intel shareholders would be better served by the company exiting the foundry business given mounting losses," said Citi analyst Chris Danely in a client note.

 
Early in my career I saw Bill Gates and Andy Grove at a conference. Andy said software will always be the limitation in the compute world. Bill Gates fired back and said hardware will always be the limitation. Both were right of course. It was a great conversation and as a fresh CS/EE grad I had serious CEO hero worship. Andy was a generation before Bill but they were a great matchup. Andy had a PhD and Bill was a Harvard dropout. Andy experienced the holocaust and Bill had a privileged life.

As time went by I realized that my heroes, were in fact, just people who made mistakes like I did. The difference being some CEOs own it, pivot, and move on. Others dodge/spin it and keep making mistakes.

I had a huge amount of respect for Bill Gates until his personal life came to light. But he has owned it and he continues to be a great leader. Andy Grove was a very humble man which I truly respect. After reading his books, especially Only the Paranoid Survive and Swimming Across (his personal memoir), I really came to wonder if we would see another leader like Andy. Jensen Huang and Hock Tan are the only Andy Grove class of CEOs I am aware of in the semiconductor industry but I really do wonder why there aren't more.

Bottom line: Intel needs another Andy Grove class of CEO. A Broadcom acquisition is not probable from what I am told, nor is Jensen leaving Nvidia. The other names I have seen mentioned are not even close and the current Intel Co CEOs baffle me. They are not even close to an Andy Grove, Hock Tan, or Jensen Huang.
 
Early in my career I saw Bill Gates and Andy Grove at a conference. Andy said software will always be the limitation in the compute world. Bill Gates fired back and said hardware will always be the limitation. Both were right of course. It was a great conversation and as a fresh CS/EE grad I had serious CEO hero worship. Andy was a generation before Bill but they were a great matchup. Andy had a PhD and Bill was a Harvard dropout. Andy experienced the holocaust and Bill had a privileged life.

As time went by I realized that my heroes, were in fact, just people who made mistakes like I did. The difference being some CEOs own it, pivot, and move on. Others dodge/spin it and keep making mistakes.

I had a huge amount of respect for Bill Gates until his personal life came to light. But he has owned it and he continues to be a great leader. Andy Grove was a very humble man which I truly respect. After reading his books, especially Only the Paranoid Survive and Swimming Across (his personal memoir), I really came to wonder if we would see another leader like Andy. Jensen Huang and Hock Tan are the only Andy Grove class of CEOs I am aware of in the semiconductor industry but I really do wonder why there aren't more.

Bottom line: Intel needs another Andy Grove class of CEO. A Broadcom acquisition is not probable from what I am told, nor is Jensen leaving Nvidia. The other names I have seen mentioned are not even close and the current Intel Co CEOs baffle me. They are not even close to an Andy Grove, Hock Tan, or Jensen Huang.
I think Intel just needs to recover financially and get back to business like any other semiconductor company.

We saw how PG handled Intel with an aggressive strategy and its consequences.

But having a high-caliber CEO is definitely an advantage.
 
I think Intel just needs to recover financially and get back to business like any other semiconductor company.
We saw how PG handled Intel with an aggressive strategy and its consequences.
But having a high-caliber CEO is definitely an advantage.

Do you think Intel will split design and manufacturing?
 
Intel didn’t miss one turn they missed two! They missed on mobile and they missed on AI/GPU. One could argue they missed on Foundry as well in the Bill and Sohail days, but that would have been difficult considering the battles they were fighting and lack of leadership at the BoD and ELT

One bad CEO or even two can kill a company in Technology but Intel can be said to have had three failing CEOs; Pat, Bob, BK, and PSO.

If you look beyond the executives failures the Board also was and is also a failure for the past decade.

The corporate culture in some of the organizations combined with history, lack of clear visionary strategy makes for a very grim situation
 
Intel didn’t miss one turn they missed two! They missed on mobile and they missed on AI/GPU. One could argue they missed on Foundry as well in the Bill and Sohail days, but that would have been difficult considering the battles they were fighting and lack of leadership at the BoD and ELT

One bad CEO or even two can kill a company in Technology but Intel can be said to have had three failing CEOs; Pat, Bob, BK, and PSO.

If you look beyond the executives failures the Board also was and is also a failure for the past decade.

The corporate culture in some of the organizations combined with history, lack of clear visionary strategy makes for a very grim situation
What battles were they fighting in the Bill and Sohail days? By Bill, do you mean Bill Holt?
 
Intel didn’t miss one turn they missed two! They missed on mobile and they missed on AI/GPU. One could argue they missed on Foundry as well in the Bill and Sohail days, but that would have been difficult considering the battles they were fighting and lack of leadership at the BoD and ELT

One bad CEO or even two can kill a company in Technology but Intel can be said to have had three failing CEOs; Pat, Bob, BK, and PSO.

If you look beyond the executives failures the Board also was and is also a failure for the past decade.

The corporate culture in some of the organizations combined with history, lack of clear visionary strategy makes for a very grim situation
Well after Craig Barrtta they have missed everything.The board was never held accountable for anything what is the use of the board if they are not accountable and just use CEO for scapegoating.
 
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Intel didn’t miss one turn they missed two! They missed on mobile and they missed on AI/GPU. One could argue they missed on Foundry as well in the Bill and Sohail days, but that would have been difficult considering the battles they were fighting and lack of leadership at the BoD and ELT

One bad CEO or even two can kill a company in Technology but Intel can be said to have had three failing CEOs; Pat, Bob, BK, and PSO.

If you look beyond the executives failures the Board also was and is also a failure for the past decade.

The corporate culture in some of the organizations combined with history, lack of clear visionary strategy makes for a very grim situation
Looks like you meant 4 there (the list of failing CEOs) and not 3. And a straight flush too.

But is it really that simple - all good CEOs until Otellini and all poor from his time on ? It certainly appears statistically unlikely.

I'm coming round to the view that what's happened to Intel is far more the inevitable result of its extraordinary success with x86 and that long term decline was probably baked in once that tide turned, almost regardless of who was CEO (or indeed on the board). That there was simply too much momentum and inertia from the x86 legacy to make the pivots we speculate about possible. Remember that pivots in a fast moving business like semis need to be both decisive and fast. We might argue that Microsoft managed the transition to the less PC-centric world far better. But software's a field where it's far easier to make fast changes (not least since quality requirements are usually less stringent).
 
Early in my career I saw Bill Gates and Andy Grove at a conference. Andy said software will always be the limitation in the compute world. Bill Gates fired back and said hardware will always be the limitation. Both were right of course. It was a great conversation and as a fresh CS/EE grad I had serious CEO hero worship. Andy was a generation before Bill but they were a great matchup. Andy had a PhD and Bill was a Harvard dropout. Andy experienced the holocaust and Bill had a privileged life.

As time went by I realized that my heroes, were in fact, just people who made mistakes like I did. The difference being some CEOs own it, pivot, and move on. Others dodge/spin it and keep making mistakes.

I had a huge amount of respect for Bill Gates until his personal life came to light. But he has owned it and he continues to be a great leader. Andy Grove was a very humble man which I truly respect. After reading his books, especially Only the Paranoid Survive and Swimming Across (his personal memoir), I really came to wonder if we would see another leader like Andy. Jensen Huang and Hock Tan are the only Andy Grove class of CEOs I am aware of in the semiconductor industry but I really do wonder why there aren't more.

Bottom line: Intel needs another Andy Grove class of CEO. A Broadcom acquisition is not probable from what I am told, nor is Jensen leaving Nvidia. The other names I have seen mentioned are not even close and the current Intel Co CEOs baffle me. They are not even close to an Andy Grove, Hock Tan, or Jensen Huang.
Didn't you say the Intel's board is the problem? Can another Andy Grove lead Intel out of its current rot or will another Andy turn out to be a Pat and get kick out by Intel's board?
 
Looks like you meant 4 there (the list of failing CEOs) and not 3. And a straight flush too.

But is it really that simple - all good CEOs until Otellini and all poor from his time on ? It certainly appears statistically unlikely.

I'm coming round to the view that what's happened to Intel is far more the inevitable result of its extraordinary success with x86 and that long term decline was probably baked in once that tide turned, almost regardless of who was CEO (or indeed on the board). That there was simply too much momentum and inertia from the x86 legacy to make the pivots we speculate about possible. Remember that pivots in a fast moving business like semis need to be both decisive and fast. We might argue that Microsoft managed the transition to the less PC-centric world far better. But software's a field where it's far easier to make fast changes (not least since quality requirements are usually less stringent).
Yes and no, one could argue the x86 success was so large and rich anything else would pale and be ignored or deprioritized for seeking more gold from the x86 golden goose. That was what made the money, got the press, got the promos. Who’d of vision or talent work on anything but x86?

Only way would be from the top! BoD or a visionary CEO with the boards support. Well we all see the failure of the BoD as well as the last four CEOs.

Pat to his credit was likely the only one to double down on technology but he has some serious flaws that led Intel to where it is at now. Was there anyone else that could have done what Pat without Pats bad things ? The prospects going forward look pretty grim IMO
 
Do we all really think Pat was a bad CEO, too? Feels like the jury may still be out. Technologically, Intel's in a much better spot now than when he started.
 
Looks like you meant 4 there (the list of failing CEOs) and not 3. And a straight flush too.

But is it really that simple - all good CEOs until Otellini and all poor from his time on ? It certainly appears statistically unlikely.

I'm coming round to the view that what's happened to Intel is far more the inevitable result of its extraordinary success with x86 and that long term decline was probably baked in once that tide turned, almost regardless of who was CEO (or indeed on the board). That there was simply too much momentum and inertia from the x86 legacy to make the pivots we speculate about possible. Remember that pivots in a fast moving business like semis need to be both decisive and fast. We might argue that Microsoft managed the transition to the less PC-centric world far better. But software's a field where it's far easier to make fast changes (not least since quality requirements are usually less stringent).

It seems to me if Intel's CEOs and Board of Directors consistently making big mistakes for the past 10+ years, it's a business model problem more than the staffing, financial, CEO, or Board of Directors problems.
 
It seems to me if Intel's CEOs and Board of Directors consistently making big mistakes for the past 10+ years, it's a business model problem more than the staffing, financial, CEO, or Board of Directors problems.
I don't think this is a business model problem we have only tried financial/Staffing and CEO we have not tried firing the board to confirm this theory 🙂
 
In the same interview I think, Mr Gates at a different point said he doesn't think the chances of an Intel turnaround are very good. He also made a distinct comment about Intel Foundry saying "they don't even use standards that people like Nvidia and Qualcomm find easy". Can anyone here elaborate on what he means? Is he saying Intel's pdk is not standard? Or something else? I realize Mr Gates no longer runs MSFT, but it is my understanding he still has some influence there. Thus, it's interesting that MSFT is one of the earliest, and arguably the most high profile customer for Intel 18A node.
 
It could also mean he is relying on second-hand information like those Reuter reported rumours. What we do know Panther Lake is designed and made using tools that are also accessible to IFS customers.
 
In the same interview I think, Mr Gates at a different point said he doesn't think the chances of an Intel turnaround are very good. He also made a distinct comment about Intel Foundry saying "they don't even use standards that people like Nvidia and Qualcomm find easy". Can anyone here elaborate on what he means? Is he saying Intel's pdk is not standard? Or something else? I realize Mr Gates no longer runs MSFT, but it is my understanding he still has some influence there. Thus, it's interesting that MSFT is one of the earliest, and arguably the most high profile customer for Intel 18A node.
He meant the EDA Tools Intel used to have custom EDA Tools they have migrated to Industry Standard tool even for their own node like Intel 3/18A
 
Do we all really think Pat was a bad CEO, too? Feels like the jury may still be out. Technologically, Intel's in a much better spot now than when he started.
Intel could have gone the Bob way and split the fans and Lunar and everything at TSMC and fabs all managed by TSMC. I could argue stock holders and product would be better off.
 
Intel could have gone the Bob way and split the fans and Lunar and everything at TSMC and fabs all managed by TSMC. I could argue stock holders and product would be better off.
And this is getting reflected in margin their designs are just as bad as once their fab was so it wouldn't have done anything and just bleed more money Intel themselves don't want you to buy a TSMC N3B Fabbed product cause it's hampering their margins
 
Early in my career I saw Bill Gates and Andy Grove at a conference. Andy said software will always be the limitation in the compute world. Bill Gates fired back and said hardware will always be the limitation. Both were right of course. It was a great conversation and as a fresh CS/EE grad I had serious CEO hero worship. Andy was a generation before Bill but they were a great matchup. Andy had a PhD and Bill was a Harvard dropout. Andy experienced the holocaust and Bill had a privileged life.

As time went by I realized that my heroes, were in fact, just people who made mistakes like I did. The difference being some CEOs own it, pivot, and move on. Others dodge/spin it and keep making mistakes.

I had a huge amount of respect for Bill Gates until his personal life came to light. But he has owned it and he continues to be a great leader. Andy Grove was a very humble man which I truly respect. After reading his books, especially Only the Paranoid Survive and Swimming Across (his personal memoir), I really came to wonder if we would see another leader like Andy. Jensen Huang and Hock Tan are the only Andy Grove class of CEOs I am aware of in the semiconductor industry but I really do wonder why there aren't more.

Bottom line: Intel needs another Andy Grove class of CEO. A Broadcom acquisition is not probable from what I am told, nor is Jensen leaving Nvidia. The other names I have seen mentioned are not even close and the current Intel Co CEOs baffle me. They are not even close to an Andy Grove, Hock Tan, or Jensen Huang.
Daniel, what would your reaction be if Lip Bu Tan were to be next INTC CEO?
 
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