Bob Swan’s Prepared RemarksHappy New Year! Thanks for joining us today. Right as I was joining the call someone was saying it was good to have 2020 behind us – I couldn’t agree more! At the same time the start of the year hasn’t been that great just in terms of stuff we have to deal with, but it’s a pleasure to be here.
To start I want to kick off with a little bit about strategically what we’ve been up to which I know all of you were at Architecture Day – Pat (Patrick Moorhead), I know you were at Analyst Day. But I want to start about strategically where we’re going, the progress we’re making, and then a little foreshadowing into what we expect you see on the 11th (the CES press event).
So first, I’ll start with the market dynamics in terms of how we see it. It is, as you say, a good time to be in semis (semiconductors), right? The digitization of everything seems to be accelerating computing, and computing is everywhere. It’s no longer just our PC or our server, but everything seems to need high-performance compute and the PC is essential once again. So they dynamics of the market are extremely favorable.
The second thing I would say is [that we need] to capitalize on these data-centric transitions. It requires, as you know, massive transformation for your clients, and obviously for us, but it’s a massive transformation so that we are seen adapting and developing the new technologies that are going to enable those transformations, like 5G, like AI, like autonomous edge.
And then the third thing is, you know in some ways fortunately but in some ways unfortunately, we’re not the only ones that have noted this massive opportunity in front of us. You know, competition is intense, and they never sleep. That means we have got to be on top of our game, which we have every intention to be, [especially] as we close out last year and enter this year. So we’re excited about the competitive landscape – sometimes I wish it wouldn’t be as intense, but I think it makes us stronger along the way.
So the market overview is relatively attractive. Strategically what we’ve been talking about for the last couple of years in terms of our role in this market is just to be the trusted performance leader, [one] that takes this insatiable appetite for data and makes that data relevant and actionable by analyzing it, storing it, and moving it faster. [This means that] whether it’s a business or a consumer going through their own digital transformation, our technologies are there to make the data that everybody's getting after increasingly relevant. And the third thing I would say is that we know that for us, to achieve our dreams, that requires us to transform ourselves on three fundamental dimensions.
One, as we characterize it, and Pat I know I read every word you write (only Pat was mentioned by name), but from the CPU to the XPU. As the industry evolves, as workloads evolve, having a variety of architectures, enhancing our core CPU, but also adding additional architectures is increasingly important.
Secondly, you know, from Silicon to Platform. It’s not just the hardware, but how do we couple the hardware with software and with other technologies to build platforms that can delight our customers.
And then the third area for us have been a transformation from what we’ve characterized as the traditional IDM (Integrated Device Manufacturer) to a more modern IDM. This is not to get rid of the IDM, as we think it is a unique advantage of this company. But we know the industry has evolved quite a bit, we know that leveraging design disaggregation and packaging technologies that the IDM of the future is going to be a little bit different than the IDM of the past. That’s the third leg of our kind of transformation.
Then to kind of bring it all together: [it’s] our intensity and focus on both execution and [the] tightly coupled re-energizing the culture of the company. So we’ve moving in a much more nimble way as we see opportunities to grow and [to] innovate, as opposed to protect what we built in the past. So that’s a little bit about what we’ve been up to.
I also want to start with the kind of momentum entering the year. I think you guys, a year ago I flagged you know three fundamental areas that I thought were critical for us to improve execution. One was capacity, to ensure that we have the capacity to meet the demands of our customer base. Second was, once and for all, the ramp of 10nm. Third was to increase the rate of innovation of these multiple/multiplicity of architectures.
So as we enter 2021, you know, we built some really good momentum. Obviously we have a lot more to do, but yeah we’ve added over $20 billion in revenue over the last five years, and we’ve been chasing it, and chasing it is disruptive. So we entered the year (2021) having essentially doubled our capacity over the course of the last couple of years, and we’re going into 2021 you know with a lot more capacity in place, both for 14nm but also for 10nm.
The second area is 10nm itself. It was a year ago that we finally launched it, and during the course of the year going to second generation SuperFin, the biggest internode enhancement in transistor density ever for us. [It] was a big introduction during the course of the year and coupling that with our packaging technology is kind of bringing them to life. [It] was a really important aspect of execution on 10nm.
Then third is the products, and just the rate of innovation. During the course of the year, whether it was beginning the year with LakeField, or 5G SOCs, FPGAs, discrete graphics, oneAPI – the amount of products that we launched during the course of the year was really good momentum. And I would say that maybe most importantly, the Tiger Lake launch during the course of the year, that t ramped on the new node faster than we anticipated. It grew better, the adoption [of Tiger Lake], the designs by our customers was more than we expected. So we enter the year with that momentum kind of behind us, and the opportunity really to scale as we ended the year.
The last thing I [want] to say is about the execution as we exit the year. We launched [the] Ice Lake server product, you know, qualified it at the end of the year, started production of the third generation of Xeon Scalable processors, and will ramp it in the first quarter. So as you know, that was an important launch to kind of complete the portfolio of products that we have, from LakeField at the beginning of the year, all the way to server at the end of the year. So that’s, you know, a little bit about strategically where we’re headed, [and] the momentum we have entering the year.
Just quickly on the things you’re going to hear about at the [press] conference on the 11th. [To] start with, I mentioned the Ice Lake Xeon Scalable. Next year the client business is going to, you know, show more advances and industry firsts for virtually every type of experience in every segment of the PC market. During the year we’ll have four families of processors, from entry to premium, a really good lineup of products during the course of the year. In that lineup we’ll include some real desktop innovation coming in. Greg (Bryant) or Chris (Walker) will showcase two technologies coming to market in 2021, including the 11th Gen Core desktop processor Rocket Lake, as you know, and our next generation processors, Alder Lake, which from our vantage point represents a significant breakthrough in the x86 architecture. So we’re really excited about the innovation on the desktop. So between server, client, mobile, and desktop, we have an exciting lineup of things as we enter the year.
The second thing we will talk about is Silicon to Platform – we will also enhance our platform offering in the year. We will launch our first ever 11th Gen Core Chromebooks, based on the Evo platform, and we’re going to debut the Intel Evo vPro platform as well, which is going to feature the highest performance business PC platform with the most comprehensive hardware based security.
So [we’re] very excited about going beyond the silicon, the platforms, not just for Chromebooks but also you’re going to hear from Annan how Mobileye is expanding its offering as well. That talk is about expanding autonomous vehicle efforts globally, with four new testing locations [in] Detroit, Tokyo, Shanghai and Paris, in the first part of 2021. [This is] basically demonstrating the ability to have that kind of rapid global deployment by leveraging the proprietary crowdsource mapping technology called RAM, or Road Experience Management. So [we have] really exciting announcements coming from the Mobileye team on the 11th as well.
Just to wrap up: the demand for compute is pervasive. It’s not just the PC or the server, it’s the network, at the edge, in the car, in the retail store, in the industrial environment, and that incredible demand for compute, on billions and billions of devices, is a rich opportunity for us to expand the role that we play in our customer success. We feel like we have good momentum [from] 2020 in entering the year, and we’re excited to demonstrate a bunch of new innovation.
Questions and AnswersPatrick Moorhead, Moor Insights and Analysis: Can you give the latest and greatest on 10nm?
Bob Swan: There are several components to this. Firstly, we have three fabs ramping [up production] now. We’re building capacity for this year and the next couple of years, and both front-end and back-end yields have been progressing as we ramp. We ramped even faster in Q4 2020. With this, as yields increase, unit costs continue to come down, and gross margins get better. But don’t forget it’s not just about the process technology, but also the products we build – I mean, we ramped everything during 2020. At the end of 2020, I think in the Q3 financial call, I said that volume on 10nm was 30% higher than we expected compared to the beginning of the year. We have felt great about our design wins on 10nm, and look to continue ramping 10nm across all three fabs as we exit our financial year 2020, into 2021.
Paul Alcorn, Tom’s Hardware: One of the key benefits of Intel is that it manages its own manufacturing supply chain, however recently Intel has discussed using external suppliers for key components. We're moving into an era, due to COVID and other political relations, where the scope for a sustained third-party supply might leave Intel on the back foot should it decide to outsource its market leading products. How does Intel move forward in a future where it blends its product lines with a mix of third-party derivatives, the supply and economics of which will be further removed from Intel's usual control?
Bob Swan: Access to supply has been a critical part of Intel’s product management. A year ago, as we collectively looked into 2020, we expected that the PC market might be grow or contract by about 1%. It felt quite flat, and the demand profile wasn't great. Then as COVID hit, most of the industry thought that the first half of the year was going to fall off in terms of demand. But then in the second half of the year, demand grew like crazy and the mix of Intel’s products changed considerably. As a result, the whole ecosystem scrambled to gain pace, and at Intel we had to react and schedule for that.
For Intel, this is our advantage as an IDM (Integrated Device Manufacturer). While an IDM is still dependent on its ecosystem, it helps being the allocator rather than the allocatee - it means a great deal. If we think about design disaggregation, where we might leverage a third party foundry process, in any discussions that we are trying, even if we don't make those agreements happen, we always have to look at how we preserve the advantages of being a [vertically integrated] IDM. This means the ability to leverage Intel's size and scale, especially to get preferential treatment when allocation decisions are being made. We've got practice in using third party resources for our commodities, and as we plan to expand and use more third party foundries, maintaining and securing the advantages to Intel’s IDM strategy is going to be critical.
Paul Alcorn: Is there scope for Intel to consider sub-licensing leading process node technology from other foundries in order to use in its own manufacturing facilities?
Bob Swan: Possibly. I think the strategically for Intel, the ecosystem has evolved over the last 10 years. If there are ways or opportunities to leverage other industry advancements, then it is going to be very front-and-center for Intel to capitalize on industry innovations. Intel is coming to the realization that we don't have to do all the innovations ourselves. So in that thought we might outsource, we might move to using third party IP, opening up our own manufacturing and become a foundry. Is there a scenario in which Intel might use another’s process technology in our own manufacturing? That's certainly possible. The industry is evolving and we need to leverage that innovation, within our walls or elsewhere, and take advantage.
Mark Hachman, PCWorld: A question on the competition. If I am a PC vendor, I can buy from Intel, I can buy from AMD, or I can go find an Arm chip (or roll my own). With that in mind, what is the competitive advantage of Intel over the competition?
Bob Swan: Competition makes us stronger and helps us to move faster. It’s all about the rate of innovation, and then developing a broad based product offering. This means providing a range of products from intro to premium, and for products to business, to the consumer, for notebooks, for desktops, and offering a predictable annual cadence of leadership. It comes down to Intel’s IDM advantage – at Intel it is the knowledge to the customer base is that we are not going to contain your growth. At Intel we need to have more capacity than needed, and Intel needs to be the allocator and have the inventory to meet the spikes in customer demand. Also on the knowledge – we work with engineers at these companies and co-optimize their products. We're part of their design team, not just the order taker.
Dave Altavilla, HotHardware: Is there an update on the progress for Intel’s higher-end Xe GPUs? How is it going, and how do you see it competing in the gaming or the datacenter?
Bob Swan: This is something that we've had a couple of goes with, as you know, when we started over two years ago. Rather than starting from scratch like we did with Larrabee, it was a case of how do we start but this time with integrated graphics. The process is about driving from integrated graphics to discrete graphics, and leveraging the same design as much as possible (to enable scale up). You saw the progress with Xe in 2020, with the launch of DG1, which we are very excited about. We've not given a date for DG2, but clearly we have strong intentions in this CPU to XPU space where there are multiple architectures needed. Intel is going to invest to expand GPU to entry up the stack over time. We will have real innovation in the next two years
Dr. Ian Cutress, AnandTech: Given Intel's position in market, its outlook for 2021, and where the company currently stands, what matters more: its financial side or its technical side?
Bob Swan: Technical. But they’re not decoupled – one powers the other and vice versa. Our rate of innovation, our rate of products, and our rate of investment helps one to drive the other which feeds back in.
Dr. Ian Cutress: Intel has had a recent exodus of prominent key technical personal in 2020, such as Renduchintala and Keller. Where does Intel see the future of its technical expertise coming from?
Bob Swan: Don’t forget that Intel has 70,000 engineers! Intel’s background is technical. Our model for the longest time was to hire engineers right out of their college campuses, and grow them within the system*. As the industry has moved on, when we think about new architectures, and the ecosystem still has to be growing from within but also we are bringing in outsiders.
As you know, Jim left for personal reasons. When Murthy left, he was a wonderful executive, but in so many ways it was ‘how to get five engineers in the room when we’re making big decisions, not just one?’ I think it’s the realization that we can get more diverse points of view, more technologists in the room, making big time decisions. As you know we’ve done substantial promotions within the company to fill those rolls, such as Ann Kelleher on technology development, Keyvan Esfarjani in manufacturing, Raja Koduri on company-wide architecture and software, and Josh Walden fills in the Jim Keller type position as we look to fill that role on a permanent basis. We also have Dr. Randhir Thakur from Applied Materials on our supply chain. Having 5 senior, what I’d characterize as brilliant, engineers in that room gives us more diverse thought on the technology and the future. Then there's also the core hardware and software engineers that work for each of them, and I'm convinced we have the best talent, by a long shot, in the world. Our expectations are to continue to have the best talent, and we’ll get it the same way as we have recently, which is from the campuses and the competition.
Final Words from Bob Swan
As a company, it has been a tough couple of years [especially on the technology side]. But coming out of 2020, it will be the 5th best year in a row for revenue. We understand it's all about innovation and execution, and we're excited about what we're going to do for customers in 2021.