Intel’s board, and an example of when boards and short-termism fail

https://www.fabricatedknowledge.com/p/the-death-of-intel-when-boards-fail

by LarsDu88 • 2 years ago

351 278 2 years ago

LarsDu889• 2 years ago

Just thought this article really drives home how a behemoth company like Intel in the midst of a turnaround can be completely kneecapped by a board of directors (virtually none of whom have any semiconductor experience!)

scrubs4• 2 years ago

See comments in

https://news.ycombinator.com/item?id=42321673

Re c-suite

And for a positive counter example think Louis V. Gerstner, Jr. (1993 - 2002) when ibm was in a jamb.

trimbo• 2 years ago

Gerstner saved a brand name by destroying a tech company and making it a consulting company. I'm not sure the same is possible with Intel.

btilly3• 2 years ago

IBM had three problems at that point.

The first was a culture of speaking to the expectations of senior executives, and following strategies that made no sense.

The second was that they were on all sides of all technology disputes - and so everyone hated them.

The third was that they were under an antitrust consent decree.

Basic software expertise wasn't going to help with any of this. The third was going to solve itself in time. The second was good old accounting. The first, well, https://gunkies.org/wiki/Gordon_Letwin_OS/2_usenet_post does a good job of describing what IBM was doing wrong.

By the time Open Source became a thing, IBM clearly had figured it out. The golden rule is this, people are willing to pay a certain amount for a solution to their problems. People don't care how their budget is divided. So if the complement to your solution is open source, you can charge more for the proprietary bit. Better yet, the open source thing with a bunch of support has a better shot than a completely proprietary stack. So open source the complement to your real product.

Gerstner somehow "got it". And it showed. This is why IBM supported Linux, Apache, etc in 1998/1999. Letting Microsoft lose the standards battles.

But do I see you saying that standards are a software issue? Maybe, but they also mattered to American Express. Which is where he came from. So he was equipped to understand the issue.

LarsDu889• 2 years ago

Positive counterexample? So you want Intel to go from a semiconductor manufacturing and design firm into a consulting and outsourcing company?

sitkack• 2 years ago

Most bureaucratic woes can be attributed to abysmal board oversight, profit and non-profit alike.

Loughla• 2 years ago

And when CEO or presidents are allowed to snow the board via force of personality and (for lack of a better way to say it) good old boy mentality.

I've lived through it at multiple organizations.

It's the worst death for a company.

buckle80172• 2 years ago

Intel without a foundry has no strategic value to the people of the united states.

Intel is pretty obviously dependent on taxpayer subsidies right now.

So they're going to get rid of the foundry?

Big brain plan over there.

NortySpock• 2 years ago

I was going to say, the fab is capital-intensive but at least has value as an asset so long as you can keep it printing out chips profitably, which is more likely in a trade war where certain foreign chips are banned...

As for what chips you print on them... x86, ARM, RISC-V, GPUs, NPUs, RAM, FPGAs, PLAs, print whatever the market asks for... It's not like there's fundamental superior value in x86 as an intellectual property, just inertia.

But local manufacturing gets protected in a trade war, because you'll need it if push comes to shove. Intellectual property just gets stolen and copied.

henriquez• 2 years ago

I’m sure the Intel board members will be drying their tears with hundred dollar bills when their assistants tell them about this article. I don’t remember a time when Intel either had a strategy or the strategy wasn’t short-sighted.

njtransit4• 2 years ago

There’s an implicit assumption in the article that, because Gelsinger was technically competent, he was going to be a great CEO of given enough time.

Personally, I’ve heard nothing but bad things from Intel during Gelsinger’s tenure. He had some lofty ideas, but he clearly wasn’t executing well with Intel’s bread and butter business.

Also, I’m not sure good engineers always make good managers. Management is all about delegation. The skillset is really about identifying talent and trusting them to do things competently so you don’t have to worry about the details. That’s pretty much the antithesis of engineering, where you like thinking through the specific details of how things will work. And of course, engineering is only one part of brining products to market.

jackyinger• 2 years ago

If you care to read the article you’ll find evidence of Pat’s competence.

Zigurd2• 2 years ago

There's a strong case to be made that Intel CEO is the worst job in tech, and also the most complex, and it also has mediocre upside. Which prompts the question: Is there someone better than Pat Gelsinger who actually wants that job?

rsanek2• 2 years ago

$50m yearly salary is limited upside? interesting take

rvba5• 2 years ago

Guy praying on twitter does not sound like some scientist to me, although article says he did 486

Zigurd2• 2 years ago

He's religious but that shows publicly only on his personal social media posts once a week, where he posts a bible verse. That's unusual in the tech industry. For some people like for example, Cathie Wood, conspicuous religiosity is a red flag. But I've never seen any evidence that Pat Gelsinger has any problems like that.

tgma4• 2 years ago

Lots of top tier scientists have been religious. Knuth is too, for instance. It strikes me as strange that believing in "simulation theory" has become cool and acceptable in tech circles, but somehow traditional popular religions are frowned upon. Feels dogmatic to believe so strongly that scientists necessarily have to be in direct contrast with religion.

shiroiushi3• 2 years ago

Also, I’m not sure good engineers always make good managers.

I worked at Intel when Craig Barrett was CEO. He was also a former engineer, and he was a terrible CEO. Intel got involved in a bunch of stupid stuff during his tenure, like the P4 Netburst architecture, the RAMBUS fiasco, and lots of side businesses that didn't pan out. Otellini took over and fixed things by going to the Core architecture, IIRC.

I'd say that good engineers becoming good managers (esp. upper managers) is the exception, not the rule.

tgma4• 2 years ago

I'd say that good engineers becoming good managers (esp. upper managers) is the exception, not the rule.

Good managers are exceptions, period. Still, good engineers are leaps and bounds more likely to be effective as managers, even if they make managerial mistakes. This is probably even more true for high level executives than line managers.

There's a common bigco school of thought that does not say this explicitly, but believes "nerds are bad managers," so if you are good at engineering you're less likely to be good at management, so let's go hire pro managers (that end up being schmoozers and less technical). In my experience, the less technical managers have been bozos AND bad at management.

ethbr1• 2 years ago

The difference between immediate pre-P4 and now Intel problems is stark though.

Immediately pre-P4, Intel need a better architecture than K6-* or AMD-next (revealed as Athlon). That's not a process problem.

Now, Intel needs their leading node to work. That's a process problem.

Arguably, none of Intel's business model works if their process is substantially behind TSMC.

Consequently, the CEO and board should be 100% focused on returning to process parity.

Gelsinger at least had an economically viable plan for that. Without him? No strategic plan: the board sure as shit isn't going to come up with one.

wbl2• 2 years ago

Hindsight is 20/20. If higher clocks won out because extractable IPC was lower Netburst was the right design.

roenxi• 2 years ago

I don't think the article did assume that. If you read between the lines the writer might well believe Intel is beyond saving no matter what Gelsinger does. Zero in on:

The CEOs who got Intel into this mess were much longer than Pat and a worse fit. Meanwhile, the board let most of his predecessor’s activities go unchecked as they sped through disaster.

That really captures the spirit of the article. It is pointing out that the people ultimately responsible for getting Intel into a mess are still in charge and have started to flail. That doesn't mean the writer thinks Gelsinger was going to be a great CEO because he is technical. They think that the board is terrible and there is evidence that it hasn't changed.

This behaviour by the board would be a common enough pattern in both business and political failures. Something goes wrong, the people in charge don't admit they made mistakes (or everyone just assumes it is too late to recover) and retain power.

njtransit4• 2 years ago

The article focuses on the boards alleged ineptitude, not about Gelsinger directly, but the article directly states that Gelsinger was the best possible candidate:

But the reality is he’s the single best candidate for the company.

However, directly before this, the author offers this:

Meanwhile, Pat wanted to pursue the big, bold IFS bet, with 100s of thousands of wafers, when the reality is just getting 10s of thousands of wafers is a massive problem as is.

This sounds oddly reminiscent of people I've worked with in the past. They have grand, pie-in-the-sky visions of what something should be, but don't know how to quickly and efficiently take the steps to get there.

BeetleB7• 2 years ago

Personally, I’ve heard nothing but bad things from Intel during Gelsinger’s tenure. He had some lofty ideas,

I don't know if I can say he was doing a good or bad job - it's really hard to say. But were there good things about him that people say?

He was the first CEO to say Intel was underpaying. He promised to raise pay, made a deal with the board to do so, and delivered. Most people got something like a 20% pay boost. Still not FAANG level, but compared to the prior CEOs who said "We pay fair market rates"... yeah, he won points with a lot of employees for that.

He quickly banned stock buybacks. Throughout his tenure he focused on his Foundry plans and improving engineering practices, at the cost of share value. His plan was "Let's fix our fabs and our efficiency, get back to building world class products, and the financials will take care of themselves". As opposed to all his predecessors who did stock buybacks instead of investing the money into the company.

He convinced the board to cut the dividend to a third of its value - because Intel was paying triple the dividends that its competitors paid.

No doubt many didn't like declining stocks, but no one can argue he was trying to artificially prop up the share price. His overall compensation was low.[1] He didn't earn any of his performance based stocks, and didn't try to manipulate those prices for personal gain. In the end he made a little over $10m per year - that includes the severance pay and signing bonus.

He was fairly good with transparency. He wanted the world to see the fab's financials when he knew they were poor. The point was to give the world a real number that could be used as a metric of how well Intel is doing. $8B loss this year, with the hope of breaking even in the next few years.

This last thing is what probably got him fired because the stock tanked after that (I don't know why - everyone knew it was unprofitable...).

Declining revenues are due to Intel products not competing. How much of that is Pat's fault - hard to say. Intel was making poor products for a while, and partly due to a poor fab process - which is precisely what Pat was trying to fix (5 nodes in 4 years is unprecedented, and it looks like Intel will achieve it). Lunar Lake was built on TSMC, and is a fairly decent product. Overall, the gap between AMD and Intel has shrunk.

Finally, perhaps the reason people really hated him: The layoffs. But as is often pointed out on HN, if you compare Intel's headcount with comparable companies (AMD, Nvidia), you can see Intel is really wasteful. The revenue per person is much, much lower. You can compare just the Intel Products head count (excluding the fabs). The layoffs had to happen. And there have to be more if Intel wants to be competitive. It can no longer command high margins.

So yeah, plenty hate him. But plenty do like him.

but he clearly wasn’t executing well with Intel’s bread and butter business.

Nor were the previous two CEOs.

[1] https://finance.yahoo.com/news/pat-gelsinger-lost-massive-14...

njtransit4• 2 years ago

These are all very interesting points. I’d like to add the total flop of Arrow Lake. That’s the type of thing the board likely cares about.

Melatonic• 2 years ago

Agree with all of this - lot of armchair experts in here but the reality is we will not know how good he was until a few years down the line

smaddox• 2 years ago

if you compare Intel's headcount with comparable companies (AMD, Nvidia), you can see Intel is really wasteful

AMD and NVIDIA are fabless. They are not comparable. It takes far more people to R&D a cutting-edge process node and run a dozen fabs 24/7 365.25 than it takes to design cutting edge chips.

hulitu3• 2 years ago

Management is all about delegation.

yes, but a manager who has no idea about his products, is a bad manager. Sometimes the teams below compensate and this is not visible, but, when the shit hits the fun, it becomes obvious.

adrian_b5• 2 years ago

I have followed Intel's products closely. While they suck enough that there have passed more than 5 years since I have bought for the last time Intel CPUs (but before that I had spent a lot of money on Intel CPUs and other products), I have not seen any problem that can be attributed directly to Pat Gelsinger.

Unlike most companies, Intel publishes relatively detailed roadmaps with years in advance.

Since Pat Gelsinger has become CEO, all those roadmaps have been accomplished in time, even if the products have not been as good as they could have been, due to things like low clock frequencies for any new fabrication process at launch (but this is a problem that has plagued Intel for the entirety of the last 10 years) or high intercommunication latencies for the first Intel multi-tile CPUs, like Sapphire Rapids and Arrow Lake, which can be attributed to an unavoidable lack of experience with such designs (because the former Intel management has delayed for too many years the transition to such designs, with jokes about the "glued" CPUs of the competition).

According to the roadmaps published years ago, the recent years have been intended as transitional years, with the first really competitive Intel products being launched only in the second half of 2025. Only then it would have been possible to judge correctly whether Pat Gelsinger had done a good job or a bad job as CEO.

As outsiders, we do not have enough information about what Pat Gelsinger has done. The roadmaps have been reasonable, the main thing that could be criticized is that there have been too many intermediate steps before reaching desirable products. However, it is likely that Intel could not have sustained financially a more abrupt transition. Even with this slower transition that has included the launch of many intermediate products intended to avoid a collapse of the sales, the financial losses have been high enough that they have been used as an excuse to eject Pat Gelsinger.

It seems that Pat Gelsinger did not have the power to do a real cleanup of the Intel managers, especially of those from the fabs. For years many of those managers must have lied continuously both to other Intel divisions and in the public presentations. There is no public information that any of those managers have suffered adequate consequences for their actions.

Also, it does not seem that he has succeeded to improve the internal cooperation between various Intel divisions. Some internal competition is good, but withholding information and lack of cooperation is bad. At Intel, too many products appear to have been developed independently by different teams, instead of all teams sharing some common designs as a base for their products.

kk032• 2 years ago

In their defense its a complex world. Its easy to focus on people and forget about how complex the environment they operate in has become. And the complexity is increasing not decreasing.

Google C-Suite turnover rates and the downward trend they have been on for the last few decades. In Tech and Finance C-Suite its super steep. The famous ones are outliers and mostly figure heads. Behind the scenes there is constant chaotic churn.

danielmarkbruce• 2 years ago

Yeah and this space is about as complex as it gets. That being said, they have screwed a lot of things up. But even if they executed perfectly they might be in approximately the same spot.

rvba5• 2 years ago

Working at Boeing, GE... should be like a kiss of death - permanent ban on any work related to shareholder value

bdangubic• 2 years ago

it is a publicly-traded company though, and if they are not working towards increasing shareholder value the investors will bolt and then how are you gonna pay your bills? :)

nationalizing might be a way but the government will run it and that always works out…

rvba5• 2 years ago

Looks like they maximize short term with various snake oil tactics, but then the company dies long term.

For me it has nothing to do with creating value, it is more like putting putting lipstick on a pig.

Instead of actually fixing and building things.

LarsDu889• 2 years ago

Intel should have someone like Jim Keller on the board. Maybe even software folks like Chris Lattner. Not Boeing, GE, merger and acquisition clowns.

jiggawatts• 2 years ago

He was there in 2020!

He left after something like 3 months because he couldn't get buy-in for his ideas from senior management, most probably the board of directors: https://www.reddit.com/r/intel/comments/z3set6/jim_keller_ap...

consumer451• 2 years ago

Clowns indeed. The only investment Boeing and Intel board members know how to execute is the ole' C-suite self-serving stock buyback.

Intel is over 100B in the last 30 years.

Boeing bought back 3x what it would have cost to develop the next-gen 737 in very recent history.

Clowns with no shame, and apparently no repercussions.

airstrike2• 2 years ago

After almost a decade advising on large cap M&A in Wall Street, my biggest takeaway is that activist investors play a fundamental role in capital markets. I think a lot of the hate they get is fabricated by the status quo in PR wars. If I were considering going back to M&A, that gig would be at the top of my list.

I'm honestly surprised we haven't seen activists clamoring for this board to be replaced. Maybe it's too late for Intel and nobody has the stomach and stamina to try to turn it around when there's easier money to be made in a very favorable environment. Or maybe it's too early and an activist is indeed slowly buying up a position but hasn't hit the threshold after which they must disclose their stake.

AtlasBarfed4• 2 years ago

I have been a consistent critic of Intel on here.

But a company like Intel can't be spun up/replaced on anything less than even more subsidies and probably 10 years of nondelivery/noncompetitiveness. A chip foundry and chip design of this level takes a long time to reach competence. Hell, if you are 1 generation behind status quo, Intel shows it can take 3 years to catch up, if then.

This company isn't a struggling retailer in a sea of retailers (Sears) or some rando restaurant chain selling potato skins, blooming onions, and nachos (TGIFridays).

This is a top-line chip fabricator, in a geopolitical environment where supply lines/shipping lines are under threat in the Pacific, demographic collapses in China, Japan, and South Korea are underway, and a president that wants to start a tariff war.

National security concerns underline Intels importance. It isn't some chopshop private equity spreadsheet play. If you split it you need functional mission-based companies.

Intel has something like a dozen fabs. I would subdivide those into the lines of business their process nodes can serve, from embedded / industrial stuff, board chipsets, whatever.

Identify the process nodes desperately needed for economic protection from a hostile/collapsing China (same thing basically in economic impact). We need state of the art, so the latest and n-1 fabs get wrapped up, but we likely need a boatload of second and third tier node production as well.

I think Intel's fabs can be split in the n-2 and n-3 nodes into two competing companies, because the US doesn't need monopolies, it needs competition, and that will be the path to far better utilization of subsidies and speeding up production independence from the Asian rim.

I cannot believe Intel has failed at integrated graphics for so long. I'd like a competitor to NVidia besides AMD.

Setting up functional subsidiaries like this will absolutely not happen with private equity chopshops, all run by the same financial illusionists that have crushed Intel and Boeing.

But that's not how the oligarchy works. It'll be something that maximizes concentration of the subsidy check by the same incompetents that "manage" Intel right now, and the subsidy will be squandered.

I cannot believe a Boeing fuckhead is now the interim CEO. Nothing will go well, these people are survivalist lizards that care about their careers and stock options and parachutes. That Boeing guy likely engineered the ousting, he's a slimy survivor of corporate Machiavellianism.

I invite him to prove me wrong, the country needs it.

airstrike2• 2 years ago

The activist playbook isn't limited to chopping up shops or any subset of the PE playbook.

Intel stock is likely so undervalued right now that an activist can just come in, throw a fight deck at the board, show to the market that they will put _some_ better board in charge (shouldn't be too hard), get the votes they need, replace the board (partially), see the stock rally (pick a number) 20% on improved sentiment and expectations, gradually unwind the position and move on.

meiraleal2• 2 years ago

That's a very romantic way to describe a corporation that was sucked dry by greedy men in suits.

colechristensen• 2 years ago

I feel like Intel was ahead for a very long time and perhaps intentionally coasting and then suddenly in the span of a few years they went from barely any competition to losing best in class in compute to three separate competitors. AMD having great consumer processors and now beating in sales in data centers, Apple having without a doubt the best consumer processor, NVIDIA completely owning the machine learning compute market which is now enormous.

I think beat case is NVIDIA buys Intel and spins off some of the less mainline business units.

In dire straights I don’t think the government would allow Intel to fall to vultures and instead would compel them to continue operating at any loss rate and then if they failed to avoid bankruptcy nationalize them in much the same way as AIG or General Motors for long term reorganization.

danielovichdk• 2 years ago

Collapsing China? I read this is as a big no clue rant.

huijzer2• 2 years ago

I would politely argue against the word “collapse”. It’s overly dramatic. It makes no sense when talking about societies. Peter Zeihan uses the word a lot but that doesn’t mean it’s correct. Peter just knows that fear sells. But what does it mean for a society to collapse? One day all is fine and the next day it is not? “Downward spiral” seems more appropriate.

hulitu3• 2 years ago

because the US doesn't need monopolies

They seem to love them very much, though. (Microsoft, Google, Apple, Facebook)

Dalewyn• 2 years ago

a company like Intel can't be spun up/replaced on anything less than even more subsidies and probably 10 years of nondelivery/noncompetitiveness.

As a taxpayer I sincerely couldn't care less, I'm fucking tired of seeing my tax dollars wasted on bailouts and subsidies for nothing. If we absolutely must use tax dollars on Intel at this point, I have a hardline requirement: Nationalize them. I want fucking tangible assets, things of fucking value for my tax dollars spent. I want them to become Public Property if they want to spend Public Money. I want them answering to the accountability of the Constitution and the electorate for wanting my tax dollars so desperately.

This is a top-line chip fabricator,

No, they are not. If they were, none of us would be having this conversation.

National security concerns underline Intels importance.

No, it is not. Not when we (Intel) are already defeated and the battle decided. Not when allies (South Korea, Israel, Germany/EU, et al.) have actual top-line silicon production. Also see next.

Identify the process nodes desperately needed for economic protection ... We need state of the art,

No, we do not. Most of the country, let alone the world, still runs on 50+ year old silicon technology. Not even the military uses "state of the art" silicon, they're almost always at least 10 to 20 years back from the bleeding edge if not more.

As for the silicon we all actually need and use? We can produce plenty of them. See: Texas Instruments (includes former National Semiconductor), Analog Devices, Onsemi (includes former Fairchild Semiconductor), and more.

No, we do not need Intel for national security, nor even economic prosperity for that matter. The American semiconductor industry is much more massive than Nvidia, AMD, and Intel.

I cannot believe Intel has failed at integrated graphics for so long.

Intel's iGPUs have been and are the best iGPUs on the market. They almost always work everywhere everytime for all practical purposes. It's their discrete GPUs which have been and always were disappointing, I'm not holding my breath that Battlemage can defy history.

crowcroft• 2 years ago

The cycles are so long that I think it's hard for activists to get in, set a new course and exit with a profit.

Having said that the stock is so low at this point something will probably happen. I think private equity taking it private for 5-10 years would let the company work through a long term turn around.

Similar to what's happened with Yahoo. PE could buy it, spin out/sell the most distracting adjacent parts of the business, and then focus the core business over the next five years without needing to publicly deliver quarterly updates.

It would be a massive PE deal, but not outside the realms of possibility, especially if the stock drops a few more percent.

llsf3• 2 years ago

Is it time for Elon Musk to step in, or is it too early ?

Now with the CHIPs money coming in, it might be the right time...

claaams• 2 years ago

By asking musk to step in are you talking about having him make the company worth 10% of what it’s worth now?

llsf3• 2 years ago

Not worrying about the worth of the company as much, but more to salvage the chip maker expertise that Intel still has (Intel has been in several rounds of layoffs, including 15,000 in 2024).

According to the article, splitting Intel would be good (short term) for the shareholders, bad long term, and bad for the country.

Intel is still a great asset, but it looks like it is losing its appeal as time passes. CEO of Intel is deemed to be a very challenging position. The board does not seem to know how to turn the ship around.

I could see Musk steering that ship. It is technically challenging (Musk seems to thrive in those environments), and it could even benefit the other Musk companies to some extent (XAi, Tesla and even maybe SpaceX).

Intel market cap is 94.713B (AMD is 233B, ARM Holdings is 144B... not mentioning NVIDIA), so about twice what Musk paid for Twitter. But if Musk sets his view on Intel, he would not have a hard time to finance the purchase. Actually, he could wait a bit more as the stock can fall even more (today, Intel stock is at the price of Dec. 1996).

This is armchair talking/joke, and it would be one more crazy thing on the 2024 bingo card, but from all the crazy things we have seen recently, Musk taking over Intel would look quite normal in comparison.

aaronbrethorst• 2 years ago

You’re right. Intel makes too many woke CPUs.

LarsDu889• 2 years ago

I don't think Intel manufactures enough transgender chips to make Musk care about buying it

bell-cot• 2 years ago

Interesting idea. And with Musk's ties to Trump, he doesn't need to buy Intel himself. The shake-up doesn't need to fit stereotypes, nor (with the current SCOTUS) satisfy legal niceties. If Musk told Trump "great countries make their own chips", the national security establishment echoed that, and Pat wound up in charge of Intel's fabs, with "Make Great Chips" for his marching orders...could Pat make that work out? It certainly would be interesting.

llsf3• 2 years ago

Yes, Pat could come back and take care of IFS, with this time a supporting CEO/board. With the China/Taiwan tensions, it might be a good move for the US to not let Intel slip further, and stir that ship in the right direction. Musk could justify the move to help his AI ventures (XAi, Tesla FSD, robot, etc.)

nonrandomstring3• 2 years ago

Vote me down to the 9th circle of hell, but I find the article is simply off with the fairies. What do boards, directors, companies, capital, investors or any of the self-important suit-wearing dog and pony show have to do with what's happening to Intel?

Intel is dying because it simply cannot bring itself to make a product that people want instead of the things it thinks people want [0].That's its fundamental life-preserving responsibility to itself. Sure, semiconductor making is very cut-off from the reality of what it makes tech for. But mindless progress for the sake of progress? It's a headless chicken running about the farmyard. The basics of business still apply. Make stuff people ask you for.

[0] https://techrights.org/n/2024/12/04/Technology_rights_or_res...

9cb14c1ec0• 2 years ago

Intel is dying because it simply cannot bring itself to make a product that people want instead of the things it thinks people want [0].

Not sure that the link adequately makes its case. The number of people that actually care about Intel Management Engine is extremely small. Intel's real problem is that their products have struggled to be competitive in the marketplace on a price and performance level.

hakfoo• 2 years ago

I could see a case for "we'll sell a few narrow SKUs of non-ME products for an audience that demands it" -- assuming there are some people who will vote with their pockets for it. It's probably up there with some of the other corner-cases in their product matrix.

But I agree, that's noise. There are much bigger problems with their product line:

* Adding and removing features (especially AVX, but also the whole market-segmentation nonsense with ECC memory) * The marginal and in some cases negative generation-over-generation performance boosts. * The unlocked wattage situation which screams "we're pushing an end-of-the-rope product that we can only get to decent clocks by feeding it an entire mains circuit". (See: FX-9590, Pentium 4 Extreme Edition)

Intel might be able to say "Today's Glysophate Lake CPU is clearly better than the Haswell you bought 10 years ago", but there will be a lot of mumbling if you ask "how much better is it than last year's Paraquat Lake". That doesn't inspire confidence, especially when they have traditionally been the premium brand.

amluto• 2 years ago

The number of people that actually care about Intel Management Engine is extremely small.

I think this sentence, in isolation, actually kind of nails the problem. I realize this isn’t what you and the article you’re replying to have in mind, but: no one cares enough about ME to buy it. After years of development, Intel has a solution to server management (and client management?) that is arguably technically superior to the crappy, power hungry chips from ASPEED and the management stacks from the likes of Dell and HPE that, until very recently, were unbelievably bad.

But Intel completely failed to execute! ME should have been a headline feature, made friendly to the point where people would buy Intel systems because of ME. Anyone considering AMD or Ampere or POWER would be annoyed because their organization heavily used ME and Intel’s competitors didn’t have it!

But instead, Intel hid the good parts (iAMT) behind annoying SKUs, obnoxious and secretive software and weird proprietary lock-ins. And the result is: no one cares about ME!

(Intel has messed up most of its recent features in almost exactly the same way.)

throwawaythekey• 2 years ago

Intel's real problem is that their products have struggled to be competitive in the marketplace on a price and performance level.

That's not super true. AMD has had good outlier performance in gaming with the X3Ds for a while, but for regular use something like a 13400f has been as good of a deal as any AMD chip.

Arrow lake seems to have definitely made the situation worse for intel though.

BlueTemplar• 2 years ago

If it was only IME...

But AMD has their own version with the PSP.

So we're stuck on Bulldozer hoping for Risc-V or something to mature enough before Bulldozer is completely obsolete.

(With Apple obviously never having been an option to start with, and Microsoft keeping to push for the likes of TPM and Pluton, thankfully still optional for now.)

LarsDu889• 2 years ago

You do realize that it takes at least 5 years for new products to come to fruition in semi right? And Intel brought GPUs to market under Gelsinger's tenure.

This isn't some software startup that just pivots from widget A to widget B or some ad campaign

Even Tesla took like 5 years from announcement (after several years of developing a prototype BEFORE the announcement) to bringing the Cybertruck to market, and unlike cars, you need to mostly build the entire assembly line from scratch for new nodes every few years.

It will be at least 3 years before we even see the outcome of decisions Gelsinger made at the beginning of his tenure.

sounds2• 2 years ago

Grandparent said:

it simply cannot bring itself to make a product that people want

To which you responded:

You do realize that it takes at least 5 years

Intel could lower the price on their HEDT chips tomorrow.

Intel could enable AVX-512 tomorrow.

Intel could more fully open up their fabs to other companies tomorrow.

Intel could publicly commit to producing silicon with no Management Engine tomorrow.

What would you do, if you were Intel CEO?

nonrandomstring3• 2 years ago

Big companies are not agile.

On the other hand I studied VLSI at school and we designed a 4 bit microprocessor (team of 10 students) in a couple of months and had it fabbed and back on the test bench before the end of semester.

And we had to listen to what the instructor told us, which is the failing I'm chewing Intel out for. Being obstreperous and uncooperative with the market, not slow.

AtlasBarfed4• 2 years ago

Because if the rot is this bad at the top, imagine what it's like below it.

The board smacks of people that spend their careers making and defending their career positions, rather than actually doing something or achieving something. These are the top dogs of middle management Machiavellis.

Underneath them is just a bunch of lackeys built on loyalty, not competence. The talent has been chased out. The talent that remains in engineering is likely just counting days to retirement or a buyout package.

etempleton4• 2 years ago

The board’s lack of technical or even product expertise struck me when it was announced Gelsinger would abruptly retire. They don’t have the chops to be the wartime board Intel needs. They likely have no idea if Gelsinger was on the right path or chasing a dream. I believe Gelsinger was the right person for the job, but the board wasn’t and isn’t. The board would have had to approve of his plans. They should have known what they were signing up for.

For Gelsinger’s part he was probably too cavalier with finances and market sentiment to ever sustain any political capital.

TheCondor2• 2 years ago

It’s too late. It was too late 18 months ago. Nvidia is over 30x bigger. Qualcomm is 2x, AMD is 2x. Intel needs a world beater, like tomorrow. Qualcomm offered to buy them, no idea what the terms are but he’d have to beat those terms, right? That had to be the death blow.

AMD has already shipped ARM parts in the recentish time frame (Opteron A1100) there are rumors that they have internal arm projects that can be ready quickly. All the other part makers are all in with ARM. Intel is on an island. Throw the customization that MS and AWS are doing, unless they have something magical, tomorrow, it’s just hard to see.

tw04• 2 years ago

All the other part makers are all in with ARM. Intel is on an island.

Intel also has an ARM architecture license… they sold Marvell the Xscale assets, but retained rights to produce ARM chips should they desire to do so in the future.

https://en.m.wikipedia.org/wiki/XScale

nwiswell• 2 years ago

It’s too late. It was too late 18 months ago. Nvidia is over 30x bigger. Qualcomm is 2x, AMD is 2x.

AMD came back from odds much longer than this. At its nadir, AMD's market cap was about a billion. A billion! Jensen's jacket collection is worth more than that.

Anyway, it's not looking good for Intel but it's certainly not "too late".

bsder2• 2 years ago

It’s too late.

Hardly.

Intel has fabs and, as we found out from Covid, we don't have capacity in old nodes either. Intel can very much still print money.

Fabless companies are really cool--until shit hits the fan and nobody will run your chips anymore--but, hey, who cares, it's not like that ever happens, right? I mean you'd have to get an enemy invasion or terrorist bombing or tsunami or earthquake or fire in the fab line or global pandemic--and, pfft, how common are those, really?

All it takes is some high-level dumbass trying to curry favor with Pooh Bear over Taiwan and suddenly Nvidia, Qualcomm, Apple, etc. have a net value of zero for the forseeable future.

But, hey, it's super more profitable to not actually have all that icky manufacturing. Ewwwwwww.

rsanek2• 2 years ago

definitely not too late. plenty of cases in tech where worse comebacks were achieved. amd is a good example mentioned elsewhere in the thread. jobs brought apple back after it was months away from bankruptcy. even Nvidia itself was close to being fucked when its cuda bet was early and wasn't paying off yet -- Jensen talks about this in interviews

mahkeiro• 2 years ago

Market cap are by no means an indicator of the future of a company! I bought AMD shares when their market cap was 20x smaller than today and everyone was telling me that AMD didn't stand a single chance vs Intel. I'm pretty sure that you were that guy then.

owenversteeg• 2 years ago

I agree that the board's lack of technical expertise is an issue, but I think the root issue is - and hear me out, because this sounds ridiculous - the vibes.

At the end of the day, a company is a machine to turn employee labor into revenue. Intel has clearly been a sinking ship for years now. What kind of people work at a failing company? What kind of people serve on its board? Is this portrait of the board not a portrait of any other failing business?

ashoeafoot2• 2 years ago

Its on the CEO if he cant convince with a plan to turn the ship around and sell that story.

mrtksn• 2 years ago

Interesting take, but wouldn't also have the chance to attract the exactly right people too? Renegades, outcasts who dreamed too big for Nvidia or never got the opportunity at TSMC maybe?

There are many comeback stories, Apple being a particularly great one.

vasco• 2 years ago

Intel won't go down after receiving the billions it did for foundries. The USA doesn't burn money. IBM 2.0

lordnacho3• 2 years ago

the vibes

I went to lunch the other day with a friend. We had both worked at Intel during our early careers, and we still know people who are there over 20 years later.

Of course the topic arose of our old workplace. We had a great time there it should be said. But neither of us stayed on, and it was vibes.

Even at that time, as a young guy in university, I thought something was wrong. I couldn't tell what, since I was a young guy who barely knew anything about the business. But I knew that I felt uncomfortable about potentially spending decades at a place where everyone was so relaxed. There was no urgency. People would come in, find a colleague to have coffee with, and that was their day. I checked with the other interns as well, it was really chill.

I was working on my thesis, and my team was working on rolling out what would later be called WiFi. Amazingly, part of the strategy was to slow down certain standards, because we were behind in some of the fabs. That didn't seem like what you would do as a cutting-edge technology company. People at the all-hands would ask things like "should we keep AMD around just for show? So that we aren't a monopoly?". Well, that problem has been solved now.

I got offered a permanent role but never even considered it.

brookst6• 2 years ago

As someone who worked at Intel for 5ish years a while ago, I partly agree. There was a fatalism to the culture; a sense that any initiative had to be simultaneously super low risk and guaranteed to generate $1B in revenue within a couple of years. It had to be 100% predictable and planned month by month years in advance, and also exactly what customers would want on day one.

The people who “succeeded” were those who could sell that story to the finance org (who essentially made all the product decisions), and who could move onward and upward before the fairy tale collapsed.

The disconnect between the aspirational culture (risk taking, tech-forward, customer-focused) and the real culture (risk averse, finance-forward, planning-focused) was extreme. The whole place was like a filter designed to retain only those who had no interest or capability to fix the systemic issues.

nimish4• 2 years ago

Culture eats strategy for breakfast.

Intel's innovate or die culture died years ago

Inertia has taken its time but the company itself is catching up

AnotherGoodName6• 2 years ago

The pay is ridiculously low. Lower than tsmc in Taiwan on a ppp basis (not that far off in raw $ terms). Much lower than tiny hardware startups in the USA. Monumentally lower than AMD or nvidia, especially with stock grants factored in.

No pay rises for over 20years now. Layoffs on a routine basis. They asked everyone to take a pay cut last year. All of this in an extremely competitive labour market.

It’s pretty obvious to anyone that a job at intel is temporary. You take the job and do the bare minimum (because hey you’re paid bare minimum) and keep looking. There isn’t going to be a single employee outside the board at intel who isn’t browsing for a new job given the wage disparity. Everyone knows this. If you have a brilliant improvement for process keep it to yourself and take it to the next job. A low level position at a startup pays more than a senior role at intel at this point. It’s a laughing stock and the most recent statement at the last earnings was more layoffs and wage freezes to give more shareholder value.

They already have 0 serious talent and nobody gives a fuck there, reasonably so. “You’re going to lay me off from by far the lowest paying company in tech if I don’t give 100%?” “Ok!”.

It’s such a joke of a company and has been for 20 years now and the investors have made it clear they want another 20 years of this.

nradov2• 2 years ago

People seeking permanent US residency via an H-1B visa want to work at a failing company. And I don't blame them; from their perspective it's a totally rational choice as long as the company doesn't fire them before they get a green card.

alfiedotwtf2• 2 years ago

Prediction: now that the bean counters taking over is complete, Intel will sell off its hardware branch and turn into a consultancy service like IBM

lmpdev• 2 years ago

I don’t see this happening

95-99%+ of their revenue is from hardware

IBM had diversified for decades before evaporating completely

passwordoops2• 2 years ago

Not just let of technical experience, but the experience they do have is scary. Gregory Smith, for example, who is "the former CFO and EVP of operations at Boeing. He’s been on the board since 2017 and was an interim CEO at Boeing during 2020...probably be directly involved with the Boeing fiasco."

Someone like that should be facing criminal negligence charges, not sitting on boards.

nimish4• 2 years ago

Truly a comical choice for a board member

lordnacho3• 2 years ago

It's an indictment of the capitalist system. There's supposed to be oversight that ensure our organizations are run by capable people. But you look at this board (and I'm sure a few others) and it's clear they are not worth the money they are paid. What is anyone even thinking, having a guy from Boeing there?

The board is also too big, and filled with irrelevant people. Four or five specialists who know the area, and one or two financial side people, that's all you need. Too many chefs = nobody's cooking, nobody is responsible.

FrustratedMonky• 2 years ago

Isn't there some business cycle where companies reach the 'fattened pig' phase, and then wall street just feeds on it.

Isn't this what that looks like? Nobody is really 'saving' Intel. They are eating it.

klelatti2• 2 years ago

I’m not sure how it’s possible to come to a firm view on this decision on the basis of the information that is now public.

For example whilst there has been apparent technical progress eg on 18A - which is central to Gelsingers track record - it will mean nothing without IFS customers. It wouldn’t take a technical background to evaluate whether Intel is making progress in actually signing firms up for IFS.

Will technical progress continue without Gelsinger - surely yes. But a new CEO might also deal with issues that he was clearly slow to such as costs and getting rid of products that are going nowhere.

AtlasBarfed4• 2 years ago

Surely yes?

Intel has been a company of engineering underdelivery and incompetence for a decade now. Huge bonuses and pay to financial management, salary reductions and cheapness on the labor side, your classic American MBA war-on-labor.

The fact they cannot deliver a GPU, which is just a big vector processing array fundamentally, has been the long running sign of Intel's incompetence, something they should have had literally 25 years ago when Apples had vector processors and the first 3D accelerators were hitting the PC gaming world.

The intellectual talent long fled Intel, and they didn't invest in replacement intellectual talent. Because MBAs don't respect "talent". They tolerate it for some function of tolerance, and generally the "dead sea effect" is imposed as talent leaves and the managers let the structure rot rather than fix it.

Gelsinger obviously didn't have time to fix the intellectual and talent rot, because he probably needed to eliminate three levels of vice presidents to start with.

I really celebrate the article's approach. The arrival of massive CEO pay, allegedly because of how important, public, and critical their positions are, never actually comes with detailing of who is in charge and the effect of their decisions.

Why do the major heads of petroleum companies, cigarette companies, and other managerial structures largely get to destroy their companies or the world in the anonymity of private org charts?

klelatti2• 2 years ago

So Gelsinger personally did all the technical work on 18A? Of course he didn’t and the work on that will continue.

He also didn’t really deal with the other issues you’ve highlighted and the ‘didn’t have time bit’ is just an excuse.

I mean how much time did it take to say eg Gaudi is a distraction and we should end it?

LarsDu889• 2 years ago

Intel does have GPUs on the market which are good on the silicon side, but simply do not have the same level of software support that companies like Nvidia have built up (Nvidia has drivers that are backwards compatible for 20 years, Intel has issues with games released more than 4 years ago, as an example)

What they don't have is GPU manufacturing setup. All the Intel GPUs are fabbed by TSMC. But guess what, Nvidia has no manufacturing at all!

tester7562• 2 years ago

The fact they cannot deliver a GPU,

Their recent GPUs are decent, wdym?

nimish4• 2 years ago

They absolutely could have done so multiple times, and did a few times with the iGPU and Larrabee, but the issue was that they wanted to protect their lucrative CPU cash cow.

So Jensen and nVidia worked around them. Any big tech company can become a fabless semiconductor company quickly, so the value edge of having "the best CPU" is declining. Intel products are OK for now but we can machine translate x86 to ARM or risc-v so well that it won't matter.

thunkshift1• 2 years ago

The fact they cannot deliver a GPU, which is just ..

“Just”?! This is an incredibly dumb take.

Are you by chance comparing a brand new hardware product launch with a software product launch? Launching a hw product that does well takes YEARS. Any other company will not be able to pull this off, or they would have done it already. Intel has done quite well coming up with a decent gpu from scratch. There are like two other companies in this world that know how to do that, and they took a long, long time to get there.

someonehere• 2 years ago

For some reason when Apple moved to their own SOC I knew this would be one of the nails in the death of the company. A few other blunders on their part and here we are.

Reason077• 2 years ago

"he (was) the most technically competent CEO of the last few bad apples at Intel, but he was also among the shortest"

Is this article suggesting that Pat Gelsinger may have lost his job in part because he's shorter compared to other typical "CEO types"? Are we still subconsciously judging people based on their height in 2024? Sad if true, and if not true, then it's an odd thing for the article to point out.

(Bezos is pretty short too, isn't he?)

buckle80172• 2 years ago

Is this a joke?

He's talking about the length of his tenure.

ojbyrne• 2 years ago

The word “tenure” was left out. It took me a second to guess that.

renewedrebecca• 2 years ago

I’m going to go with shortest as in length of time he was in the job.

LarsDu889• 2 years ago

I think this was a typo. He had the shortest tenure at 5 years. He wasn't the physically shortest guy.

Intel greatest ceo Andy Grove may not have been particularly tall... spent his childhood as a malnourished holocaust survivor

AnotherGoodName6• 2 years ago

Is Pat ok? Everyone’s talking about how it’s terrible to force pat out but he started posting very out of context bible quotes to twitter starting in August this year and continued posting since.

There’s been no word of personal health issues but it did seem like a sudden change.

anon291• 2 years ago

I mean he's always been super religious and runs an org for Christians in tech

tyre• 2 years ago

The board works in mysterious ways.

mepian• 2 years ago

He has been posting them for years.

douglee650• 2 years ago

Is this guy short INTC, yes or no. The rest is color commentary

porknubbins• 2 years ago

As a shareholder who lost quite a bit I was angry at Gelsinger. But now after reading this article I feel sorry for him as someone who by all appearances tried to do a very hard thing and just came up short and got pushed out by the board.

Loss of a lot of performance crowns to AMD and 13th and 14th gen cpu failure problems were big black marks on his watch but its not certain that anyone else would have done better and I never doubted his commitment to the job at hand. Maybe what Intel needs is a whole culture shift to get rid of the bureaucratization and HR-ization and Gelsinger was not ruthless enough in removing calcified middle management layers and thought he could save Intel with technical achievements alone and avoid a lot of human suffering.

tgma4• 2 years ago

I have mixed feelings about this. On one hand, Intel as we knew it, a technical powerhouse, who kicked ass and delivered the Moore's law, would likely have been best served by someone like Pat than the alternatives. However, the world may have changed and the real value of Intel going forward may be the national security aspect of it. If Intel is becoming a Lockheed Martin, perhaps you want a capital allocator more than a technologist at the helm.

ulfw• 2 years ago

What national security? Huh? What do you have in mind for intel to be going forward?

BeetleB7• 2 years ago

Fabs. The only other major players are Samsung and TSMC, with the latter being the giant. If China invades Taiwan, they control the bulk of the semiconductor supply.

zoky• 2 years ago

His brief stint of 1386 days was surprising because not only was he the most technically competent CEO of the last few bad apples at Intel, but he was also among the shortest.

Well, how tall is he? And why does it matter? The article never actually says.

LarsDu889• 2 years ago

I'm pretty sure that was a typo. Short tenure, not short stature

challenger-derp• 2 years ago

would be helpful if I could get assistance with the paywall – I could be wrong, but I'm assuming a sizeable handful of commenters in this section managed to read this paywalled article?

h_tbob• 2 years ago

This may sound weird but I think the CHIPS act tempted intel to overextend. Counterintuitively they may even have been better without the money.

i don’t think problem was never lack of manufacturing capacity. I think it was process tech.

So I think the free govt money tempted them to invest in something that wasn’t mission critical - old node capacity, when they really needed r&d

rapsey• 2 years ago

It was announced a few days ago that Intel is finally going to actually receive something from the CHIPS act. So far they haven't gotten a dime. CHIPS money has overall distributed barely any of the funds.

mrweasel3• 2 years ago

That's a good point, there's also Trump coming in and potential tariffs. The path set by Pat Gelsinger may no longer be the most profitable, in the short term. Why invest and restructure if you expect the incoming government to cut your competitors off and allow you to cruise along for another four years?

_huayra_• 2 years ago

Highly recommend the latest Oxide and Friends podcast where they discuss a lot of this and related stuff: https://oxide.computer/podcasts/oxide-and-friends/2218242

ksec• 2 years ago

We have a whole article on Intel's Board and not a single word on Andy Bryant?

Andy Bryant was large part of the reason Pat Gelsinger left Intel in the first place.

He has been the Chairman of the Board since 2012 and on the board as Vice Chairman for even longer. So yes, all the strategy and direction of Intel's CEO in the past 10 years prior to Pat Gelsinger can be attributed to him.

He also handpicked all the Intel CEO since Paul Otellini.

Pat was called number of times to be backed as next CEO to save Intel during and after Brian Krzanich 's era. He said "no" every time.

Pat agree to be new CEO to replace interim or later official CEO Bob Swan after Andy Bryant's announced his retirement in early 2020. Handing it over to his friend Omar Ishrak.

The share-holding part was the reason why Intel cant cut off its dividends the first thing Pat came back. They only wanted Intel to keep handing out those dividends.

And ultimately it was the Shareholders or Wall Street, handing out Board Membership to their circles until it is run to the ground.

brookst6• 2 years ago

Well said. Everyone kept acting like Intel “should be” an innovator but was somehow failing, when the shareholders were running it as a cash cow all along. Rightly or wrongly, they decided a long time ago that it would be more lucrative for Intel to be in decline, and that became self-fulfilling.

glial• 2 years ago

This is another reason that any federal investment in Intel should have strings attached.

michaelt2• 2 years ago

the shareholders were running it as a cash cow all along

Those shareholders have seen an average dividend yield of 2.83% [1] in the past 5 years. In the meantime, the inflation rate has been 2.43%. And if you're about to say 'stock buybacks are more tax-efficient' the stock price is down 63% over that period.

If you think that's a cash cow, you should see what an amazing deal 5-year treasury bills are, with their jaw-dropping 4% return on investment.

[1] https://ycharts.com/companies/INTC/dividend_yield

ksynwa• 2 years ago

The Death of Intel

I know they are not doing well number wise but is it correct to claim this? Or it exaggerated?

If it is somewhat true, what could Intel ideally do to not die? The article talks about Gelsinger's naivete and provides a quanitity for wafers but I don't know what that means.

lotsofpulp3• 2 years ago

It probably means the death of a high net income business or a business that leads in its field.

They fall sufficiently far back that they can no longer afford to pay the wages and capital expenses necessary to compete.

jgrahamc• 2 years ago

James Goetz is a partner at Sequoia and joined the board in November 2019. He has previously served on networking-focused boards. He has a degree in electrical engineering, is likely semi-technical, and understands the industry. He’s relatively new but likely does not have a technical background. He’s been on the board long enough to be partially to blame.

I crossed paths with Jim Goetz at Accel because of the company Vital Signs that he started. I am not sure why they say "but likely does not have a technical background" because I can attest that he clearly did. Weird.

billjive• 2 years ago

Jim and I were on my company's board (Jive) and he absolutely has a technical background.

SilverBirch• 2 years ago

I think a lot of the analysis of Intel is just looking at a totally broken timeframe. Intel started having problems in early 2010s. It has been sliding since then. To fix it you need to clean house, get aligned on a good chain of management and engineering, then build out a roadmap that gets you back to process leadership and then execute on that roadmap. A year to sort out the organisation, a year to re-vamp the roadmap, probably 2-3 years to execute. Pat was probably the only person with the clout to ask for that time, and he didn't get it (and arguably he didn't really face the scale of the problem). The board failed, but it failed in 2010-2015, there's no point searching for someone to blame now, we're well past the point that the correct answer is to sell it for parts.

AlexandrB• 2 years ago

What's crazy about Intel's downfall is that Intel used a bunch of anticompetitive tactics to hamper AMD throughout the years and still couldn't keep them at bay long term. It's like a sports team that keeps cheating and still loses in the end.

LarsDu889• 2 years ago

Hey who changed the title of this post?

hedgehog2• 2 years ago

Let's not underestimate the complexity of the problem Gelsinger took on. I base that on the experience of selling them a company, and then having a little bit of a view from inside (under Bob Swan). It's clear to me that Gelsinger was trying to keep a lot of plates spinning while returning to former glory in an organization with a lot of cultural baggage doing work that is not amenable to clean sheet attempts. Messy. Post author is probably correct that PE-style chop & shop is the short-term most profitable approach, but it's also the worst outcome for almost everyone besides the largest shareholders.

What I'm looking for in the next set of leadership is a clear, positive vision for the future + an acknowledgement of the systemic changes to the industry they're in (e.g. no longer have the dominant volume to give them a process leadership advantage). There's a lot they can do with tight integration, security, software platform, and product lifecycle that the smaller fabless players aren't able to (yet).

29athrowaway• 2 years ago

MBAs are the ruin of America

brutal_chaos_• 2 years ago

Fabricated Knowledge

dash2• 2 years ago

Just one thing is missing from this excellent article: any explanation of why splitting up Intel, while it would “maximise shareholder value” is also “bad for America”. What’s America’s interest in having an integrated designer and manufacturer, rather than splitting the roles?

Intel’s board, and an example of when boards and short-termism fail

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