Intel CEO Pat Gelsinger on Bloomberg Studio 1.0

Thank you so much for having us. So do you have a direct line to the president now? Well, he's enthusiastic. You know, obviously the project is significant and a lot of interest around it. But, you know, it's also he says, hey, I really want your views. You know, I want your views on the semiconductor industry, on the shortage, you know, how to be, you know, more effective partner with business, some of the geopolitical topics. So we have a date planned to get together again. When you talk to him, do you feel like he learned something? Like, what did he take away from the conversation? You know, I gave him a 20-minute briefing. You know, and some have said, you know, how there is he. But he was engaged. He was asking questions, seeking to understand, excited about the benefits to the region. And I'll tell you, Emily, this idea of the Silicon Heartland, it just pulled on something deeper in the nation. And, you know, the plans have sort of been under work. And all of a sudden, you know, hey, you know, let's get this announced. And what a what a kick in the pants for the Chips Act. That's Intel CEO Pat Gelsinger leaning in with President Biden at the White House, unveiling a plan to invest tens of billions of dollars in the American heartland of Ohio, create thousands of jobs and bring chip manufacturing back to U.S. soil. It's part of an ambitious effort to revitalize a lagging company and wrest control of an industry from Asia. The question remains, will it work? Joining me on this edition of Bloomberg Studio 1.0, Intel CEO Pat Gelsinger. Pat, so good to be here with you. It's always a joy, Emily, to be with you. Thank you for having me. And here at the Intel Museum, which is obviously a sign of the legacy, which you were part of because you worked here for 30 years before you left. Yeah, 30 years, you know, an 11-year vacation. And then now back for just about a year. So tell me about that call when you got asked to come back as CEO or coming up on the one year anniversary. It was right before Thanksgiving a year plus ago. And the request was, would you consider joining the board? So I asked Michael, right? Hey, Michael, what do you think? Right. He says, hey, they need help. Go help them. And yeah, that Michael. And, you know, the VMware board was OK. Yeah, you know, with Michael supporting it, we're OK with that. So I interviewed to join the board for the month of December. They said, would you consider being the CEO? So it just ruined my Christmas season last year. You know, our eighth grandchild was on the way. And, you know, the VMware gig. And I wanted to get the public offering of VMware done and everything. So it was sort of like, wow or wow. And, you know, how was that going to play? So three weeks of chaos. And then obviously the January 15th announcement, you know, and the idea of coming home, you know, being a successful CEO, coming back now to the company that I was born and raised in. As I like to say, I went through puberty here. I started so young. And now the opportunity to lead and really help the resurgence and reestablishment of this iconic company. It really is the honor of a lifetime. What was it like to return to a company that has so much history, which you were part of, but also knowing you needed to shake things up? The first staff meeting, you know, February 15th, you know, they usually started at nine. I started the first one at 7 a.m. And the first bullet of the first slide, we will have a torrid pace, right? Just setting the... Torrid. Yeah, it's a new word in the Intel vocabulary. The industry is moving rapidly. Massive shortages. The competitors are performing well. Hey, what we've been doing ain't working, team. We have to set a new course for the future, and that's gotten underway very rapidly. We've gotten a lot done over the first year, but you don't change, you don't fix, you don't reestablish after a decade of bad decisions and poor execution. It's going to take a while, but we're well on our way after year one. You took the job in the middle of a pandemic, in the middle of a supply crisis. Two themes that are still with us today. If you could give yourself an honest one-year report card, what would it say? Give yourself a grade. Well, let me give you two grades. Let me give you two grades. The board gives me an A. Myself, I give myself an A-, right? Now, in some regards, we're ahead of where I thought we'd be. In some areas, we're not as far as I thought we'd be. And it really is more a statement of the massive challenge in front of us. And we still got analysts out here. Some of them piss me off, right? I call them my bears and my perma bears at that, and sort of say, yeah, it's the right strategy, Pat. But I'm not sure if I need to invest for a year or two yet. When's it going to start materializing in the marketplace as well? So good progress. It's a good year behind us. And people are really getting excited about the new, old, and tough. Do you ever have it out with the perma bears? Of course. We'll debate on different aspects. And hey, I appreciate divergent views. That's part of the Intel culture, right? You know, Andy would argue everything, as I would say. If you were 95% right with Andy, you were wrong. Well, you know something about hard work, because you grew up on a farm. Robisonia, Pennsylvania. Yeah, I say, between Reading and Hershey, halfway is Robisonia, and we were five miles outside of town. So when you got nowhere, we were five more miles. But tell me about your opportunity. How do you go from farmer in the middle of Pennsylvania to engineer in Silicon Valley? My dad, number nine of 10 kids, and grandpa said, you know, we have enough farms in the family. Just work with your siblings. I'm the oldest boy. Had we had a farm, I'd be the farmer. Because that's what the oldest boy does. 16 years old, accidentally took a scholarship exam and won. So I ended up having the opportunity to go get a technician's degree, you know, community college. And so at 16 years old, skipped my last year and a half of high school, finished my associate's degree, and Intel came interviewing for technicians. So here I am, 18 years old, Intel on the West Coast invites me to come for an interview. I'd never been on an airplane, never been to the West Coast. How long do you think it took for me to say, yes, I'll fly to California, right? It was like two nanoseconds, and they offered me a job. And the interviewer said, you know, in the interview, he said, smart, aggressive, arrogant. He'll fit right in. You actually became the chief architect of the 486 processor, Intel's 486 processor, right? Yes, yes. And you had to pitch that to Steve Jobs. I want to hear about that meeting. You know, Jobs and Andy, they had argued early, and Jobs went off on a different path, right? And because of that, they were using other microprocessors. And so I tried to convince Steve to come back to Intel. And I tried to sell him on the 386. He sort of threw us out. I tried to sell him on the 486, and he threw us out at the time. And eventually, we won him over with the Centrino product some number of years later. But, you know, it was also his insatiable, detailed demand for engineering and industrial engineering excellence. You know, and to me, that's just what set him apart. You know, literally, I was nudged out of the company at the time. And I was- Nudged out or pushed out? You became Intel's first CTO. When did you know you wanted to be a CEO, that you wanted something more? So in my 20s, I had my first patent. I had my first book being written, programmed in the 8386. It was a bestseller, Emily, right? Had, you know, gotten to be a VP of the company, right? At the youngest VP ever. And it was sort of like, okay, what do I want to do next, right? And then through that was sort of the soul-searching time. And I wrote my mission statement that said, become CEO of Intel. And, you know, here I am, you know, 25, 26-year-old as well, being CEO. You've got to be kidding me, right? You know, what are you talking about? You've got to have ambition. But it became this driving force in me that I'd be in meetings with Andy Grove, Bob Noyce. Sort of, I was armchair CEOing for a decade and a half as I'm sitting in the room, you know, with these industry legends. And all the time, it was making me better. A lot of people thought you would be a shoo-in for the CEO job when that job came open. So why did you leave if this was your dream job? Yeah, you know, there was a period of time under Odellini's leadership where he had a different view of leadership, different view of what he wanted his successor to look like. And, you know, literally, I was nudged out of the company at the time. And I was... Nudged out or pushed out? Let's say, you know, somewhere between those two. You know, that 11-year period, by the way, Steve Jobs was outside of Apple for 11 years, right? And there's something about... Yeah, you know, being away, and I call it the death of a vision, you know, period, where you really have to sort of look and say, okay, why am I pursuing this? Why wasn't I ready for that job? Out of these circumstances, what am I going to learn? I've also seen the VMware and the Dell and the EMC culture up close. I just feel so much more equipped now. And had I stayed on the linear path to CEO, I wouldn't have been the leader that I am today. So those eight years as CEO of VMware... Hugely valuable. You wouldn't change a thing. I wouldn't change a thing, right? And I learned the value of software. And hey, Intel's going to do a whole lot more software in the future, I promise you. But it was also a period of personal development as well. You know, developing humility, confidence, insights on how to be a leader at this scale. Moore's law has guided the development of the chip industry for decades. It's not a law per se, but it's been critical to the development of semiconductors. We might even go super Moore's law this decade. And four reasons I said was the case. We know how to build transistors that we can see them scale for the next decade. We have power delivery. How do you get the power in and out of the chip with our Power Via technology? Third, we have the lithography. We also see that packaging, we'll call 2.5 and 3D, which is becoming much more like wafer building as we look to the future. So here we are, 100 billion transistor chip will be our largest chip that we do today, our Ponte Vecchio for high performance computing. By the end of the decade, we will deliver the trillion transistor chip. And I just say, you know, with utter confidence, I sit here and say, my team's going to make that happen. So industry, buckle up. Hang on. We are going for a ride. So what happens after a decade? I mean, do you think Moore's law can continue forever? To me, Moore's law has always been about a decade, right? Where we can see in front of us the core technologies, the barriers, you know, we're lining up the things that will allow us to do it. So five years from now, we'll have the next interview, Emily, and you'll say, are you still good for a decade? And I hope to be able to answer that question. Yes. So we have a date in five years. There we go. Absolutely. Your strategy involves doing multiple things that Intel has never been able to pull off before at the same time. Moving into Foundry, for example. Why do all of these things at once? These are reinforcing strategies. It's not like this one is in conflict or separate from the others, but they are making each other better. And let's talk about the Foundry as an example of that. You know, if I open my Foundry doors up, that means I have customers benchmarking my process technology every day, right? I'm not an internal guy anymore. Instead of just saying, here's my chip, or you can go to external Foundries, I'm going to say, let's go together and we'll bring some of your stuff. We'll optimize some of our stuff. Also, some of the new business areas that we're launching. Hey, we've been in internal graphics forever. You know, now we're going to do discrete graphics. We're going to build on things that we're already doing and doing well. Now, investors seem to be really excited about the ambition, the speed, the aggression, the torrid pace, if you will. But they're not excited about how much it's going to be. And they want to know about margins. And I know you've said five years. That's when, you know, those historically high margins will return. That's right. It's going to be at a couple of years of investment. And I am proud of making those investments. We're not being managed on a quarterly Wall Street view, right? We are investing for a long-term return. And I'm pretty darn proud of that. And you've budgeted up to $28 billion here. But your rival, Samsung, TSMC, they're planning to spend way more than that. So is there a chance this could cost even more than you're planning? Well, what we've said, you know, we've said, you know, $28 billion for this year. And it could go up next year and the year after. This is big business. This is big capital investments. This is big manufacturing expansion. We're pretty proud of the position. And boy, having doubled my capital investments year on year, hey, we're not being bashful about the big steps forward that we're taking. And with the announcements that we've laid out, you know, we believe that we'll be back in fundamental process leadership by 2025. So I think I saw you wearing a Christmas sweater, taking some shots at Lisa Su and AMD. I believe you said they're already in the rearview mirror. They're never going to be in the windshield again. I asked her about this and she said, you know, we're playing our own game and we feel good about it. She didn't even say the word info. What's your reaction to that? Well, Lisa's done a good job with AMD as a company. And hey, you know, I think we're back to a leadership position in the client and server. We got a little bit more work to do in that area. Is it possible the industry's in an arms race that will lead to spending itself into an oversupply? I mean, that has happened before. We've looked at this very carefully and the digitization of everything. Tell me what aspect of your life, Emily, isn't becoming more digital? Well, I'm trying to prevent that, but yes, I think it's happening. And COVID has accelerated that. The industry cost $500 billion last year, the semiconductor industry overall. And estimates are a trillion dollars, a doubling by the end of the decade at that point. I believe those estimates. It's not that there's not going to be some blips and turns on the way. And the majority of that is driven by leadership process technology, of which only three companies can satisfy that need. You know, Intel, Samsung, TSMC. And we are destined to grow faster than the market to accomplish that objective over that time. CEO of Apple recently said on the earnings call that it's because of the Apple-designed chips that more customers are buying Macs. How does it feel if Intel's being designed out? Do you feel you're getting as much support as your Asian rivals are getting from their government? You know, I think in the past, clearly, they've gotten more, right, unquestionably. And I think what we've seen over the last number of months is really that the entire political infrastructure in the U.S. realizes how critical this is. This isn't just any industry, right? You know, this is the heart of what the automotive industry needs, of what the industrial industry needs, what the medical industry needs, the consumer industry, the cloud industry. Every one of those relies on semiconductor. The national security relies on semiconductor. This is a priority for the nation. Well, speaking of national security, tension between the U.S. and China is escalating daily. The U.S. is your home market. China is your biggest market. Isn't that a risk to Intel's future? The U.S.-China relationship now, very critical. Big market for us. So, you know, we're in China. We're navigating that carefully. U.S. global market, big, important for us. And I'll say, you know, how do you navigate that? Careful, right? It requires you to be deft, thoughtful, engage with the political leaders, the business leaders on both sides. Definitely consumes a lot of our energy. And we have to navigate it well. Intel asked suppliers to avoid Xinjiang, an area that the U.S. has accused China of human rights abuses. Huge backlash from China. Intel apologized for the trouble that it caused. Why not stand up to China in that moment, if you believe human rights are at risk? We don't source out of Xinjiang. You know, there's no reason for us to be calling one out over any other. We shouldn't be calling out individual things. You know, it's not our job, right, in that respect. We're here to build great chips. And we have a consistent global policy with regard to human rights expectations of our suppliers. And that's what we've reinforced. And, you know, we feel confident that that's the right way to balance the views that we would have across the globe in this regard. Your customers are starting to make their own silicon. Microsoft, Apple, Amazon, Alphabet. How do you turn back that trend? You know, these companies are at such scale now, they can say, well, we can hire another 100 engineers. Let's go start a silicon project. And that's part of my foundry strategy as well. That's right. You know, Google, Amazon, you know, Microsoft. Do it with us, right? Come and use our foundry. And when you do that, you know, when you show up to use our foundry, we're going to allow our IP to be used by your designers. Or let's design together, right? You know, and let's bring together your innovations with our innovations and our leading edge process technology and manufacturing capacity. So we are creating better products that meet your unique needs. Tim Cook, CEO of Apple, recently said on the earnings call that it's because of the Apple design chips that more customers are buying Macs. That Mac sales went up 25% for a year earlier. How does it feel if Intel's being designed out? Yeah, very sad, you know, because, you know, they designed a better chip for their purposes than we were giving to them. So what's my mantra to my team? Design a better chip, right? We have to create products and technologies that Apple says, huh, that's better than I could have done myself. So you think you can get that business back? Oh, yeah, yeah. If we do, what I said, build better chips. Obviously, you know, winning the microprocessor back, huh, you know, they've made those decisions about every decade. You know, so I'm not expecting this. We have a number of years to get our act together at that point. Back in 2019, you said Bitcoin was bad design, extreme, and climate intolerant. Do you still feel that way? Indeed, I do. A single ledger entry in Bitcoin consumes enough energy to power your house for almost a day. That's a climate crisis, right, at that point. And the more you use it, so if we produce a technology that consumes that much energy, wow, that's not okay. And then you sort of say most of the uses when I said that were illicit. Now, that doesn't mean it's not a good technology, but we're not using it good yet. Well, Intel's about to bring forward a blockchain chip, you know, that's dramatically better. What about the metaverse? How are you going to use the metaverse, right? I don't know yet. Tell me. And I do think that there's going to be, you know, a set of, I'll say business-to-business applications in the metaverse, as well as consumer applications. Well, in the consumer applications, the nearest embodiment of that would be advanced gaming. So many of our graphics initiatives and PC initiatives absolutely are going to place us in the metaverse. We're also going to help to build the backend cloud infrastructure for metaverse. We're moving into our lightning round. We are going to move at a torrid pace. Yes. So these are some rapid fire questions. Okay. I hear you were a late night radio DJ. Is that true? Indeed. What were you spinning back in the day? Oh, this was easy listening music. Can you give us your intro? This is Pat Gelsinger, WFMZ Allentown. Good morning to everybody in the Lehigh Valley. I love it. What's the latest TV show you've been? We're running out of things to watch for my wife and I, Linda. So it was Alias was our last binge. Okay. Best piece of advice that you would give someone in their 20s? Relationships more important than results. Best piece of advice for someone in their 40s? Mentors. How much does faith guide your decisions? Every day, every way. I'm working for something much bigger and more important than just being the CEO of Intel. Speaking of that, you have how many kids these days? Four kids. Eight grandkids. And how often are you getting tapped to babysit? We're with the kids or have the kids most weekends, right? Between three different families. My wife, she is like Grammy of the year, if not the century. How do you do that and be a CEO? Eight grandkids? Hey, Saturdays, Sundays, we find ways to fit it in. And as I would always say, life doesn't make room for your priorities. You make room for your priorities. I hear you climb Mount Kilimanjaro to raise money for one of your charities. Do you still give away half of your money? Going up every year. Favorite family meal to cook for the kids and the grandkids? Oh, I'm the grill master. Anything on the grill. And a great steak on the grill, salmon on the grill. We just had ribs on the grill. I've been waiting for this one. Do you still have the VMware tattoo? No. Was that a real tattoo? No, it was one of those month-long tattoos. My wife said, if it ain't gone before our vacation, I'm ripping it off of your arm. I love it. Since you said the farthest ahead that you can see is 10 years, take me to 10 years. We're going to go on a growth journey as a company that is going to establish us as one of the largest companies on the planet. We will become a very substantial provider of foundry services. I said the number two company in the industry for foundry. Overall major business. We're going to be the unquestioned leader in delivering compute to the planet, including things like AI, graphics, accelerated high-performance computing. We'll be the company that's creating entire categories like autonomous vehicles. Tesla, Intel, unquestioned. So it's going to be a tour in 10 years. Are you going to be here in 10 years? Or are you going to be with those eight grandkids? When we took the job, we said, this is a five-year assignment. It's not that we're done in five years, but we knew it wasn't less than five years. So we'll see where we are at the five-year mark and decide how much longer and how much more energy I have. But right now, we're quite enjoying the journey. All right. Intel CEO Pat Gelsinger, thank you so much for joining us. Fascinating. So much enthusiasm. It's been great to be here. Thank you, Emily.