Intel sought to reestablish its technical bona fides Wednesday, reviving the company’s annual technical conference and promising to work more closely with software and hardware developers as it designs new generations of chips.
“We haven’t done a great job recently. We have to stay connected to you through the evolution of that ecosystem,” new CEO Pat Gelsinger said at the keynote address of the company’s Intel Innovation conference, broadcast online from San Francisco.
“We can, and will, do better,” Gelsinger said.
It’s not just developers. Intel is trying to repair its relationships with computer manufacturers, data center operators and investors after years of setbacks.
A succession of manufacturing failures at Intel’s Hillsboro research factories delayed three generations of new Intel processors. That gave rival firms an opening and they leapfrogged Intel with more advanced chips, costing Intel sales and profits.
Intel responded in January by recruiting Gelsinger to come back to lead the company. Once among Intel’s top engineers, Gelsinger had spent a decade running software maker VMware.
“The geek is back at Intel,” Gelsinger insisted Wednesday. In the minutes before the conference began, Gelsinger, 60, tweeted videos of himself doing pushups and jumping jacks to warm up for his keynote.
Intel is Oregon’s largest corporate employer, with more than 21,000 people working at its Washington County campuses. It is hiring hundreds more workers in preparation for a $3 billion Hillsboro factory expansion that opens early next year.
On Wednesday, Intel outlined a new processor for PCs, which will be available to manufacturers next month. And it unveiled a new data center chip, developed with Google.
Additionally, Gelsinger promised to extend Moore’s Law for another decade. That’s the maxim, coined by Intel co-founder Gordon Moore in 1965, that predicted the number of transistors in computer chips would double at regular intervals -- a year, or, in a later iteration, two. Moore correctly anticipated that would produce exponential growth in computing power even as costs declined.
On Wednesday, Moore himself – now 92, and long retired – joined Gelsinger in a prerecorded video chat. In a voice ragged and soft, Moore recounted the development of Intel’s first general purpose microprocessor five decades ago.
Moore’s Law was an Intel touchstone for decades but went haywire amid the company’s manufacturing travails. Gelsinger said two new innovations to its chip architecture, and new lithography technology, have enabled Intel to resume its rapid pace of technological breakthroughs.
“Taken together,” he said, “Moore’s Law is alive and well.”
Restoring Intel’s engineering edge is central to Gelsinger’s turnaround plan. But it’s a long-term proposition and Wall Street is running out of patience.
Intel’s stock dropped nearly 12% last Friday, shedding $26 billion in market value, after the company warned investors that Gelsinger’s turnaround plan would require tens of billions of dollars in new factory construction and smaller profit margins for the next few years.
At least five investment analysts cut their ratings on Intel’s stock following last week’s announcement. On Tuesday, BMO Capital Markets’ Ambrish Srivastava downgraded his own rating and warned that Intel might have to borrow to keep paying its dividend while the company waits for its turnaround effort to play out.
Intel held an annual developer conference for nearly 20 years until former CEO Brian Krzanich scrapped it in 2017. Reviving the event – which is virtual this year, because of the pandemic – is an element of Gelsinger’s plan to make Intel a more communicative and transparent company.
Those efforts at openness have produced mixed results. While Gelsinger has made headway in the U.S. and Europe, seeking public subsidies for new factories, neither Congress nor any European government has committed yet to providing the billions of dollars Intel seeks.
And while investors appreciate transparency, Intel plainly caught them off guard last week when Gelsinger described the price tag of his comeback plan. Investors hadn’t expected that information until November, and the early unveiling left analysts scrambling to tally up the costs.
On Wednesday, though, Tirias Research analyst Kevin Krewell said Gelsinger was striking the right notes.
“His enthusiasm really does come across at the conference, even across video,” Krewell said.
While Intel is fundamentally a computer hardware company, software had long been key to getting the most from its chips. Krewell said Gelsinger’s time running VMware’s software business gave him a clear understanding of what developers are seeking.
Intel has more resources to throw at software development than smaller rivals like AMD, Krewell said, and he said some of Intel’s announcements Wednesday, including a ready-made data science platform for developers, are exactly what the software community wants.
“He’s actually following, I think, exactly the right playbook here on how to make Intel more software developer friendly,” Krewell said. “And that’s where he can differentiate himself further from the competition.”
-- Mike Rogoway | mrogoway@oregonian.com | Twitter: @rogoway | 503-294-7699