03 May 2021

Bloomberg: “How Intel Missed the Mobile Revolution and Fell Behind”

Ultimately, according to several people with knowledge of Intel’s strategy and operations, the company was never willing to divert its production and design resources away from PC and server chips, and its mobile efforts suffered as a result. Intel not only forfeited billions of dollars in revenue, but it also gave its competitors an opening to gain the manufacturing expertise that comes from making chips at such high volume and to exacting specifications. There are far more mobile phones than PCs and servers in the world, and the chips that run them need to be energy efficient to preserve battery life. Landing Apple as a customer became such a driver for TSMC, says Risto Pahukka, president of VLSI Research Inc. The combination turned out to be very fruitful and is staying that way.

Over his five-year tenure, Krzanich reversed Grove’s policy of embracing Cassandras. Instead he publicly humiliated executives with whom he disagreed, ignoring warnings that Intel was falling behind in its ability to manufacture key products. Brian did not create an environment where people could bring him problems that could be worked on, one former executive says. Limiting the truth is death for a complex company like Intel.

In the review meetings that his predecessors had used as forums for debate, Krzanich answered emails, shopped online, or left to make phone calls, say people who worked for him. Colleagues say this was his way of showing those presenting that he wasn’t interested, had made up his mind already, or didn’t value what they were saying. When he did participate it was often to sneer at presenters or verbally abuse them, sometimes telling experts they had no idea what they were talking about, according to a dozen sources. Krzanich did not respond to repeated requests for comment.

Ian King & Tom Giles

Far from surprising: ignoring issues and delaying decisions does not magically make them disappear. When top management behaves this way, the entire company struggles.

Intel's Bet on American Manufacturing illustration
Illustration: Ori Toor for Bloomberg Businessweek

It remains to be seen if Intel can get back into the game under new leadership. The new CEO Pat Gelsinger plans to expand manufacturing in the US and Europe – even discussing subsidies for an European chip plant. Many people would feel more comfortable with a chip supply less concentrated in and around China – and if we play our cards correctly, maybe Romania could be one of the places to manufacture chips in the EU – but I doubt Intel can move fast enough to undo the damage and compete with Apple and AMD. After all, it takes time to build these new foundries, to train workers and create a supply chain.

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