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Intel CEO Pat Gelsinger joins Yahoo Finance's All Markets Summit 2021

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Intel CEO Pat Gelsinger's full interview with Yahoo Finance anchor & Editor-at-Large Brian Sozzi. Pat discusses the impact of the worldwide chip shortage on Intel's business as well as how he is transforming the company into a tech industry leader.

Video Transcript

BRIAN SOZZI: Pat Gelsinger is the CEO of Intel. He's a tech industry pioneer and played a key role in developing several groundbreaking technologies, such as USB, Wi-Fi, and Intel's line of leading computer chips. Gelsinger was also Intel's first chief technology officer and the brains behind its legendary 486 processor. He rejoined Intel as CEO in 2021 after a successful run as the CEO of VMware.

Pat, always good to see you here. So you are-- you're eight months officially into the top job at Intel. Now that you can look back a little bit, what are some of the, I guess, the three biggest changes you've made to the company?

PAT GELSINGER: Well, you know, first thing was, we rolled out a new strategy, right? We said very clearly, you know, without ambiguity, we are going to be an IBM, and we're going to be an IBM 2.0, as we said. And we're going to double down on manufacturing. We're going to become a foundry for the industry. And we are just on it to bring back our process and unquestioned process package leadership, right?

So I'll say, number one, we, you know-- semiconductors are important to the world. We are going to be the biggest, baddest semiconductor supplier on the planet. You know, secondly, we said, look, we have to rebuild our execution engine. And to do that, I've laid out a new organization. I've brought in new leaders and said here are the six business units that we are going to be focused on. Here's how we're going to align the entire corporate structure against that.

We have leaders in each of those roles who I think are, you know, not only super qualified for the roles that I've put them into, but maybe they're the best humans on the planet for the assignment that we put. I really think that we're building out the dream team for Intel. So, you know, a team, a clear organization to go execute on that assignment.

And then finally, we have to bring back the culture. I've called it the Grovian disciplines. We have to rebuild this execution as detailed, data driven, engineering driven, paranoia of the competition, commitment to our customers culture. And so we're underway on doing that. And you know, if I would have sat at the beginning of the year and said, hey, this is what I got to get done this year, you know, I think most people would have said, OK, that sounds about right.

You know, a clear strategy, you know, and as Colin said, get the bus pointed in the right direction. Get the right seats on the bus, the right butts in the right seats on the bus, you know, and then the right culture, camaraderie, commitment to the future. I think we're on track to what I said we'd get done and maybe a bit ahead of schedule.

BRIAN SOZZI: It sounds like a turnaround is brewing at Intel, Pat. Why is Intel in a turnaround? I think Intel, I think leadership in what it does. How did the company get here?

PAT GELSINGER: Yeah, I think over the decade, you know, some bad decisions, a lack of, I'll say, you know, manic technology focus on the part of the company. You know, a business leadership, not that they were bad, but they were business leaders. They weren't technology leaders. You know, some stumbles around the process technology roadmap. A lack of clear leadership in the products and, you know, underinvestment in some of the key areas, like our manufacturing and capacity.

So all of these sort of accumulated together to get the company to a position that it wasn't a leader. And, you know, it didn't have that, you know, that sense of iconic leadership, the company that puts Silicon into Silicon Valley. And in the period where Silicon is becoming more important than ever to the planet, you know, it's time for us to not only turn around, but step up and to unquestionably lead.

BRIAN SOZZI: Is part of the secret to this turnaround, Pat, you? You started at the company at 18. How big an advantage is it that you have that insider knowledge of when Intel was great?

PAT GELSINGER: Yeah, and I'd say, you know, I think there's people that could do this job beside me, but I think I'm qualified, right? And the 30 years that I had with the company, you know, when I say Grovian, you know, half the company knows what I mean. You know, there's so much of that depth.

And, you know, I grew up at the feet of Noyce and Moore. You know, I just did an interview of Gordon Moore, maybe the last interview he does while he's on this Earth. You know, and I can with extraordinary depth of experience, passions, you know, these sentiments, these understandings of, you know, some of the history of the company. And that's a big leg up.

You know, I'd also say the clear support of the board of directors. And, you know, I was asked, well, how did you make some of these decisions so quickly? And I says, well, I started to make them in January when I was interviewing with the board, right? I had a clear thesis for what I wanted to do. And part of the calling of me was the unanimous support of the board for me and for the vision that we were laying out.

So, you know, that strength of conviction and then the ability, then, to sort of bridge the old, but also the experiences of the last 11 years, being outside of the company, new cultural understandings, industry, software understandings, and combining those together. You know, this is a good period and one that I'm extraordinarily motivated as I come back to what I've called is my dream job.

BRIAN SOZZI: Part of that strategy, Pat, is what you have called bring Intel back to unquestioned leadership by 2025. What does Intel look like by a 2025?

PAT GELSINGER: Well, you know, and everything is building from today to there. So it isn't like we're waiting till 2025, and voila, right? We are making progress each day along it. And, you know, we'll be rolling out our Alder Lake products. You know, hey, that's the best desktop product. By 2025, you know, we are talking about inching ahead of the competition, but having miles between us and the competition. You know, it's about our process technologies, where we're sort of clawing our way back and building this five technology nodes in four years.

You know, an extraordinary cadence of process technology where everyone in the world says in 2025, oh, whose transistors are the best in the world? Intel's by far. You know, the manufacturing capacity that we'll have rolled out by then, you know, the leadership that we'll have reestablished in the data center, and, you know, these four new business areas that I've talked about rolling out.

Leadership and accelerated graphics and GPUs, high performance computing, unquestioned leadership in the transformation of the network and the edge, unquestioned broad deployment of autonomous vehicles and leading the establishment of that category, and being one of the largest foundries in the world for the industry writ large. And by 2025, all of those businesses are going to be at scale, measured in billions of revenue and unquestioned leadership in their respective industry category as well. You know, that's a pretty powerful picture of where we're going to be by 2025.

BRIAN SOZZI: I was thinking back, Pat, when you first started and we spoke early on, one of your first calls, among many, I'm sure, was to Apple and CEO Tim Cook and trying to get, you know, I guess some of that business back. Now that you've settled into the role here, what's the relationship with Apple like?

PAT GELSINGER: Apple is a great company. You know, we certainly respect their innovations. And, you know, we do a number of products with them today. Obviously, they've moved the core of their product line to their own M1 and its derivative family because they thought they could do a better chip. And they've done a good job with that. My job is to win them back and to deliver products that are better than they can do themselves.

We also want to win them to more of our foundry offerings over time. And that just makes sense, right? Everybody wants to have multiple suppliers. And if we have the best process technology in the industry, of course, they'll come our way. But, you know, we view these decisions are, you know, long decisions. You know, they don't flip architectures arbitrarily. Nobody does. Those should be contemplated very carefully.

So this is many years in the future. And between now and then, we are reviving the PC ecosystem. We're building out our foundry business. And we're aggressively pursuing unquestioned product leadership that our customers can build the best computing experiences of any available in the industry. And if we're doing that, we're just going to do fine over time.

BRIAN SOZZI: Do you think it takes a couple of years to get a good chunk of Apple business back? And what could you get back?

PAT GELSINGER: Well, you know, as I said, you know, we would hope to have them using more of our products over time, more of our technologies in different spaces, hoping to use our foundry at different points of time. But these are long-term decisions, Brian. If they started the design tomorrow, if somebody came to us and said, hey, we want to go do a major foundry offering with you today, it's not till '25 that that hits any volume. A couple of years to make the decision, a couple of years to do the design. You know, these are long-term decisions.

So, you know, we're very, very, I think, pragmatic about what that might take, but we're also very clear-minded that if we're doing the best products, the best process technology, the best packaging technology that's available anywhere in the industry, they and others will make very pragmatic choices of picking the best set of things they can do to build the best products for their customers.

BRIAN SOZZI: How long does this chip supply shortage, which you mentioned is a crisis, how long would that continue?

PAT GELSINGER: You know, with or without the chip, Zack, we think we still have some rough road in front of us. And I've said, you know, we believe the chip shortage is at its worst right now. It will get incrementally better as we go through '22. But we expect the shortage to persist into '23. It just takes that long to build capacity. Now, you know, if the Chips Act doesn't pass, if the European Act doesn't pass, we think the slope of the recovery dampens.

You know, if it passes, I'm announcing our next fab, right? I mean, I am-- you know, shovels go into ground more rapidly if this gets put into place. So let's get it done at that level so that we can increase the slope of the recovery more rapidly. But it's also, as Winston Churchill said, never waste a good crisis. You know, if we come out of this and we haven't created the environment for a more geographically balanced supply chain and we become more dependent on Asia, right, you know, how terrible, right, you know, that we haven't really fixed the problem.

And as we well know, some of these areas in the world are very geopolitically unstable. You know, let's build back better, as the Biden campaign included in its political process. Build back in the way that we want these to occur. The Chips Act is critical. We want these fabs on American and European soil. And we're ready to step up. Build bigger and faster, right, with the investments of the government.

BRIAN SOZZI: Pat, if we're sitting here five years from now having this conversation, hopefully it's in a studio. I'm not sitting in my home studio. Let's just call it that. As you can see, my [INAUDIBLE] behind me. But what--

PAT GELSINGER: Hey, I'll take a cappuccino there, if you don't mind [INAUDIBLE].

BRIAN SOZZI: Yeah, I'll-- all right, I could duly get you one very quickly. But what do you think the long-term impact of the pandemic is going to be on society and even the tech sector?

PAT GELSINGER: So, you know, unquestionably, the tech sector has seen a large accelerant from COVID, right? And we've seen part of the reason we have the semiconductor shortage is demand was increasing for semiconductors five-ish percent. COVID moved it to 20%. Wow, an enormous acceleration. It disrupted supply chains. They went negative for a year, right?

And now we're building up. Semiconductor supply this year will increase 15%, but an extraordinary acceleration in technology. And we all know that, right? You know, our kids are going to school online. You know, we're all working online more. We're educating online. We're seeing more cloud services, you know, Grubhubs and everything. You know, deliveries are-- you know, every aspect of our life has become more digital, and it's accelerating.

And it isn't just some of those, I'll say, consumerist things, but how do you think mRNA happened? I mean, it took us 35 years to create an influenza vaccine, right? We created mRNA-based COVID vaccines in under a year. This is because of computing technology, because of digitization of health care and medical research as well. So it's this extraordinary accelerant of the digitization of humanity. And as we think about that, when we're sitting here five years from now, there's going to be these things that we would have never dreamed of before.

You know, if you say over the last 20 years, my iPhone and my social experiences, et cetera, we're going to have many of those and become-- hey, you know, oh, yeah, I go to the office every-- once a month. You know, we go in for our team sprints and things. But otherwise, I work where I want to work because it's so productive, so effective, such an improvement in the quality of life. We don't think we ever go back, right, to saying we all show up.

We all burn hours a day in commute traffic. You know, that's the exception, not the rule. You know, we're going to see an explosion in how we educate online, how we provide care online. You know, these social systems are going to settle into how our lives, as we mix both physical as well as virtual-- I call it the phygital, right, experiences of the future. So we don't think there's a going back. It's just a huge accelerant in the digitization of humanity.

BRIAN SOZZI: Pat Gelsinger, always good to see you. Thanks for carving out some time for us. And maybe we'll actually be able to share that espresso sometime in person soon.

PAT GELSINGER: I look forward to it, Sozz. Thank you so much.

BRIAN SOZZI: Thanks, Pat. Appreciate it.