At the CES 2021 online tech trade show, Intel unveiled a lineup of products today aimed at making it more competitive against rival Advanced Micro Devices. In the past couple of years, AMD has made historic gains against Intel in both chip design and third-party manufacturing.
Intel has stumbled with its own manufacturing a couple of times, and AMD’s chips are now faster. But Intel CEO Bob Swan has been taking steps to fix problems, and he has acquired companies to make Intel more competitive.
Swan met with a group of journalists and analysts who each asked a question. I got a couple of questions in, and Swan responded with written answers to my questions.
In the interview, Swan acknowledged how tough the competition is. But he believes the opportunity with the growth of AI, the spread of computing everywhere, and the digitization of everything will give Intel plenty of avenues to grow.
Here’s an edited transcript of the conversation.
Bob Swan: It’s a good time to be in semis. The digitization of everything seems to be accelerating. Computing is everywhere. It’s no longer just our PC or our server, but everything seems to need high-performance compute. The PC is essential once again. The dynamics of the market are extremely favorable.
To capitalize on these data-centric transitions, it requires massive transformation for all your clients, and obviously for us. But a massive transformation, so we’re adjusting, adapting, and developing the new technologies that will enable these transformations — like 5G, like AI, like intelligent autonomous edge.
In some ways fortunately and in some ways unfortunately, we’re not the only ones who have noticed this massive opportunity. Competition is intense. They never sleep. That means we have to be on top of our game, which we have every intention to be as we close out last year and enter this year. We’re excited about the competitive landscape. Sometimes I wish it were less intense, but it makes us stronger along the way.
The market overview is relatively attractive. Strategically, what we’ve talked about for the last couple of years in terms of our role in the market is to be the trusted performance leader, that takes a sensational appetite for data and makes that data relevant and actionable by analyzing it, storing it, moving it faster and faster, so that whether it’s a business or a consumer going through their own digital transformation, our technologies are there to make the data that everybody’s getting after increasingly relevant.
We know that for us, to achieve our dreams, it requires us to transform ourselves on three fundamental dimensions. One, as we characterize it, from the CPU to XPU. As the industry evolves, as workloads evolve, having a variety of architectures, enhancing our core CPU but also adding additional architectures, is increasingly important.
Second, from silicon to platforms. Not just the hardware, but how we couple the hardware with software and other technologies to build platforms that can delight our customers.
The third area for us has been a transformation from what we’ve characterized as the traditional IDM (integrated device manufacturer, or a company that designs and manufactures its own chips) to a more modern IDM. This is not to get rid of the IDM. We think it’s a unique advantage of this company. But we know the industry has evolved quite a bit. We know that leveraging design disaggregation, packaging technologies, that the IDM of the future is going to be different from the IDM of the past.
To bring it all together, our intensity and focus on execution, tightly coupled with re-energizing the culture of the company, so we’re moving in a much more nimble way as we see opportunities to grow and innovate, as opposed to protecting what we built in the past.
That’s a bit about what we’ve been up to. I’d start with a momentum entry into the year. A year ago I flagged the three fundamental areas that I thought were critical for us to improve execution. One was capacity, to ensure we have the capacity to meet the demands of our customer base. The second was, once and for all, the ramp to 10 nanometers (nm, the width between circuits in Intel’s chips). The third was to increase the rate of innovation in this multiplicity of architectures.
As we enter 2021, we’ve built some good momentum. Obviously, we have a lot more to do, but we’ve added more than $20 billion in revenue over the last five years we’ve been chasing it. Chasing it is disruptive. We exit the year having essentially doubled our capacity over the course of the last couple of years. We’re going into 2021 with a lot more capacity in place, both for 14nm and for 10nm.
The second area is 10nm itself. A year ago we finally launched it. During the course of the year, going to second-generation and super-thin, the biggest intra-node enhancement in transistor density ever for us, was a big introduction. Coupling that with our packaging technologies, bringing them to life, was an important aspect of execution on 10nm.
Third is products, just the rate of innovation. During the course of the year, whether it was Lakefield, 5G SOCs, FPGAs, discrete graphics, OneAPI, the amount of products we launched during the course of the year built good momentum. Maybe most important, the Tiger Lake launch that ramped on the new node faster than we anticipated. It grew better. The adoption in designs by our customers was more than we expected. We enter the year with that momentum behind us and the opportunity to scale tech as we come into the year.
The last thing I’d say about the execution as we exit the year — we launched Ice Lake server products. Qualified it at the end of the year, started production of the third-generation Xeon scalable processors, and ramped in the first quarter. As you know, that was an important launch, completing the portfolio of products we have from Lakefield at the beginning of the year to the server at the end of the year. It’s good to have that launch and ramping production as we begin this year.
That’s a bit about, strategically, where we’re headed, the momentum we have entering the year. Quickly on the things you’re going to hear about at the press conference on January 11, I mentioned the Ice Lake Xeon scalable. Next, we have the client business. We’re going to show more advances and industry firsts for virtually every type of experience in every segment of the PC market during the year. We’ll have four families of processors from entry to premium, a good lineup of products during the course of the year.
In that lineup, we’ll include some real desktop innovation. We’ll showcase two new technologies coming to market in 2021, including the 11th-generation Core desktop processor, the Rocket Lake. Our next-generation processors, codenamed Other Lake, which from our vantage point represent a significant breakthrough in the x86 architecture. It’s our most power-scalable system on chip for both desktop and mobile processors. We’re excited about the innovation on the desktop. Between server, client, mobile, and desktop, it’s an exciting lineup as we enter the year.
The second thing we talked about is silicon to platforms. We’ll also enhance our platform offering in the year. We’ll launch our first-ever 11th-generation Core Chromebooks, based on the Evo platform, and we’ll debut the Intel Evo Vpro platform as well, which is going to feature the highest-performance business PC platform with the most comprehensive hardware-based security.
We’re very excited about going beyond the silicon to platforms, not just for Chromebooks, but also on how Mobileye is expanding its offering as well. We’ll talk about expanding autonomous vehicle efforts globally, with four new testing locations in Detroit, Tokyo, Shanghai, and Paris in the first part of 2021. We’re basically demonstrating the ability to do that, to have that kind of rapid global deployment by leveraging the proprietary crowdsourced mapping technology called REM, Road Experience Management. Very exciting announcements coming from the Mobileye team on January 11 as well.
The demand for compute is pervasive. It’s not just at the PC or the server, but at the network, at the edge, in the car, in the retail store, in the industrial environment. That incredible demand for compute on billions of devices is a rich opportunity for us to expand the role that we play in our customers’ success. We feel like we have good momentum in 2020 entering the year, and we’re excited to demonstrate a bunch of new innovations.
VentureBeat: Given the state of the country, how worried are you about business continuity?
Swan: This has been a disruptive time for our country. That said, I’m encouraged … and frankly proud … of how our Intel team has operated and delivered for customers in this highly dynamic environment. As we welcome and prepare to work constructively with the incoming administration, we remain very focused on delivering the Intel innovation that supports our customers’ growth and enriches the lives of everyone on earth.
VentureBeat: Apple has shown it can move Arm beyond mobile, and server startups are creating Arm chips. Where does Intel stand on that? Given Arm’s new ownership, would RISC-V be attractive?
Swan: Computing is pervasive and the digitization of everything is only accelerating. That creates massive opportunity and more architectures are going to be required to meet the evolving workloads of today and the future. That’s why we’ve been evolving from a CPU-centric company to an xPU-centric company with a diverse set of big core and small core CPUs (building on the strength of our x86-based ecosystem), programmable solutions, GPUs, and purpose-built solutions. The unrelenting demand for compute performance and new experiences like AI demand more and more of what Intel is best at delivering. We feel great about the diversity, customization, and scale that we can offer customers today and going forward.
Question: Can you give us the latest and greatest on 10-nanometer production?
Swan: Maybe three components. First, the capacity. As you know, we have three high-volume fabs ramping it out. The capacity for this year and going on a couple of years, we have the capacity in place, first and foremost. Second, in terms of yields, unit cost, driven obviously by wafer cost, front end and back end yields have been progressing very well, almost quarter on quarter over the course of 2020 and then ramping faster in the fourth quarter of the year. Unit cost, driven by those factors, continues to come down. All those gross margins get better as we ramp it.
I won’t repeat myself, but it’s not just the process technology, but what products you’re putting on it. We’ve ramped everything during the course of last year, and the Ice Lake product was the last one to ramp. In 2020 — it might have been Architecture Day, or maybe it was in our third-quarter call, but the volume on 10nm this year was 30% higher than we anticipated at the beginning of the year. Tiger Lake was a big driver for that, but we felt great about the design wins and our ability to ramp across all three fabs as we exited the year.
Question: Right now the industry is going through a lot of shortages. One of the key benefits of Intel is that it manages so many parts of the supply chain as an IDM, but you also use a lot of external suppliers for some components. Due to COVID and for political reasons, third-party supply could present some challenges. How do you plan to move forward in a future where you build more of your product lines with a mix of third-party derivatives, with the supply and economics challenges that brings? And is there a scope for Intel to enable a licensed derivative of another founder’s product or technology, to use someone else’s process technology in your own factories?
Swan: On the first point, access to supply, you may remember a year ago that collectively we all looked into 2020 thinking that PC might be plus one or minus one. It feels like that was about a century ago, but the demand profile wasn’t that great. All of a sudden COVID hit. The immediate reaction was, “Oh my God, the second half is going to fall off like a rock.” Lo and behold, the second half grew like crazy, and not only grew, but the mix of the products changed dramatically as well. The whole ecosystem was scrambling to keep pace not just with the increased demand, but the changing mix of desktop and mobile devices. We all had to struggle with that.
This is one of the massive advantages of IDM. We’re still dependent on other commodities, but being able to control your own destiny and be the allocator, as opposed to the allocatee, is a big deal. When we think about the challenges of supply constraints in general, but even as we think about design disaggregation and where we may leverage other third-party foundry capacity, in any discussions along those lines you can imagine that we’re trying to — even if we don’t make it, how do we preserve the advantages of IDM?
More simply put, how do we leverage our size and scale with the entire supply chain to get preferential treatment and be first in line when allocation decisions are being made? We have a lot of practice in doing that with commodities, and now, as we think and evaluate whether to expand in a disaggregated world, with more utilization of third-party foundry, maintaining and securing the advantages of IDM is important to us in the consideration set.
The second part of your question, is there a time in the future that we would use somebody else’s process technology inside our manufacturing environment? I would just say, possibly. Strategically, for us, we know that the ecosystem has evolved quite a bit over the last 10 years. If there are ways or opportunities for us to leverage some of the advancements of the industry in new and different ways, I think it’s going to be front and center for us to capitalize on industry innovations. We don’t have to do all the innovation ourselves.
That means we may outsource more. We may use more available third-party IP. We may make stuff for others, not just be a foundry ourselves. Is there a scenario where we could be using someone else’s process technology in our fabs? That’s possible. The key is, the industry is evolving. How do we leverage the innovation not just within our four walls, but the innovation in the industry as a whole, and be very flexible and adaptable to take advantage of that along the way?
Question: You alluded to competition earlier, and I wanted to focus on that for a second in the core space, the PC space. Right now if I’m a PC vendor, I have a choice of buying from Intel, AMD, or hypothetically at least roll my own ARM processor, or consider buying one from a third party. Right now, what is the competitive advantage of the Intel Core processor?
Swan: This goes back to my intro comments. In the good old days, there wasn’t that much competition, but now competition makes us stronger, makes us move faster. It starts with the rate of innovation, and then broad-based product offering. Having products from intro to premium, having products for business, for consumer, for notebook, for desktop, and then that annual, predictable cadence of leadership products. That’s what we’ve been known for over time.
Back to the IDM, the knowledge in the customer base that we’re not going to constrain your growth. I’m going to have too much capacity before I’ll have not enough. I don’t have to wait for someone else to allocate to me. I’ll be the allocator. You can count on us to have inventory on hand to meet your spikes in demand.
The third factor is knowledge, our ability to work with engineering teams to almost co-optimize the products that they’re working on. That technology dialogue that we have with the OEMs in particular. We’re part of their design team, not just an order-taker for their product needs.
Question: Could you provide an update on the progress of higher-end Xe GPU variants? How is that going, and how do you see it will compete in the market for various GPUs, whether it’s datacenter or gaming?
Swan: We’ve had a couple of gos at this, as you know. When we started over a couple of years ago, rather than starting from scratch like we did with Larrabee, the idea was, how do we start with integrated graphics and enhance integrated graphics, but do it in a way that might migrate from integrated to discrete? It’s much easier to leverage the same designs.
You saw last year the progress we made on integrated graphics, and then the launch of DG1. We’re very excited about it. I don’t know if we’ve given a date for DG2, and when we launch to datacenter, but clearly our intentions in this CPU to XPU to world, where there’s multiple architectures required, whether it’s gaming or in the datacenter — we’re going to invest to extend our graphics capabilities, from entry level all the way up the stack over time. We expect to have real innovation rolling out during the course of the next couple years.
Question: Given Intel’s position in the market and the outlook for 2021, where we currently stand, what matters more to Intel: the financial side or the technical side?
Swan: Technical. As you imagine, though, they’re not decoupled. Rate of innovation, rate of products, capacity in place, investing in technology development, one drives the other. We know that whether it’s capital, whether it’s continuing to increase R&D and compress the cycles and when we get the products out, that’s what drives our financials. It’s very tightly correlated.
In the scheme of things, it’s relatively easy to save money. But we can’t save enough money to offset what incremental demand and volume does for us across the spectrum of both architectures and where compute happens. The simple answer is technology. This is all about innovation relative to the other guys. If we can get paid for that, if we don’t have to share all the profits with the other guys in the ecosystem, that gives us the capacity and the fuel to in turn drive more technology and drive more innovation.
Question: Intel had a recent exodus of prominent key technical personnel, such as Murthy Renduchintala and Jim Keller. Where does Intel see the future’s technical expertise coming from?
Swan: We have 70,000 engineers with technical backgrounds in the company. Our mode for the longest time has been bringing them out of college campuses as input and then growing them in our system. But we also realize, particularly as we think about more architectures and how much the ecosystem has evolved for the last few years, we’ve been trying to both grow from within and bring outsiders in, trying to get one plus one to equal five.
Jim left for personal reasons. Murthy is a wonderful executive, but in so many ways it was, how do we get five engineers in a room when we’re making big decisions, not just one? The realization that we could get more diverse points of view, more technologists in the room when we’re making big-time decisions — we have Ann Kelleher on the TD front. We have Keyvan Esfarjani, who ran manufacturing and ops for memory, taking Ann’s spot. We have Raja [Koduri] in architecture and software. We have Josh [Walden] in the Jim Keller role now as we look to fill that role. We have Randhir Thakur from Applied Materials on the global supply chain. Having five senior, brilliant technologists in the room gives us more diversity of thought about the rate of innovation, the different ideas.
There’s a whole group of core hardware and software engineers that work for them. I’m convinced we have the best talent by a long shot in the world. Our expectations are to continue to have the best talent. We’ll get it the same ways we have recently, which is from the campuses and from the competition.
It’s been a tough couple of years. We’re coming out of 2020. Our guidance says it will be the best year in the company’s history, coming out of 2020. It’s the fifth “best year” in a row. It’s all about innovation and execution. We’re getting our mojo back as we exit the year. We’re excited about what we’ll be able to do for our customers in 2021. I look forward to continuing the dialogue with you all.
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