12,000 chopped: Intel finds its inner paranoid

The ghost of Grove that drove CEO Krzanich


Only the Paranoid Survive, or so former Intel chief executive Andy Grove once wrote. And it seems that, faced with the demise of the PC market, Intel CEO Brian Krzanich has found his inner Andy Grove.

Grove, who died last month aged 79, left both an awesome business record and some great quotes behind him. While Intel co-founder Robert Noyce was credited by Jack Kilby as the honorary co-recipient of a Nobel Prize for the microprocessor technology, and fellow co-founder Gordon Moore pioneered the technology and articulated Moore’s Law, it was Grove, an escapee from the 1956 Hungarian revolution and the company’s first employee, who built Intel.

Grove never took success for granted. “How can you motivate yourself to continue to follow a leader when he appears to be going around in circles?” he asked. “Businesses fail either because they leave their customers or their customers leave them.” And, “In technology, whatever can be done will be done.”

It was Grove who turned Intel into the giant it is, or was. Or is. Intel started life in DRAM chips but, confronted by a wave of competition from Japanese makers in the 1970s, he switched Intel to microprocessors. During his tenure as CEO, 1987 to 1998, Intel moved from the 5MHz 8088 that powered the IBM PC to the Pentium II that introduced the Celeron and Xeon sub-brands Intel still uses today. x86 processors paved the way for mass-market Windows and Microsoft’s success and thence the mighty Wintel alliance that dominated computing of the late 1980s and 1990s PC explosion.

Not long into his tenure, in 1989, Grove greenlighted Intel’s largest chip plant outside the US homeland, in Leixlip, Ireland. It has spent $7bn on Leixlip. A wave of US tech firms have followed his lead to manufacturing in Ireland, although not all have remained (Dell 1991 – 2009), and some have headed to cheaper destinations.

Krzanich, CEO since 2013 and COO since 2012 under predecessor Paul Otellini, now seems to have awoken in the last month to something else Grove wrote, that “[t]he strategic inflection point is the time to wake up and listen.” What Krzanich is hearing is the collapse of the PC market.

By cutting about 12,000 jobs, 11 per cent of his workforce, and taking a $1.2bn charge against earnings this quarter, Krzanich is cauterizing the PC wound and moving on. Depending on whom you believe, IDC or Gartner, PC sales in the first quarter fell either 9.6 per cent or 11.5 per cent as consumers found no compelling reasons to upgrade. I personally found Windows 10 worked well on my five-year-old main machine, and after buying a $300, 900g (2-pound) netbook for the road last Christmas I’m good.

As Microsoft takes more of the client load onto its cloud, forced obsolescence is becoming a thing of the past, and low-end sales are disappearing. Krzanich said in a conference call that 2-in-1s (which also act as tablets) and game machines are still growing, and set-top boxes are a promising niche.

CFO Stacy Smith is walking the plank into sales for not anticipating the market shift. Newly-hired Murphy Renduchintala, late of Qualcomm, is re-evaluating the product roadmap. The change, in short, has just begun.

WWAD? What Would Andy Do?

“Mark Twain hit it on the head when he said ‘Put all your eggs in one basket and watch that basket'," Grove wrote. Intel is a chip company and Intel will remain a chip company. Krzanich is not listening to those who say Intel must separate its chip design business from its manufacturing plants, as nearly all competitors have done. He’s looking for new things chips might do.

Thus, the Internet of Things.

I first wrote about this in 2003, calling it “Always On” technology. Chips and motes, woven into common objects, turn wireless networks into a platform through which everything becomes computer-controlled. The sprinkler goes on when the grass is dry. The refrigerator knows when the yoghurt goes bad. You may never lose your keys and, more importantly, your doctor can know about your coming heart attack before you do, and send the ambulance automatically.

Already, this technology is making jet travel safer, it’s transforming the auto industry, and it is further automating manufacturing. The question, for Intel, is how this Internet of Things can become an Internet of Systems, and what kinds of user interfaces will allow people to make use of this capability in their daily lives.

It looks from here like a software question, not a hardware question.

“When a strategic inflection point sweeps through the industry, the more successful a participant was in the old industry structure, the more threatened it is by change and the more reluctant it is to adapt to it.” That’s Andy Grove again. Intel has already begun pounding the table for IoT in manufacturing, retail, buildings, transportation and other verticals, but so far it’s all marketing, a spreading of Fear, Uncertainty and Doubt rather than an actual delivery of solutions.

Everyone who makes things, from toasters to rocket launchers, expects to control those things itself, in a proprietary way. Herding these cats won’t be easy. It will take time. Is it about software, marketing, or diplomacy? No one knows. While Intel works to figure that out, it will be eating its seed corn, tossing what no longer works on the fire and working to maintain the 24 cent/share quarterly dividend, which now yields 3.2 per cent. It will be paying shareholders to stay with it as it struggles to go from the failing industry into the unknown, and clear the inflection point.

That’s a big ask. Intel shares lost 1.6 per cent of its value in overnight trading, and the game has barely begun. But at least, Krzanich can comfort himself with knowing, the game is at last afoot, and Intel is committed to it. ®


Other stories you might like

  • Intel delivers first discrete Arc desktop GPUs ... in China
    Why not just ship it in Narnia and call it a win?

    Updated Intel has said its first discrete Arc desktop GPUs will, as planned, go on sale this month. But only in China.

    The x86 giant's foray into discrete graphics processors has been difficult. Intel has baked 2D and 3D acceleration into its chipsets for years but watched as AMD and Nvidia swept the market with more powerful discrete GPU cards.

    Intel announced it would offer discrete GPUs of its own in 2018 and promised shipments would start in 2020. But it was not until 2021 that Intel launched the Arc brand for its GPU efforts and promised discrete graphics silicon for desktops and laptops would appear in Q1 2022.

    Continue reading
  • Lenovo reveals small but mighty desktop workstation
    ThinkStation P360 Ultra packs latest Intel Core processor, Nvidia RTX A5000 GPU, support for eight monitors

    Lenovo has unveiled a small desktop workstation in a new physical format that's smaller than previous compact designs, but which it claims still has the type of performance professional users require.

    Available from the end of this month, the ThinkStation P360 Ultra comes in a chassis that is less than 4 liters in total volume, but packs in 12th Gen Intel Core processors – that's the latest Alder Lake generation with up to 16 cores, but not the Xeon chips that we would expect to see in a workstation – and an Nvidia RTX A5000 GPU.

    Other specifications include up to 128GB of DDR5 memory, two PCIe 4.0 slots, up to 8TB of storage using plug-in M.2 cards, plus dual Ethernet and Thunderbolt 4 ports, and support for up to eight displays, the latter of which will please many professional users. Pricing is expected to start at $1,299 in the US.

    Continue reading
  • Intel is running rings around AMD and Arm at the edge
    What will it take to loosen the x86 giant's edge stranglehold?

    Analysis Supermicro launched a wave of edge appliances using Intel's newly refreshed Xeon-D processors last week. The launch itself was nothing to write home about, but a thought occurred: with all the hype surrounding the outer reaches of computing that we call the edge, you'd think there would be more competition from chipmakers in this arena.

    So where are all the AMD and Arm-based edge appliances?

    A glance through the catalogs of the major OEMs – Dell, HPE, Lenovo, Inspur, Supermicro – returned plenty of results for AMD servers, but few, if any, validated for edge deployments. In fact, Supermicro was the only one of the five vendors that even offered an AMD-based edge appliance – which used an ageing Epyc processor. Hardly a great showing from AMD. Meanwhile, just one appliance from Inspur used an Arm-based chip from Nvidia.

    Continue reading
  • Intel details advances to make upcoming chips faster, less costly
    X86 giant says it’s on track to regaining manufacturing leadership after years of missteps

    By now, you likely know the story: Intel made major manufacturing missteps over the past several years, giving rivals like AMD a major advantage, and now the x86 giant is in the midst of an ambitious five-year plan to regain its chip-making mojo.

    This week, Intel is expected to detail just how it's going to make chips in the near future that are faster, less costly and more reliable from a manufacturing standpoint at the 2022 IEEE Symposium on VLSI Technology and Circuits, which begins on Monday. The Register and other media outlets were given a sneak peek in a briefing last week.

    The details surround Intel 4, the manufacturing node previously known as the chipmaker's 7nm process. Intel plans to use the node for products entering the market next year, which includes the compute tiles for the Meteor Lake CPUs for PCs and the Granite Rapids server chips.

    Continue reading
  • Intel freezes hiring for PC chip team, cites 'macroeconomic uncertainty'
    Inflation, Apple M2, PC market shrink: Could the timing have been worse?

    Intel's PC chip division is the latest team caught in the current tide of economic uncertainty, as the company freezes hiring in the group. 

    In an internal memo obtained by Reuters, Intel told employees all hiring and job requisitions in the client computing group were on hold for at least two weeks. During that time, the chipmaker will reportedly be reevaluating its priorities with "increased focus and prioritization in our spending [to] help us weather macroeconomic uncertainty," Intel said. 

    The client computing group, which designs end-user hardware, is Intel's largest by sales, having generated $9.3 billion of the $18.4 billion Intel made last quarter. Despite its place at the top, the CCG's Q1 takings were still down 13 percent compared to the same time in 2021. It was also the only Intel division to lose money compared to Q1 2021, another potential reason for the hiring freeze in the sector. 

    Continue reading
  • AMD to end Threadripper Pro 5000 drought for non-Lenovo PCs
    As the House of Zen kills off consumer-friendly non-Pro TR chips

    A drought of AMD's latest Threadripper workstation processors is finally coming to an end for PC makers who faced shortages earlier this year all while Hong Kong giant Lenovo enjoyed an exclusive supply of the chips.

    AMD announced on Monday it will expand availability of its Ryzen Threadripper Pro 5000 CPUs to "leading" system integrators in July and to DIY builders through retailers later this year. This announcement came nearly two weeks after Dell announced it would release a workstation with Threadripper Pro 5000 in the summer.

    The coming wave of Threadripper Pro 5000 workstations will mark an end to the exclusivity window Lenovo had with the high-performance chips since they launched in April.

    Continue reading
  • DRAM prices to drop 3-8% due to Ukraine war, inflation
    Wait, we’ll explain

    As the world continues to grapple with unrelenting inflation for many products and services, the trend of rising prices is expected to have the opposite impact on memory chips for PCs, servers, smartphones, graphics processors, and other devices.

    Taiwanese research firm TrendForce said Monday that DRAM pricing for commercial buyers is forecast to drop around three to eight percent across those markets in the third quarter compared to the previous three months. Even prices for DDR5 modules in the PC market could drop as much as five percent from July to September.

    This could result in DRAM buyers, such as system vendors and distributors, reducing prices for end users if they hope to stimulate demand in markets like PC and smartphones where sales have waned. We suppose they could try to profit on the decreased memory prices, but with many people tightening their budgets, we hope this won't be the case.

    Continue reading

Biting the hand that feeds IT © 1998–2022