Intel’s board is incompetent and its horrible decisions over the decades are going to push it towards death. The decision to fire Pat Gelsinger, put in charge a CFO + career sales and marketing leader, and cut spending on fabs in favor of a renewed focus on x86 is an example of the incompetence that will end Intel.
Upon closer inspection, these failures are no surprise. 7 of 11 members haveno relevant semiconductor experience .
The story of Intel’s cultural rot goes back to Paul Otellini. Paul and Pat Gelsinger were the front runners for the CEO position. This is the classic leadership choice of business bro versus technologist. The result was that Intel chose its first non-engineer CEO.
This may well be true but it’s also a good example of the innovators paradox. Intel got so fat and happy doing “their kind” of chips that AMD and others had to search for niches to survive. Graphics chips was one of those - a decent market but surely nowhere near what Intel was putting into desktops and laptops and server racks, and suddenly graphics chips exploded as an adjunct to an entirely new field: AI, and competitors came out of nowhere to exploit it.
I find it entirely believable that a non-chip CEO would miss that, but I think it’s also possible that one steeped in the “traditional business” could have as well. Happens all the time. Kodak, Yahoo, Nokia, Blockbuster, Blackberry, Sears - the boneyard is full of them, and there will be more. I’m gonna guess one of the biggest auto manufacturers is going to go toes up before the end of the decade, too. Possibly even Boeing, although the government will keep them afloat because of “military.”
Would it not be fair to expect most Boards and upper management to promote people who “fit in”? That was the case in the places I worked, where I could watch management operate. Trying to disrupt existing management’s world view was the easy way to get a one-way ticket to Minot.
Back in 1969, Lawrence J. Peter created a cultural phenomenon with his brilliant, outrageous, hilarious, and all-too-true treatise on business and life, The Peter Principle—and his words and theories are as true today as they were then. By posing—and answering—the eternal question, “Why do things always go wrong?”
iirc, the “Peter Principle” is that everyone is promoted, eventually, to a level where they are incompetent. So the end state is a company is being run, at every level, by people who are incompetent at their assigned task.
I’m not sure that is entirely right. Jack Welch was not incompetent. I submit he was competent. His value system: enriching himself, at the expense of the sustainability of the company, was self-serving, but not incompetent. His followers, particularly succeeded at Boeing. Phil Condit was replaced by Harry Stonecipher, who came to MDD, from GE, a Welchist. Stonecipher was replaced by Jim McNerney, from GE, anther Welchist. When McNerney took his loot and retired, he was replaced by his personal pick, Dennis Muilenburg, a career Boeing guy. His short tenure ended when he took the fall for 73s falling out of the sky. He was replaced by Dave Calhoun, who was already on the Board. He was probably already on the Board, because he was another Welchist GE alum. The new guy has no apparent Welchist leanings. We will see “in the fullness of time”, if the Board actually was desperate enough to shift off of the Welchist track and pick someone who thinks differently.
During my management consulting days (1967-76) we studied GE management style without reference to the people running the show and it seemed a perfectly good way to run any big, multi division business. The two key ingredients:
Every division must be first or second in its industry. If not, sell it.
Reward divisions coming in below budget and reduce its next year budget accordingly
We did not see or anticipate any unintended consequences. Of course, it’s much easier to judge after the fact. Frederik Bastiat,“That Which Is Seen, and That Which Is Not Seen.” What we did not see was the displacement of engineers by MBAs, a logical consequence of extremely.tight budgets.
My point is that intention does not need to be evil to cause harm.
Intel’s current trouble is not because they are not good at graphics chip, but because they failed in their ‘x86’ franchise. Intel had repeated failures, delays in project execution and missing many technology cycles.
Intel missed mobile, why? Because Intel was focused on speed of the CPU not on power management. Power management, thus heating is key for mobile devices. It doesn’t take a genius to figure that. Yet Intel completely ignored and lost a huge market.
Intl had serious manufacturing challenges, unable to bring new tech on time and started losing badly to TSMC. Mobile success enabled TSMC to invest 10’s of Billion $$$, while Intel was falling behind on the capex.
Intel is not Kodak yet. If they can go the route of NVIDIA and off-load all the chip manufacturing to TSMC and focus on their core chip design, it is a viable company.
But, at this point I am not sure Intel has the leadership, and market permission to do that.
Just to be clear, this is the reason intel lost iPhone contract. Intel insisted on speed of the CPU, and Apple wanted an efficient chip. The biggest problem for mobile devices are battery life. They are not Servers and attached to a power card permanently. Intel engineers, Intel management didn’t get the importance of power efficiency.