Intel CEO Bob Swan said the evolution of the semiconductor giant's culture will be a significant factor in the company's success over the next decade as it works to improve the cadence of its products and restore CPU supplies to a normal level.
"Our cultural evolution will be a significant focus for me and the Intel leadership team in 2020," Swan said in his annual letter to customers, partners, stockholders and employees. "Our success evolving our culture will determine how we perform over the next decade and how we fulfill our purpose to create world-changing technology that enriches lives."
Swan's letter was released Tuesday in the company's annual report as the Santa Clara, Calif.-based company and countless other companies attempt to weather the unprecedented changes to the market brought about by the COVID-19 coronavirus pandemic and international efforts to contain it. It has been a little more than a year since Swan was named Intel's permanent CEO, a role he took after serving as the company's top leader on an interim basis following the unexpected ouster of former CEO Brian Krzanich.
In a LinkedIn post, Swan said his letter and Intel's annual report were sent to print before the "outbreak escalated into a pandemic." However, he added, "one theme is even more relevant today: Intel and the technology industry's essential role in all aspects of business and society."
"In the current environment this includes critical systems serving those on the front lines of this crisis, access and connectivity to many millions now working remotely, and everything we can contribute to keeping people safe and finding effective treatments," he said in the LinkedIn post, pointing to the recent letter he wrote to customers and partners about how Intel is responding to the pandemic.
Underlying the need for Intel to evolve its culture is the recognition that "a computer is no longer simply a PC or a server in a data center, or even a phone," Swan said in the annual letter.
Instead, "computing is permeating all of our interactions," from the global communications network to retail stores, vehicles, hospitals, farms and factory floors, according to Swan. As a result, Intel has shifted its strategy from making processors for PCs and servers to making a variety of compute products for a diverse set of workloads, expanding Intel's total addressable market to $300 billion, of which the company has under 25 percent share.
"This profound evolution in computing opens a much larger opportunity with implications for every aspect of our business," the CEO said. "As Intel's leadership team, we must re-imagine the world through this change, and move forward boldly, not constrained by history."
To ensure Intel's success over the next decade, Swan said there are three key factors the company must focus on, one of which is the evolution of the company's culture. To Swan, the first one means becoming "customer obsessed" and listening more closely to what customers need, being truthful and transparent and listening to "what data is telling you," expressing fearlessness and showing up as "One Intel."
"When you are the clear leader in any field — as Intel has been in semiconductors for PCs and servers — there is a danger that your listening skills and your curiosity about the world will erode," Swan said. "This is a big part of what Andy Grove meant when he said, 'Only the paranoid survive.'"
Another important factor for Intel will be "embracing strategic inflections" in the tech industry like artificial intelligence, 5G and the intelligent edge — which the chipmaker is doing by investing heavily in AI products and features like Deep Learning Boost, pivoting from 5G smartphone modems to 5G infrastructure and focusing on mobility with its Mobileeye advanced driver assistance software business.
Equally important is Intel's execution in continued innovation, which has informed the company's new strategy of focusing on six pillars of technology: process and packaging, architectures, memory, interconnects, security technologies and software.
From this, the company is focused on delivering its third-generation Xeon Scalable server processors, code-named Cooper Lake, in the second quarter; 10-nanometer Ice Lake server processors later in the year; and advancements in platform solutions like Intel Optane DC persistent memory. The company is also focused on delivering 10nm Tiger Lake laptop processors later this year as well as working with OEMs on designing next-generation laptops as part of its Project Athena program.
Swan said Intel's roadmap of "innovative 10nm products is strong" and reiterated the company's plan to move back to a two- to two-and-a-half-year cadence in process technology advancement with its in-development 7nm node, which is expected to begin delivering products in 2021.
With Intel's ambition to "play a much larger role in our customers' success," Swan said, the company needs to "ensure that we exceed their expectations and deliver what they need when the need it," referring to the company's ongoing CPU shortage that predated the coronavirus pandemic. He said earlier this month that Intel is delivering products to partners and customers on time at a rate of more than 90 percent as it continues to "operate on a relatively normal basis."
"Sometimes we failed to do that last year, and that was unacceptable," Swan said in the letter. "Customers look to Intel for a predictable cadence of high-performance products and technologies that are integral to their success. […] Accountability comes with the territory. We will improve our execution."
Kent Tibbils, vice president of marketing at ASI, a Fremont, Calif.-based Intel distributor, said one thing that Intel has consistently done a good job at is "staying committed and involved in the channel." Channel partners have also benefited from the introduction of new products like Optane and SSD hard drives in PCIe form factors, Tibbils added.
"We're pretty excited about where they can go with Optane," he said.
Tibbils acknowledged that Intel has gotten away from its "tick-tock" model, with a multi-year delay of 10-nanometer CPUs that only started hitting the mass market last year, which is why he's encouraged that the company plans to get back on track with a regular cadence of process improvements for 7nm.
"Something like that was very helpful," he said. "It was consistent, and you kind of knew what the transitions would be. Since they’ve gotten away from 'tick-tock,' they have not been hitting those marks."
While Intel continue to have supply issues, which have also been impacted by the pandemic, Tibbils said the company has improved since the shortage began in 2018. Out of the various measures Intel has put in place to improve supply, the distribution executive pointed to Intel's F-series processors that were introduced last year as an effective measure.
"We all wish there was more supply, but we're not terribly short," he said. “We're still able to get product and Intel's done a good job in getting the product into the market."
But one executive at an Intel channel partner organization said the chipmaker can still do better when it comes to supply, especially when it comes to the extra demand for desktops and laptops that has been created as a result of many businesses and organizations moving their workers to home offices.
"They need to clean up production on CPUs. That should be their No. 1 focus," said the executive, who asked to not be identified so they could offer their candid thoughts, "because the demand for mobile, the demand for desktop is going to go through the roof."