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Patrick Gelsinger is Intel's True Believer

Patrick Gelsinger was 18 years old and four months into an entry-level job at Intel when he heard a pivotal sermon at a Silicon Valley church in February 1980. There, a minister quoted Jesus from the Book of Revelation.

“I know your deeds, that you are neither cold nor hot. I wish you were either one or the other!” the minister said. “So, because you are lukewarm — neither hot nor cold — I am about to spit you out of my mouth.”

The words jolted Mr. Gelsinger, reshaping his philosophy. He realized he had been a lukewarm believer, one who practiced his faith just once a week. He vowed never to be neither hot nor cold again.

Now, at age 60, Mr. Gelsinger is hot about one thing in particular: Revitalizing Intel, a Silicon Valley icon that lost its leading position in chip manufacturing.

The 120,000-person company was a household name in the 1990s, celebrated as a fount of innovation as its microprocessors became the electronic brains in the vast majority of computers. But Intel failed to place its chips into smartphones, which became the device of choice for most people. Apple and Google instead grew into the trillion-dollar emblems of Silicon Valley.

Rejuvenating Intel is partly about Mr. Gelsinger’s own ambitions. As a young engineer, he once wrote down a goal of leading Intel one day. But in 2009, after spending his entire career at the company, he was forced out. A year ago, he was wooed back for a surprise second chance.

His mission is also about America’s place in the world. Mr. Gelsinger wants to return the United States to a leading role in semiconductor production, reducing the country’s dependence on manufacturers in Asia and easing a global chip shortage. Intel, he believes, can spearhead the charge. If he succeeds, the impact could extend far beyond computers to just about every device with an on-off switch.

The quest faces many obstacles. Steering a $200 billion company while chasing a goal of raising U.S. chip production to 30 percent globally from about 12 percent today requires tens of billions of dollars, political maneuvering with governments and years of patience.

“You’re going to have to spend a lot of money and you’re going to have to spend it for a long period of time,” said Simon Segars, who recently stepped down as chief executive of Arm, a British company whose chip designs power most smartphones. “Whether governments have the stomach for that over the long term remains to be seen.”

In four interviews, Mr. Gelsinger acknowledged the difficulties. But the father of four and grandfather of eight has pursued the goals with intensity.

In March, he unveiled a $20 billion project to add two chip factories to Intel’s complex near Phoenix. Last month, he joined President Biden to showcase a $20 billion investment in a new chip manufacturing site near Columbus, Ohio. On Tuesday, he announced a $5.4 billion deal to buy Tower Semiconductor, which operates chip production services from factories in four countries.

To drum up government support for his investments, Mr. Gelsinger has attended three virtual White House gatherings, spoken with two dozen members of Congress and four governors. He became a key ally to President Biden over a $52 billion package that would provide grants to companies willing to set up new U.S. chip factories. And in Europe, Mr. Gelsinger met with President Emmanuel Macron of France, President Mario Draghi of Italy, their counterparts in other countries, and the pope.

Pool photo by Stephane De Sakutin

It has been a tough slog. Intel’s stock has dropped as Mr. Gelsinger committed huge sums to chip manufacturing. The $52 billion funding package stalled for months in the House of Representatives, finally passing this month as part of broader legislation that must now be reconciled with a Senate version. Criticism of the chief executive from Wall Street analysts has ramped up.

“Every day the job is way bigger than me,” Mr. Gelsinger said. But “it’s OK,” he added, because he believes he has help. “God, I need you showing up with me today because this job is way more than I could possibly do myself.”

If his father had managed to buy a farm, Mr. Gelsinger would almost certainly have inherited it and become a farmer. That was expected in Robesonia, a borough in Pennsylvania Dutch country where he was raised and worked on his uncles’ farms.

But there was no farm to inherit. So at age 16, Mr. Gelsinger passed a scholarship exam that took him to the Lincoln Technical Institute, a for-profit vocational school, where he earned an associate degree.

Mr. Gelsinger tells this and other stories self-deprecatingly in a 2003 book of advice that he wrote for Christians titled “Balancing Your Family, Faith & Work,” which was expanded in 2008 and titled, “The Juggling Act: Bringing Balance to Your Faith, Family, and Work.”

In 1979, he was interviewed at the technical institute by a manager from Intel. Unlike most of the other students there, Mr. Gelsinger had heard of the company. He breezed through questions related to his studies and predicted he could earn bachelor’s, master’s and Ph.D. degrees while holding down a full-time job, said Ronald Smith, the former Intel executive who conducted the interview.

“He is very smart, very ambitious and arrogant,” Mr. Smith said he wrote in a summary of the conversation. “He’ll fit right in.”

Mr. Gelsinger took his first plane ride to interview at Intel in California, where he started in October 1979 as a technician. He worked on improving the reliability of microprocessors while studying for a bachelor’s degree at Santa Clara University.

He soon started hanging out with the engineers who designed the chips, coming up with ideas to test the chips more efficiently. In 1982, he became the fourth engineer on the team that introduced the groundbreaking 80386 microprocessor.

During a 1985 presentation near the completion of the chip, Mr. Gelsinger chided Intel’s leaders Robert Noyce, Gordon Moore and Andy Grove about balky company computers that were slowing the process.

A few days later, he got a surprise call from Mr. Grove. The Hungarian-born executive, then Intel’s president who later wrote the management book “Only the Paranoid Survive,” had built a culture where lower-level employees were encouraged to challenge superiors if they could back up their positions. Mr. Grove began mentoring Mr. Gelsinger, a relationship that lasted three decades.

By 1986, Mr. Grove had convinced Mr. Gelsinger not to pursue a doctorate at Stanford University and instead made him, at age 24, the leader of a 100-person team designing Intel’s 80486 microprocessor. Mr. Gelsinger eventually earned eight patents, became Intel’s youngest vice president in 1992 and the first person with the title of chief technology officer in 2001.

His climb up Intel’s ladder was shaped by another priority: his faith.

Though raised in the mainstream United Church of Christ, Mr. Gelsinger said he didn’t really become a Christian until he attended the nondenominational church in Silicon Valley where he met Linda Fortune, who later became his wife. It was at that church in 1980 that he heard the minister quote Revelations.

After Mr. Gelsinger became a born-again Christian, he wrestled privately with whether to join the clergy. In a 2019 oral history conducted by the Computer History Museum in Mountain View, Calif., he said he eventually decided to become a “workplace minister,” where “you really view yourself as working for God as your C.E.O., even though you’re working for Intel.”

In the mid-2000s, Mr. Gelsinger’s footing within Intel shifted. Mr. Grove retired as board chairman in 2004. Another executive, Paul Otellini, was appointed chief executive in 2005. Mr. Gelsinger said he was a “dissonant voice” on Intel’s senior executive team.

Mr. Otellini pushed him to leave, Mr. Gelsinger said. (Mr. Otellini died in 2017.) In 2009, Mr. Gelsinger accepted an offer to become president and chief operating officer of EMC, a maker of data storage gear.

Departing Intel after 30 years as a company man hurt badly. “I was just so angry and emotional about the departure,” Mr. Gelsinger said.

In 2012, he became chief executive of VMware, a software company that EMC controlled. He weathered challenges there, including an aborted effort to compete in cloud computing services with Amazon, but broadened the company’s business and nearly tripled revenues.

During those years, Intel slipped. For decades, the company had led the industry in delivering regular factory advances that pack more processing power into chips. But delays in perfecting new production processes allowed rivals such as Taiwan Semiconductor Manufacturing Company and Samsung Electronics to grab the lead in manufacturing technology between 2015 and 2019.

Justin Sullivan/Getty Images

Today, T.S.M.C. makes chips designed by hundreds of other companies. It supplies the world with more than 90 percent of the chips made with the most advanced production technology. Because it is headquartered in Taiwan, which China has laid territorial claim to, its location has made it a political and supply chain chokepoint should conflict erupt over the island nation.

Intel was also suffering from its missteps in the mobile market, which consumes billions of processors compared with the hundreds of millions sold for computers.

After convincing Apple to use its chips in Macintosh computers in 2005, Intel had a chance to win a place in the iPhone, which debuted in 2007. But Mr. Otellini said in a 2013 interview in The Atlantic that he turned down the opportunity because the price that Apple was willing to pay for chips was too low to make a profit.

The decision, which Mr. Otellini said he regretted, led Apple to use rival Arm technology for smartphones and, later, tablets. So did Samsung and other companies that make devices using Google’s Android software. More recently, Apple started using Arm chips in many new Macs.

Mr. Otellini and his successors prioritized Intel’s profit margins while failing to take risks to move into new markets and outflank rivals, former company insiders now acknowledge. If boiled down to a book, “it could be called ‘the insufficiently paranoid don’t survive,’” said Reed Hundt, a former Federal Communications Commission chairman who served on Intel’s board from 2001 to 2020, in a nod to Mr. Grove’s “Only the Paranoid Survive.”

As questions swirled about Intel’s future, Mr. Gelsinger was viewed as a possible savior. But he insisted he was committed to VMware, a point he seemed to underscore by adding a temporary tattoo with the company’s name on his arm during a 2018 conference in Las Vegas.

Then, just before Thanksgiving 2020, an Intel director asked Mr. Gelsinger to join the company’s board. Mr. Gelsinger asked for permission from Michael Dell, the founder of Dell Technologies, which then controlled VMware.

“I knew Intel needed some help and Pat was somebody who could help a lot, so I said ‘sure,’” Mr. Dell said.

At a dinner before Christmas, two Intel board members asked Mr. Gelsinger if he would think about the chief executive role instead. “That ruined my Christmas holiday,” he said.

He and his wife took long walks to discuss what to do. Early in their marriage, they had committed to giving an increasing percentage of their gross income to philanthropic causes such as schools in Kenya and Christian nonprofits, with the percentage reaching about 50 percent, he said in the oral history.

Their values came up during what he said were “three weeks of chaos” over the Intel job. The couple concluded that Intel’s size and influence would give Mr. Gelsinger a global platform to promote technology for good purposes, not to mention serving as a Christian role model.

“The fact that I continue to be very public about my faith is seen more and more like a unicorn in the market,” he said. “I would hope to make it less so.”

Mr. Gelsinger already had ideas about how to turn around Intel. The company was rumored to be considering a spinoff of its manufacturing operations, but Mr. Gelsinger believed steady chip demand would leave companies with factories in a powerful position.

He drafted a plan to expand Intel’s manufacturing operations. He also wanted to emulate T.S.M.C. by making semiconductors for other companies and not just Intel’s own microprocessors. Becoming a major provider of these “foundry services” could also buffer America from future supply chain shocks.

In January 2021, at a virtual meeting with Intel’s board, Mr. Gelsinger insisted the nine directors unanimously endorse him and the manufacturing expansion strategy. They did. Mr. Gelsinger was offered an annual salary of $1.25 million and bonus of up to $3.4 million, plus one-time equity awards that could be worth up to $110 million if Intel’s share price reached certain long-term targets.

Mr. Gelsinger started work as Intel’s chief executive on Feb. 15, 2021.

Mr. Gelsinger had the job he had long dreamed of. But he took over during a full-blown chip crisis. The pandemic had disrupted production and unleashed new demand, as people working from home snapped up new computers and other devices. The chip shortage was so severe that some carmakers temporarily shut down their plants.

In Washington, where officials worried about the reliance on Asian chip suppliers, discussions about how to right the imbalance ramped up. The $52 billion package of incentives to boost domestic chip production, known as the CHIPS Act, passed the Senate in June with bipartisan support.

Last March, Mr. Gelsinger announced Intel’s manufacturing expansion, including the foundry plan and the $20 billion Arizona project. When he detailed the long-term financial impact in October, Wall Street was stunned. Intel shed nearly $25 billion in market value in one day.

Stephen Nellis/Reuters

Critics have questioned whether Intel can catch up to T.S.M.C. and Samsung in manufacturing technology, while others have been skeptical of the foundry plan. Some big chip makers would be reluctant to pay a competitor for such manufacturing services, they said.

And while T.S.M.C. offers production processes that are tweaked to make many kinds of chips, Intel is known for rigidly standardizing its manufacturing to make microprocessors.

“That is the opposite of the flexibility you need for the foundry business,” said Walden Rhines, who runs the chip start-up Cornami.

Mr. Gelsinger countered that Intel’s foundry business had attracted the Pentagon and Qualcomm, the big mobile chip maker, and said his long-term investments would eventually pay off. “We need to boldly seize this moment,” he said.

At the same time, Mr. Gelsinger courted government officials to bolster chip manufacturing in the United States and Europe.

In September, he showed up in Washington to lobby the House to approve the CHIPS Act. There, he met with a couple dozen members of the Problem Solvers Caucus, a group of Democratic and Republican representatives, who had questions about the chip shortage and the proposed funding package.

Representative Haley Stevens, a Michigan Democrat who was at the meeting, said Mr. Gelsinger made the stakes clear. “Someone would ask him a question, and he’s giving the details of what would be in a dissertation without sounding like you are listening to a dissertation,” she said.

In October, the group formally endorsed fully funding the $52 billion package. Ms. Stevens called Mr. Gelsinger’s presentation “a complete instigator” for the decision.

The $20 billion investment would bring the new plant to Ohio, with operations expected to begin in 2025.Sarahbeth Maney/The New York Times

On Jan. 21, Mr. Gelsinger arrived at the White House for a late morning briefing to announce that Intel planned to invest at least $20 billion in a new site in Ohio. It would be the company’s first new U.S. manufacturing campus in 40 years. President Biden patted Mr. Gelsinger on the shoulder as the Intel chief strode to the podium and later jokingly referred to him as “the boss.”

Later that day, Mr. Gelsinger flew to Columbus for a gathering with state and local officials. Marveling at his event with the president, he also described how Intel hoped to invest as much as $100 billion to build eight factories on the 1,000-acre site over a decade. That would make Ohio one of the world’s biggest chip production sites.

“We are the company that helped to put silicon into Silicon Valley,” he said. “Today the silicon heartland begins.”

Source: Economy - nytimes.com


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