Will Developers Keep the Faith in Intel that Investors Lost?

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Oct 27, 2021

The most important thing in tech today is …

the Intel Innovation event, and CEO Pat Gelsinger’s campaign to rally the ecosystem behind his aggressive transformation strategy for the company.

Intel has been spiraling into irrelevance, and a year ago the board reached out to Gelsinger, then CEO of VMware, about becoming a board member. Those talks escalated into them asking him to become a CEO candidate. As part of that process, Gelsinger wrote a strategy document that outlined the extraordinary steps he believes the chipmaker must take to regain greatness.

Investors first cheered Gelsinger’s return, but have since balked at the expense, scale and velocity of his plan. The stock is trading below where it was before he was announced as the CEO pick. But the fascinating thing is, the events of the last year have only underscored the urgency and prescience of the vision Gelsinger laid out. What they haven’t confirmed is its viability.

Intel certainly has access to enough cheap capital to fund it. But can Gelsinger both fix Intel’s manufacturing process and accelerate it to reach five process nodes in four years — when the company used to do one every two years? Is his projected 10-12% compound annual growth rate in a couple of years realistic? And can he stand up a competitive foundry business at the same time? A lot of investors just don’t believe it can be done. And it’s frankly unprecedented for a CEO to show all of his cards like this, revealing the cost and ambition of the plan at the outset.

Because this is a hardware business, and a huge global one, it will be the biggest turnaround of the decade if Gelsinger pulls it off. Yesterday in San Francisco, he told me how this leg of the journey started:

Coming up today on CNBC’s TechCheck, 11 a.m. ET / 8 a.m. PT …

Informatica CEO Amit Walia

While you were sleeping …

Microsoft shares edged 2% higher in extended trading Tuesday after the software and hardware maker reported fiscal first-quarter earnings that exceeded analysts’ estimates. CNBC

Today, Informatica is going public, once again. The company, which went private in a $5.3 billion deal back in 2015, expects to raise $841 million on this round. Informatica's emergence from private equity comes as the company has transitioned to a cloud-first business where subscriptions have climbed to nearly half of overall revenue. ZDNet

In the broader world …

Mortgage rates have been on a tear this month, rising yet again last week to the highest level in eight months, according to the Mortgage Bankers Association. That caused mixed demand for mortgages last week, resulting in no change from the week before. CNBC