Intel’s new CEO faces big challenges with a geopolitical dimension

Gelsinger originally joined Intel at the age of 18 in 1979, and eventually served as its CTO before leaving in 2009. When the company lured him back to become CEO, he was running virtualization software maker VMware. “It’s been an incredible six months since then being welcomed back to the company,” Gelsinger told Fast Company technology editor Harry McCracken during an interview recorded for the Fast Company Innovation Festival. “The energy of taking over inside of a pandemic, driving a turnaround, and a global semiconductor shortage . . . it’s been a pretty torrid environment for us to engage.”

Gelsinger’s main job is making big changes to Intel’s chip business after a difficult period for the company. During the summer of 2020, before his return, the company announced that it was way behind schedule in the development of its most advanced 7-nanometer manufacturing process. It even announced a “contingency plan” to outsource the manufacture of the 7-nanometer chips to another company. The news showed that Intel had fallen behind rivals such as Taiwan Semiconductor Manufacturing Company (TSMC), and no longer represented the industry’s cutting edge in chip design and manufacturing.

Now Gelsinger is remaking Intel’s mix of insourcing and outsourcing. He wants the company to manufacture chips for other companies. But also he wants to have the option of using other companies’ foundries to fabricate Intel-designed chips. And he’ll push Intel to once again design chips that fit more computing power on a piece of silicon than any other chip company.

During a 60 Minutes interview in May, Gelsinger told Lesley Stahl that Intel plans to catch up with TSMC and Samsung in chipmaking prowess within the next five years. It’s a costly ambition. Intel is expected to spend $20 billion on the two new plants it plans to build in Arizona.

The company already had major expansions underway to expand its factories in Oregon, Ireland, and Israel. Gelsinger also announced plans to open two new “mega fab” locations–one in the U.S. and one in Europe–that Intel will announce the exact locations of before the end of the year. “A mega fab location would be a site that would be big enough that we could put eight fabs in place in these new sites,” he says. “This is a big project where we’d expect [that in] the next decade or so that we’d invest on the order of $100 billion, [and that] at each of these sites that we’d employ 10,000 people.”

The stakes of these investments go beyond their impact on Intel’s own business. In 1990 the U.S. was home to 37% of the world’s semiconductor manufacturing capacity; it’s home to just 12% today. Three-quarters of the world’s chips–including those relied upon by U.S. companies, consumers, and even defense and intelligence organizations–are manufactured in the Asia Pacific region. And an estimated 90% of the complex chips that run large AI models are baked at one company–TSMC, which sits on the island of Taiwan just 90 miles off China’s southeastern coast.

Gelsinger is acutely aware of the dimensionality of Intel’s situation.

“It is critical for the industry, but it’s also critical for the national economy, [and] national security,” he says. “Everything is going digital and everything runs on semiconductors, it’s that critical for the nation.”

Intel and Gelsinger may get some help from Uncle Sam. Congress passed (by a wide margin and with strong bipartisan support) a bill called the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act in the FY 2021 National Defense Authorization Act (NDAA), which provides a framework for increasing government money for the U.S. semiconductor industry. In June the Senate essentially funded CHIPs when it passed the U.S. Innovation and Competition Act, which includes $52 billion in federal investments for domestic semiconductor research, design, and manufacturing. But the House of Representatives has yet to pass the bill.

On September 23, Gelsinger attended a meeting at the White House along with representatives of Apple, Samsung, and Microsoft to talk to President Biden about the chip shortage. The White House wants more information about bottlenecks in technology supply chains. A lot is riding on whether or not Intel can regain its global leadership in chip manufacturing—the fundamental process which powers every other aspect of our modern digital economy.