March 26, 2021 — Strategy and Tactics: lntel's Strategy under Pat Gelsinger. lntel's partnership with IBM Research. WildPhotons: Serenity is not freedom from the storm, but peace amid the storm...
G. Dan Hutcheson
Summaries: lntel's Strategy under Pat Gelsinger. Pat's over-arching strategy is a fundamental shift back to the future. First and foremost, Pat is setting aside the company's more recent strategy of cost reduction as the path to greater profits and returning to Gordon Moore's time-honored model of technology investment being the path to greater profits through revenue growth. It's a subtle difference, but an important one. Gordon once famously answered an investor's question into why he was spending so much in a downturn with, "You can't save your way out of a downturn." There are three chronic diseases tech companies contract when their business turns down: 1) Cutting prices. 2) Cutting costs. 3) Reaching for incremental gains with product refreshes. Combinations of these can be fatal... The new strategic paradox... Rise of the Hyperverticals... Pat Gelsinger is leap-frogging the foundry/fabless model from being a foundry to being a TaaS company.
lntel's partnership with IBM Research This match was a no-brainer, given the head-on train collision between the late-2020's emergent post-global world and 2021's global chip shortage, both of which fed on each other to raise semiconductors to the presidential level of U.S. national security concerns. Semiconductors have come a long way since the early 90s when the chair of the White House Council of Economic Advisers, Michael Boskin, demeaned their importance, stating that "Potato chips, computer chips, what's the difference? A hundred dollars of one or a hundred dollars of the other is still a hundred dollars." Thirty years later, semiconductors have risen in the political atmosphere from hands-off free-market economics to be considered a critical part of National Security. My take on the reason for lntel's partnership is based on IBM's ability to start working with the U.S. government today, its longer R&D time horizon, a proven ability to foster productive coopetitive partnerships, and its close relationship with decision makers in Washington D.C. As I wrote above, it's a no-brainer.
The Chip History Center: IBM's R&D Partnering Model revisited and Semiconductor Business Model Evolution
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