The Shake-Up at Intel | The Motley Fool

In this podcast, Motley Fool analyst Tim Beyers and host Dylan Lewis discuss:

• Intel CEO Pat Gelsinger’s stepping down and why “GPU” was the key focus of his time at the helm of the company.
• The multiyear planning cycle that goes into chipmaking, and why we may wind up praising Gelsinger’s investment in the foundry business several years from now.
• How Fastly will have one fewer name to compete with in the content delivery network market, but why it might spell trouble for the business long-term.

Then Motley Fool host Ricky Mulvey talks with Dave Hatter, a cybersecurity consultant at Intrust IT, about the “surveillance capitalism model” and where your digital data winds up.

To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. To get started investing, check out our beginner’s guide to investing in stocks. A full transcript follows the video.

Dylan Lewis: The mess at Intel gets messier. Motley Fool Money starts now. I’m Dylan Lewis, and I’m joined over the airwaves by Motley Fool Analyst Tim Beyers. Tim, thanks for joining me. First day back from the Thanksgiving holiday.

Tim Beyers: Good to be back. Non-caffeinated today. It’s a hot chocolate day, but it’s the season. Why not?

Dylan Lewis: I would say sugar has its own punch to it. You have some hot cocoa over there. You’re getting yourself ready for the holidays. We are back to work today from the holiday break. Over at Intel, CEO Patrick Gelsinger getting ready to step aside, and the chief executive announced that he will be stepping down, ending what I think was probably a pretty disappointing run for a lot of Intel shareholders. A lot of people who, Tim, were looking for this tech giant to really rebound and become a major player in the chip game again.

Tim Beyers: I’m a little sad because Patrick Gelsinger is eminently qualified to be CEO of Intel. He is in some ways an Intel lifer. Now, I did leave the company for a period of time, but he has a very long history. He has a technical background. He has lots of semiconductor engineering credentials, and he was coming back with the promise of reestablishing Intel as if not a dominant player, a highly performing player in the chip market, particularly in the server market. That did not happen, Dylan.

Over the course of his tenure, AMD has grown its share in the data center, and Nvidia has absolutely exploded it’s share. If you wanted to sum up the Intel problem in one word, it would actually be an acronym, and it would be this GPU. It would be graphics processing units because AMD has them. They’re nowhere near where Nvidia is, and Nvidia is dominant in them and GPUs have been crucial over the development of high performance computing, particularly in the Data Center over the past several years, and Intel they are a competitor in the server space. It’s not like they aren’t. They’ve always been. But they used to be dominant, Dylan and Gelsinger didn’t get them back to where they had been, and he really hadn’t gotten them close. It’s been one of those maybe, like, what could have been type of stories.

Dylan Lewis: I want to rewind the clock to early 2021 when he took the CEO role. I went and found the press release that Intel put out when they announced he’d be stepping into that chief executive position. Here’s what they said that they were expecting from him. Strong execution on Intel’s strategy to build on its product leadership and take advantage of the significant opportunities ahead as it continues to transform from a CPU to a multi architecture XPU company. Tim, we’ve had three years now to see this play out. There are a lot of things that have gone on in those three years that were outside of management’s control, but focusing specifically on what the board was looking for them to do. What do you think about the job that he did?

Tim Beyers: I think you have to say two things can be true here. Intel does have more chip sets, more designs outside of its purely traditional x86 CPU chip sets. It does have that. They are starting to compete in some other areas. But have they been successful? Not really. They are still largely driven by the CPU business or what they call the client business and to be honest here, the client computing group, so these are two, three numbers here.

In the data center business, that revenue was up, 9%. The client business was down 7%, but just as a total of all products, so 12.2 billion during the quarter, 7.3 billion of that, is the client computing group. It is overwhelmingly, Dylan, the dominant piece of the business. I think if you’re measuring what the board asked for, one way to measure it isn’t just the number of products, but, like, could you diversify the revenue? Could you get us a bigger share of the data center? I think the answer to that is largely no, even though I think you can fairly concede that Intel is still very much a player in the data center, but it is largely a two horse race for dominance between Nvidia and AMD, and Intel is lagging in third at best.