0:00

Hi

0:10

everyone. I'm Brad Stone in for Emily Chang,

0:12

and this is Bloomberg Studio one point

0:14

oh. As head of our global technology

0:16

coverage, I lead a team of about fifty

0:18

five reporters and editors around the world, working

0:21

on stories ranging from the culture inside

0:23

SoftBank's Vision Fund to the inside

0:25

story behind Amazon's HQ two

0:28

fiasco. I was super excited

0:30

to fill the anchor seat for this episode because

0:32

before becoming CEO of Intel, Bob

0:35

Swan was the CEO of an online

0:37

grocery delivery startup called web

0:39

Van. Web Van blew up spectacularly

0:42

during the height of the dot com boom,

0:44

but its history is relevant for a new book

0:46

I'm writing about the last ten years at Amazon,

0:49

where it's really tried to correct some of the big

0:51

mistakes that web Van made. After

0:53

web Van, Swan stayed in tech, working at

0:56

eBay alongside Meg Whitman. After

0:58

overseeing the eBay PayPal split, you

1:00

joined Intel in two thousand sixteen, first

1:02

a CFO and then interim CEO

1:05

following the sudden resignation of his predecessor,

1:08

Brian Chrissanitch. He was then chosen

1:10

for the role permanently about a year ago after

1:13

the company conducted an extensive search. Here's

1:15

my conversation with Bob Swan, Intel

1:18

CEO on Bloomberg Studio one

1:20

point. Oh,

1:30

tell me what you were like as a young kid growing

1:32

up in Syracuse, New York. I

1:34

grew up with with

1:36

eight siblings, all on pretty

1:39

tight range. Where were you? And I was right

1:41

in the middle. Okay, So I had the opportunity

1:43

at very early age to learn from

1:46

eight different siblings about how they think.

1:49

What did your parents do? My dad

1:51

started a Swanning company,

1:53

a jewelry store with my uncle. Two of them

1:55

started Swann and Company and entrepreneurs,

1:58

and my mom was

2:01

was a kindergarten teacher for thirty

2:03

plus years. Did you travel? Did you

2:05

did the international vacations or

2:07

no? No, No. We drove to the

2:09

Green Lakes, which was like fifteen minutes

2:11

away, and that was a big trip. No nine

2:14

kids. We couldn't barely

2:16

fit in the one car that we had, so

2:19

I didn't. I jumped on a plane

2:22

for the first time, I think when I was five.

2:25

That's remarkable. Do you remember where you were going? Yeah,

2:28

from Binghamton, New York to Philadelphia.

2:31

This is when you were at Yeah, fast

2:33

forwarding a little bit. You came to Silicon Valley right

2:36

in the in the heat of the dot com

2:38

boom and then the bust. Right you became CEO

2:40

briefly of a company that was almost synonymous

2:43

at the time with the dot com bust. To

2:46

what extended that turn you off to Silicon

2:48

Valley? Not at all, um, but it was a

2:50

bit humbling, and I would, yeah, think

2:52

about I had I

2:55

had spent sixteen years and what

2:57

I had considered at the time the best company in

2:59

the world, which was GE. But

3:01

at the time in the late nineties, um

3:05

uh, you know, we started inside

3:07

GE this thing called destroy your

3:09

Business dot com. So

3:12

it was the chairman at the time, Welch's way

3:14

of kind of turning inward and say, hey, we need

3:16

to innovate, we need to think

3:18

differently, think bolder. And I got

3:20

into that in the late nineties and I was in the

3:23

lighting business, and from that I thought

3:25

to both um professionally

3:29

and personally. I realized, now

3:32

is a real chance for me and my family

3:34

to do something different. So when

3:37

you're in the midst of thinking about destroy

3:39

your Business dot com and how it will disrupt

3:42

the breath and depth of what GE

3:44

had to offer. Um, I

3:46

thought, I if I go out west

3:49

to Silicon Valley, UM,

3:52

I know I'll accomplish one thing. I

3:54

will never compare it to g

3:57

So I joined a startup internet

4:00

company in the height of the bubble called Webvan,

4:02

and in so many ways failed miserably

4:05

and so many ways benefited tremendously

4:08

from trying to create something rather

4:10

than being part of something that was created long before

4:13

I got there. And then, of course you spent nine years

4:15

at eBay s CFO when the company

4:17

was sort of very acquisitive. There there are some acquisitions

4:20

like the Skype deal you know that maybe didn't

4:22

work out so well. Of course, then you're responsible

4:25

for spinning out PayPal, obviously a big

4:27

win for the company. But what what

4:29

you know? Lessons did you take from the eBay

4:31

experience in terms of sort of focusing on the core market

4:34

or looking abroad for growth. In eBay,

4:36

we had so many opportunities to say

4:39

yes, and we had a lot of opportunities

4:41

where we had to say no, and if something

4:44

didn't work based on its original

4:46

premise, we had to be okay

4:49

letting it go and in some

4:51

ways dust ourselves off and

4:53

go and try something. I guess when you look at back at

4:55

those years, it should you have been more selective

4:58

by definition, anything that

5:00

we did that didn't quite pan out the

5:03

way we thought probably

5:05

could have done something different. But that

5:08

being said, you know, in these

5:10

technology industries, you've got to be prepared

5:13

to invest, you've got to be prepared to take

5:15

risk, and in doing so, you've got

5:17

to be prepared that everything doesn't work out and

5:19

if it doesn't, what do you learn from it? So

5:21

in that sense, yeah, and there's things that

5:23

we did that with the benefit of hindsight. Um

5:27

No. But UM, I think the

5:29

challenge and tech

5:31

and in my role today is how

5:33

do you take calculated risks? You

5:35

know, the opportunities are endless. There's

5:39

it's not um it's not working

5:41

you grow because there's lots of opportunities

5:43

for growing. I just think you have to. Um

5:46

I've learned you have to open up the aperture a little bit

5:48

and be prepared to take a little risk. So we'll talk about

5:50

where you're taking risks now at Intel. UM

5:53

I remember a year ago my

5:55

colleague and King was writing about

5:57

the leadership transition. Your predecessor

5:59

at stepped down. You became the temporary

6:02

CEO, and he reported that you told

6:04

employees that you didn't want the

6:06

job permanently. What were you thinking during

6:08

that time period? UM, Well, at first

6:11

I was thinking that I absolutely loved the job

6:13

I was in, and I

6:15

had been h I had been a

6:17

CFO for twenty plus

6:19

years. UM. I had

6:21

this wonderful opportunity to join this

6:24

incredible company, and I loved the

6:26

role of the CFO, and I didn't really

6:28

have aspirations to

6:30

be in the CEO role. I loved the job

6:32

that I did, and then that evolved

6:35

a little bit over time, and during

6:38

the interim period as the interim

6:40

CEO, which was six or seven months,

6:42

I, UM, this

6:45

will be corny, but in some

6:47

ways I love my job as a CFO.

6:49

I fell in love with the company UM

6:51

in that interim period, and so

6:55

UM when the board came around and

6:58

asked me if I would entertain

7:00

it, I was, you know, I just felt

7:03

and humbled, honored, excited,

7:07

overwhelmed UM, and I

7:10

thought, what a great company and what a great honor.

7:12

So I didn't start out that way. I loved

7:14

my job, and I fell in love

7:16

with a company that I think has a real purpose and

7:18

a real role to play in the world. You're also a

7:20

sort of non technical CEO

7:23

and you're a relative outsider.

7:25

Was there any kind of internal resistance

7:28

to the CFO getting the job? I

7:30

mean, we are a technology company, so

7:33

the technology blood is very

7:35

strong. I would not have taken the job

7:37

if during the interim period I didn't

7:40

feel in some way, shape or form

7:42

um embraced by the technical community.

7:49

You're listening to my conversation with Intel

7:51

CEO Bob Swan. Up next,

7:54

we break down Intel's complex relationship

7:56

with big tech plus the impact

7:58

of the US China t work on the global

8:01

supply chain. I'm brad Stone

8:03

and this is Bloomberg Studio. One point

8:05

out is

8:21

until still a chip company. Would you describe

8:23

it that way? I'd call it it a data company.

8:26

You know, we we talked about, you know, going

8:29

from a PC centric

8:31

company to a data centric company,

8:34

and by that I mean U software

8:37

and a variety of different chips are enabling

8:40

the ability of technology to meet this insatiable

8:42

appetite for consumers and businesses

8:45

to create more and more day to make it more and more relevant.

8:48

Intel had at a moment where some

8:50

customers like Dell and HP were

8:52

complaining about production problems,

8:55

right, They wanted more supply, and you actually

8:57

had to apologize well and our

9:00

desires and ambitions, as I said, or to play

9:02

a much larger role in our customers

9:04

success. And today I'm

9:06

given the breath of

9:08

the things that we do. We play a pretty

9:11

large role. They count on

9:13

us. We constrained their growth

9:15

by not having enough supply

9:17

to meet the growing demands. We've added

9:20

over fourteen billion dollars in revenue

9:22

to the company. The growth

9:25

and the demand for high performance

9:27

products was higher than we had anticipated,

9:30

and the capacity to

9:32

put in place to meet that demand, we

9:34

didn't get after it as quick as we

9:36

needed to. Failure of forecasting or

9:38

of production. Well, I think it's the

9:41

challenges where demand for our products

9:44

were bigger, The

9:46

amount of products we made were much

9:48

broader, and our

9:50

process technology, what

9:53

we call Moore's lod generically,

9:55

but ten d animeter more specifically,

9:58

moved out to the right, and as

10:00

a result we had to add more performance

10:02

by building larger chips moving

10:06

up to the rate it was. It took longer to

10:08

get that production up and running,

10:10

and so you had to go back to the previous generation. Yeah,

10:13

going back to the previous generation so to deliver

10:15

performance for our customers, the chips were larger.

10:18

Larger chips consume more capacity,

10:20

and in parallel we had to build

10:22

more facilities. We expect to add

10:26

more next year. And third

10:29

we're building out shells around

10:32

the world, so in the event there's

10:35

a spike in demand, we can respond to

10:37

those much quicker than we ever had. Do you feel

10:39

like you lost trust with customers? I

10:41

think we put them in a very awkward position, and

10:43

UM yes, I I feel like personally,

10:47

UM I told them we'll be there for you, and

10:49

we were short. So we need

10:51

to re establish that trust and make sure

10:53

they understand that when they make decisions

10:56

on UM who they're

10:58

going to hang around with, that we're there for them

11:00

and they don't have to worry about us. Speaking

11:02

of customers, Microsoft, Amazon

11:05

and Google. Are these these hyperscale

11:07

cloud companies. They use Intel

11:09

chips in the in their data farms, but they're also

11:12

talking about building their own processors

11:14

and they've all acquired companies. To what extent

11:16

is that a competitive threat frontal? And

11:19

I think it to the extent that UM

11:22

any company stands still, including

11:25

Intel. UM you by

11:27

definition move behind in a world where

11:29

everything is changing, So you

11:31

have to innovate um um. Whether

11:34

it's O E, ms PC manufacturers,

11:37

data center companies, automobiles

11:39

or factories. We have to continue

11:42

to innovate, and if we don't, somebody's

11:44

going to fill the void. So what's

11:47

key for us is continue to innovate

11:49

and make sure that and things were investing

11:51

behind are deliver more and more

11:53

performance for our customers

11:56

and our customers customers such that they

11:58

don't worry about being

12:00

a data centric company. They worry about

12:03

serving their customers, and they leave the

12:05

chip and the software and the capabilities

12:08

to us. So we have to innovate. But

12:10

in these three explicit cases, they're not leaving

12:12

it to you, right, They see the same you

12:15

know, competitive needs and feel

12:17

like silicon could be a competitive

12:19

advantage. I mean, do you wish that, you

12:22

know, they'd leave it alone and just use Intel chips

12:24

or is that just unrealistic in this environment? You

12:27

know, in so many ways, the

12:29

amount of innovation

12:32

and even investment in the semiconductors

12:34

and silicon is somewhat

12:37

encouraging. And it's encouraging

12:39

because lots of smart people, whether

12:42

their customers or whether they're

12:44

investors, looking at startups

12:47

there's there's a lot of money flowing

12:49

into this, this semiconductor

12:51

industry and the silicon to a certain

12:54

extent. Um As a

12:56

company with a mere thirty percent

12:58

share in a lot arch market

13:00

that has incredible demands for the

13:03

things that we do, it's

13:05

reinforcing, reinforcing

13:07

that people invest in the things that we're pretty

13:09

good at. So we have to move

13:11

faster. We have to

13:13

solve customers problems, maybe

13:16

customize our CPUs

13:18

as opposed to selling general purpose

13:20

compute, but we need to be solving

13:22

their problems at a time when the demands

13:24

for data and compute continue

13:27

to grow. So, Bob, I have to ask you about China.

13:29

You have been a voice of reason, urging

13:32

the Chinese and the U S governments to engage

13:34

in constructive dialogue. We're still in a

13:37

trade war. What impact has it had for

13:39

a global company? We have a huge R

13:41

and D in manufactur shuring presence

13:43

here in the US, So winning

13:46

in markets outside of the US, creating

13:49

value for our customers and making money, he gives

13:51

us more capacity to invest here in the

13:53

un US and R and D in fab So

13:56

we've all had to adjusting

13:58

and adapt in a variety of different ways,

14:00

and I say that meaning, um

14:03

we have we play a large role

14:05

in China. It's a big consumption market

14:08

for us, both on the PC and on the server

14:10

side. We have a reasonably

14:12

large manufacturing base, and we have a large

14:15

chunk of employees and our

14:17

design centers in China. So it's a very

14:19

important market for us and for

14:21

our customers in any way. So we've

14:24

had to adjust and adapt our supply chain

14:26

to have flexibility

14:28

to allow some of our O E M

14:31

s to move their assembly so

14:33

they don't have to deal with ariffs. We've had to stop

14:36

in some cases um as

14:38

export control laws evolving change,

14:41

we've had to stop shipping

14:43

to some customers. So our

14:45

priorities in our focus about retaining

14:48

market access, protecting

14:50

our I P and adjusting

14:53

adapting to the rules of the road. How

14:55

serious is the risk that, in response

14:58

to the trade war China that could double

15:00

down on the development of its own indigenous

15:03

chip making capability is that I

15:06

know there are nowhere close right now, but

15:08

over the longer term, is that a threat to Intel?

15:11

Look at it in a slightly different way, whether

15:13

it's a hyper scale with incredible

15:16

capabilities, whether it's

15:19

venture capital going into semi

15:21

um um, whether it's China

15:24

building their own capabilities for

15:26

for us, it all leads back

15:28

to the rate and pace of innovation

15:31

UM to continue to defy

15:34

the odds and do things that nobody else

15:36

can do, such that when

15:38

they have to make these decisions, UM

15:41

intel and the role that we play

15:43

in the world is near the top of their list.

15:45

But that presumes there they're thinking rationally,

15:48

and they may be. But another sort

15:50

of irrational aspects going to enter into thinking,

15:52

which is kind of national security and national

15:55

independence. So is it more realistic

15:57

that China develops a chip capability

16:00

because of all all of these global

16:02

tensions? You know, in so many ways,

16:04

we have to focus on things

16:06

that we can control, but you know,

16:09

we also focus

16:11

on things that we can control and influence.

16:13

And along the way, I still

16:15

come back to the same answer, um.

16:18

Pace of innovation to deliver things

16:20

that nobody else can do is the breast

16:23

path to continue

16:26

to trajectory for the company. Speaking

16:28

then of things you can control, have you

16:30

moved any production out of China? I know you

16:32

have, I think some memory chip production

16:34

in in China. So we have a very

16:37

global footprint in the

16:39

US predominantly

16:42

Israel, UM Ireland

16:46

that's our fabs in a

16:48

fab and Dalian which is our memory

16:50

fab. And then we have assembly and tests

16:52

in Malaysia and Vietnam and China. So

16:55

we have a very global footprint, so we

16:57

have the flexibility to adjust

16:59

in a adapt to where we make things

17:02

um around the world. So now

17:04

I'm so far we you know, we have diversity

17:07

in our footprinted, so we call it a

17:09

virtual virtual factory, so we

17:12

always have the build and move things around to optimize

17:15

great opportunities and manage risk. This

17:22

is my conversation with Bob Swan, Intel

17:25

CEO, coming up the future of autonomous

17:27

vehicles and Intel's work in Israel to

17:29

accelerate the adoption of self driving cars.

17:32

I'm Brad Stone and you're listening to

17:34

Bloomberg Studio. At one point, Oh, stay

17:36

with us, let's

18:00

talk about the future. So in two thousand and

18:02

seventeen, Until bought an Israeli company

18:04

called Mobile I for fifteen billion dollars

18:06

censors for driverless cars.

18:09

I know you've taken rides in in

18:11

in mobileizes. How close are we to that bed

18:14

paying off? For Intel? It's

18:16

paying off now, I mean we're two years

18:18

in. We couldn't feel better about

18:21

not just Mobilize business,

18:23

but the role that Mobili and that

18:26

team plays in the ecosystem of

18:28

a market that is going to be significant

18:31

for us. We are leveraging

18:33

data to make maps

18:36

better and better, which creates more

18:38

and more opportunities to get more data. More

18:40

and more data, we can monetize it new and different

18:43

ways. We're going to

18:45

enter into mobility as a service

18:47

in conjunction with a partnership

18:50

that we have in Israel with VW,

18:52

a company called Champion Motors, Intel

18:55

mobil I, with the Israeli government

18:58

to solve some of the problems of question

19:00

and safety on the roads in

19:02

Israel, and that will, we

19:04

believe, lead us to autonomous

19:06

driving. There's been a little bit of a sense

19:09

lately that that autonomous future might be

19:11

further out then we all imagined.

19:13

Is that skepticism unwarranted? You think we'll

19:15

be seeing full autonomy, say

19:18

in the coming decade? It's

19:20

I was going to say, it probably depends on

19:22

where you started. I think during the course

19:25

of two thousand, two thirty

19:28

um we will see autonomous

19:30

driving. We think that technology we're

19:32

building will be an accelerant of

19:35

the adoption of technology

19:37

for autonomous driving and increasingly

19:40

safe environments. Another development

19:42

that will be impacting Intel's future is

19:44

the opening of this very large

19:47

new fab facility in Arizona.

19:50

You guys have been working on this for a long

19:52

time. Tell me a little bit about the Chandler Arizona

19:55

fab and how that will impact, say,

19:57

the production problems we've talked about in

19:59

the future mental currently, Um,

20:02

you know, our fab in Arizona

20:05

is a source of

20:08

fourteen animal or equipment, so it's not an

20:10

idol fab by any stretch. But that's

20:12

the last generation. That's the that's kind of

20:14

the current generation. We've expanded

20:17

the facility. It's about roughly

20:20

a mile long. We've connected four

20:22

different buildings almost into one

20:25

probably wanted,

20:27

if not the most sophisticated manufacturing

20:30

plant in the world. And what does that mean

20:32

for for your customers and for consumers.

20:34

The ten D animet technology in a sence

20:36

allows for more

20:39

transistors and a smaller

20:41

and smaller space so that we can

20:43

deliver more feature functionality,

20:45

whether it's graphics, longer,

20:49

longer, battery life, unique experiences.

20:52

UM, that's what ten

20:54

D animet technology will deliver

20:57

into the PC environment or into

20:59

the data CenTra environment for

21:01

our employees. You know, we've added UM

21:03

it's one of our largest facilities. We

21:05

have almost twelve thousand

21:08

people. UM. We've added about

21:10

two thousand people in Arizona over

21:12

the last twelve months, So UM more

21:15

Intel employees, UM delivering

21:18

more products for our customers. And I

21:20

think, as you know, our employees

21:22

play a huge role in the communities in which we

21:24

operate in and we

21:27

have roughly two thousand more them in Arizona.

21:29

But we are in this environment of remarkably

21:33

increased scrutiny of big tech companies.

21:35

You know, it's kind of the consumer companies. It's it's

21:38

Amazon and Apple and Google

21:40

and Facebook. But until went through this

21:43

in the two thousand's, right there were

21:45

there were There was a New York State uh

21:47

antitrust case, there was an FDC case,

21:50

a private case, and this was all before your time

21:52

and Intel. But what do you what do you think?

21:55

You know the lessons are for

21:57

big tech companies right now, and

21:59

I think at the most macro level, UM,

22:02

you've got to be a good citizen. The responsibility

22:06

we play for designing and building

22:08

technologies that have

22:10

a real positive impact on the world.

22:13

UM, you have to have a, you

22:16

have a real responsibility to ensure

22:18

that those technologies are being used

22:20

for the better. You've been a member of the Silicon

22:22

Valley community now for a while. Do

22:24

you think the tech industry has understood

22:27

that responsibility well enough for the most

22:29

part. Yes, I mean, I do think that

22:31

companies know that technology.

22:34

With development of technology comes a

22:36

sense of responsibility. And yeah,

22:39

I do think that my peers and um

22:42

um in my neck of the would understand

22:44

the responsibility that comes along with changing

22:46

the world with today's technologies. Are there

22:49

moon shots at Intel? Sure?

22:52

What are you excited about? It's hard not

22:54

to be excited about autonomous

22:57

driving. Yeah, the impact that it

23:00

have on society, you know, congestion,

23:02

if you talk about the role of tech

23:05

and CEOs congestion,

23:08

fewer cars operating seven

23:11

to reduce congestion and save lives

23:14

is extremely exciting. And we're in the very

23:16

only stage of that. We made great progress.

23:18

But um, as you said, whether it's

23:20

two thousan two thousand thirty, there's

23:22

a little ways to go in terms of fully

23:25

autonomous vehicles. That's that's very

23:27

exciting. So, Bob, earlier in the discussion,

23:29

we talked about the kind of inadvertently

23:32

a messy succession process that

23:35

brought you into the into the CEO chair

23:37

at Intel, not to us shure

23:39

you out of this job, but as

23:42

we wrap up, what is the next succession

23:44

at Intel look like? The next the

23:46

next CEO? That's right, Can you give me a

23:48

break? What have you

23:50

thought about that about? Of course? I mean to

23:53

a certain extent, one of the responsibilities

23:56

of any executive, whether it's

23:58

the CEO or the CFO is

24:01

and how are you building a team

24:03

such that, um, you can

24:05

hand the reins off to somebody that can

24:07

do something more special than you could have

24:09

ever done yourself. So I think that's that's

24:12

the role of every executive. And

24:14

so my role clearly is

24:17

deliver on the present, create

24:20

the future, whether it's moon shots

24:22

or whether it's you know, how

24:24

do you position the passing the

24:26

baton to the next generation of leadership?

24:29

And so, yeah, it's a sense of responsibility

24:31

that I think that the CEO

24:34

and the board really play. That you

24:36

have wonderful condre of people

24:38

around you, that you

24:41

encourage them, challenge them, learn from

24:43

them so that they can play at a different

24:45

level. So ultimately, um,

24:48

when the baton gets past hopefully

24:50

not too soon. Um that

24:53

that that that team

24:56

can take the company to a whole new level. Okay,

24:59

Bob, so they you very much. Bloomberg

25:05

Studio at one point, I was produced and edited

25:08

by Kevin Hines. Our executive producer

25:10

is Candy Chang. Our managing editor

25:12

is Danielle Culbertson. I brad

25:15

Stone, Senior Executive editor and head of

25:17

Technology coverage for Bloomberg News.

25:19

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