Yeah, let's get right into it. Spent a long time at Intel. Yeah.
Probably one of the greatest American companies ever. And then absolutely went off the rails and got absolutely demolished by Nvidia, TSMC, and I guess Apple to a certain extent. So, you had this incredible Intel Inside moment. We bought our computers based on, you know, hey, the Pentium and that sound.
Intel Inside. And so let's talk about how things went wrong.
What went right and then — how did it — and you were there for a long time. You took a break and then you came back. But there seem to have been some critical mistakes that we can learn from. So let's just embrace it and go right into it. Tremendous success as an American company, coming back now, I think, reasonably. But when you — when we look back on it and we do our post-mortem, what were the mistakes and what would we change in terms of the direction of that company?
Yeah. And you know, having spent so much of my life there, I view it — I joined when I was 18. I went through puberty at Intel, right? I joke, right? You know, just like — I am so early. Grove, Noyce, Barrett, right? And they were the people I grew up with. They were my mentors. They were the people I adored. And they were deeply technical.
Andy Grove. Gordon Moore. Bob Noyce, you know, co-inventor. You know, these were deeply technical leaders. I remember when I joined the executive staff for the first time, you know, there were probably 15 of the 20 people in the room who were PhDs, right? It was just that technical. And I view one of the things that went off the rail was when it started to be run by business people.
As opposed to technical people.
The bean counters, the finance people. Yeah. And you know, when I became CEO in 2001, that was the first technical leader in essentially 15 years. Right, you know, associated with it. And if you have a business leader, who does he promote? Business leaders. And you know, so I think one of the fundamental things is — and you know, as you look at the great technology companies today, they're deeply technical and founder-led typically. You know, and even if they're not, Satya is not a founder, right? Sundar is not a founder as well, but they're deeply technical individuals. And when you're making these hardcore technical decisions that affect billions of dollars, you don't do that through a spreadsheet — that's a lousy investment, right? Unless the technology trends make it the right investment. And I think that's one of the fundamental things. And obviously, in the five or six years before I came back, Intel gave a hundred billion dollars to shareholders.
A hundred — what I wouldn't have done for another hundred billion dollars on the books. What would you have done? You probably would have made a chip for iPhone, which Intel passed on.
Yeah. You know, but — you know, it hadn't built a new factory in a decade when I got there. It's like, how can you not be building? How could you not buy EUV machines? There's just all of these things that you would only do as a technologist, because the economics behind them by themselves were not good. So, getting back to the core of technology — to me, that was the fundamental thing. You know, you make good decisions, you make bad decisions as leaders. Every business does that as they go along. But fundamentally, this is a technology business, and you need technologists running technology, that then hire technologists that are sitting at the staff, that then hire the best technologists. And take big swings at categories that could matter in the future, like skating to where the puck's going. If you look at Apple, they did the same thing for the past 15 years: buying back the stock, tremendous amount of dividends. They're the largest holder of capital of any company, I believe, to this date. And what companies do they buy? They buy little tiny acquisitions on the margins. I think the largest one was Beats, because they wanted to get inroads into certain demographic segments, like the Android space that they couldn't get into. But my god, what a colossal waste of time.
Like you said, they could have done so many amazing things. Tell me about Steve Jobs in 2008, 2009, deciding — I think we're going to make our own silicon — and that impact. Because was that a covert product project, or did you guys know he was doing that? Did he inform you?
Well, that seemed to be another one of those forks in the road. Yeah. You know, Steve was an incredible leader. Yeah. You know, he was also a ruthless leader, right? Very difficult. You know, read Walter Isaacson's book on him. I had many, many conversations with Steve over the years. But, you know, when they moved to Intel and the Centrino chip, it was a big deal.
Right. And they were putting extraordinary demands on Intel. You know, make the chip smaller, drive lower power. They're a demanding customer. And when he was no longer convinced that we could continue to do that, you know, he started the project, right? And if you remember what it was — P.A. Semi. You know, they acquired some small companies, started to build some competency. But they did a few little chips internally. It wasn't a big deal. And then the little chips got a little bit bigger, and Steve was a master of this — just starting these small efforts to build core competence inside the company. I remember when we had the first conversation with Steve about porting the operating system to the Intel chip from the PowerPC chip that they were running on before they moved to Intel. And we were quite proud of the silicon and software competencies that we had, and compilers and operating systems. So, Steve, we'll help you port the operating system to the x86. And I remember that Steve said, 'I've been working on that for the last four releases.'
He had been preparing the core technologies inside of Apple for something that might happen in the future. And he was already — to me, I just remember I was just shocked. 'I've ported the last four releases to the x86. I think we got this.'
Right. You know, it was that kind of thing. And that's how they got into the semiconductor — doing their own semiconductor. 'I'm not sure I can rely on Intel to be that much ahead of the industry, and I can start optimizing the system design with the silicon design, as opposed to relying on one that's been somewhat optimized for a Windows environment versus an iOS environment in their operating system.' And you know, it was just — it was never that kind of thing. They sort of said, 'You failed as a supplier. No, I can supply myself better.'
Yeah. And Jensen decides, hey, he's going to go all in making these video cards. And talk about just incredible serendipity that these happen to also be very applicable for cryptocurrency and running these AI jobs.
Is that luck or skill or a combination of both there?
Well, you know, when you think about that progression — Jensen, he was just building high performance computers, throughput machines. You know, when we were at the height of our strength on CPUs at Intel, we sort of scoffed at his machines.
Right. You'd laugh, like, oh, it's a graphics machine. There's some gamers who want to use that kind of stuff. It was always the big CPU and those little GPUs. But when they started to build a real software stack with it — sort of, okay, this CUDA thing and SIMT as a technology, multi-threading and so on — it just sort of kept getting a little bit better and a little bit better, and it was a little bit Jobs-like in that way. We're just making it better every release, and it's becoming more robust. And all of a sudden, the crazy Japanese HPC guys said, 'Hey, we could take those graphics cards and maybe start using them in HPC,' right? And that was sort of a defining moment, where it wasn't just about doing graphics anymore. This was a more computationally dense platform to start attacking some of the world's most interesting workloads.
And I think Jensen would agree that was a defining moment — and them sort of saying, 'Oh, these aren't just graphics cards anymore.' You know, these are general-purpose computing devices that can start applying to these other workloads. And AI had gone through what — its fifth nuclear winter by that point — where it's like, man, this is never going to matter, we're never gonna get the breakthroughs. But the community around it was continuing to develop, and the CUDA software kept getting better, generation by generation. And I had a project at Intel, Larrabee, right? Where we were trying to take the x86 and essentially do the same thing. And in my first departure from Intel, the project was killed a week after I left.
And the world would have been so much different, right?
I mean, it really — I think it's illustrative of what continuous innovation, taking some risks, and doing that fundamental research, and the compounding power of technology can do. Because I think it was William Gibson who said the street finds its own use for technology. Like, Nvidia did not predict that this Bitcoin project would take over and that this would be the best way to do those computations, nor did they anticipate, I think, that AI would take off. But because it was the best solution, the hacker community could kind of figure that out. Well, as we wrap on the Intel portion of your career — okay, Apple Silicon, that's one. And then you have Nvidia. And then you have this Taiwanese company that starts making these chips — really great at fabricating these chips. And Intel missed that as well. And maybe you could talk a little bit about TSMC and their surging. And we can even get into a little bit of the politics of it now, and then we'll get into some of these AI chips and venture investing.
You know, the thing with TSMC was they started with a vision of foundry, right? That they were going to become the factory for the industry. And again, these factories are so expensive — 20 billion, 30 billion — and the engineering and the continuous investment required to do it. And it was a stunning vision at that point in time. Intel was IDM, as we called it — the integrated design and manufacturing. We never worked to make our process and our factories available for third parties, right? It was always this thing — hey, we do enough CPUs ourselves. We reuse it for chipsets and some of the other things that we're doing. But it was never standardized in a way that it could be made available for a broad ecosystem.
You know, using PDKs and all the design tools — we did a lot of our own EDA tools ourselves. One of the projects that I started early in my career was the foundations of EDA, right? The first place and route, the first standard cells, the first HDL — high-level description language. It was so proprietary. And TSMC basically cut that in half and says, 'I don't care whose chip it is. I don't care what you're designing. I'll be your manufacturing partner.' And at the time, that was such a trivial piece of the business, Intel didn't even care, right?
And then, over steady progress over a long period of time, and Apple as a customer driving them to become really meaningful. Obviously, the world changed. And when I came back to Intel in 2001, TSMC was producing 5x the wafers of Intel.
Right. Not 10% more — 5x. Yeah. And all of a sudden, that model of foundry became the model of the semiconductor industry, with two exceptions: Intel and memory. You know, memory — IDMs design and manufacture, right? — that is uniquely different. And obviously, we're seeing three trillion dollar memory companies, just extraordinary, and a trillion dollar foundry company in TSMC. The industry has said, 'I want a lot of wafers, I want a lot of innovation of different designs, I have a layer of standardization and EDA tools.' And the world changed. And obviously, as I came back to Intel, that was one of the core theses of the new strategy. Yeah, we must become a foundry as well. 5:1 — and now it's more like 7 to 1 in terms of wafers, TSMC to us.
Are we going to be able to onshore that? Obviously, we had the Chips Act. And just give us broad strokes — what you think is going to happen here in terms of — obviously, Taiwan is in play. Some people in the administration believe it's going to happen the year after Trump's out, unless he takes his third term. Other people believe it was going to happen as early as '27, or maybe going into '28. So, are we going to be able to replicate that here in America in a reasonable amount of time? Or is this like — truly could be a cataclysmic event if, god forbid, China decides, hey, we're going to blockade Taiwan, and then the Taiwanese decide, yeah, we're going to burn the fabs and we're going to fly out all of the engineers and ship them to America.
Well, there's a lot in that question, you know. Do we have an hour to talk about this question?
