A bomb went off in the tech world last week when Intel’s CEO suggested the mighty microprocessor manufacturer might do the unthinkable and outsource the manufacturing of its chip. To call it the end of an era, as everyone immediately has, is no understatement.
Intel’s silicon chips are the brains of our modern personal computers, in no small part because of Intel’s superior hi-tech fabrication technology. Intel’s factories have been some of the most advanced in the world over the past 30 years of this remarkable 52-year-old company.
But, fearing that its production plans for the next generation of processors would be further delayed, CEO Bob Swan told analysts about the outsourcing idea. Intel shares fell 16%.
If this truly is the beginning of the end for the once-mighty processor manufacturer, history will record it as a stunning fall from grace. And a final betrayal of its legendary former CEO Andrew Grove’s mantra "only the paranoid survive". Grove was employee number three at Intel, and its third CEO, and the man who built it into the powerhouse it became at its height.
As improbable as it seems, the tech company that has prospered the most is Microsoft, whose obituary has been written many times. Microsoft has moved with the times; and gone into the cloud, effectively retiring its Windows brand into the Azure division. Intel hasn’t advanced in the same way.
A major part of its misstep was to underestimate the mobile phone space. Until Steve Jobs unveiled the iPhone in 2007, Intel was much more focused on its core competence: desktop (including laptop) processors.
If this truly is the beginning of the end for Intel, history will record it as a stunning fall from grace
The two giants controlled the computing world, along with Microsoft’s Windows. Adverts for laptops always featured an "Intel inside" logo – part of a marketing strategy in which Intel gave PC makers marketing dollars that came with stringent conditions.
Both firms saw cellphones merely as keypad feature phones.
It took a total outsider to see the big opportunity for mobile computing. With nothing to lose and no legacy business to worry about, Apple went mobile. And the world followed.
Intel’s announcement validates Apple’s recent decision to use iPhone and iPad processors in future laptops and desktops. It is another sign of the profound impact mobile is having on the desktop industry.
Intel’s suggestion of outsourcing — conceivably to Taiwan or China, where such facilities are located — will play havoc with the trade war stalemate between the Trump administration and Beijing.
Part of US President Donald Trump’s trade campaign against Chinese firms is to limit access to US technology — hence the ban that prevents Huawei from using the Android Play Store or apps from Facebook, Twitter, WhatsApp and Instagram.
Ultimately, it seems Intel’s recent crop of leaders never took Grove’s advice seriously enough.
Only the paranoid survive.
- Shapshak is editor-in-chief and publisher of Stuff magazine
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