The Strategic Importance of Intel’s New CEO

on May 2, 2013

This morning Intel finally announced the successor to current CEO, Paul Otellini. Otellini steps down later this month and new CEO, Brian Krzanich, who is currently their COO, will then become CEO.

Here is a short background on Krzanich:

Brian M. Krzanich is executive vice president and chief operating officer for Intel Corporation. He is responsible for Intel’s global manufacturing, supply chain, human resources and information technology operations.
Previously, Krzanich was responsible for Assembly Test from 2003 to 2007. From 2001 to 2003, he was responsible for the implementation of the 0.13-micron logic process technology across Intel’s global factory network. From 1997 to 2001, Krzanich served as the Fab 17 plant manager, where he oversaw integrating Digital Equipment Corporation’s semiconductor manufacturing operations into Intel’s manufacturing network. The assignment included building updated facilities as well as initiating and ramping 0.18-micron and 0.13-micron process technologies. In 1996 and 1997, Krzanich was the Fab 6 plant manager in Arizona. From 1994 to 1996, he was a manufacturing manager for Fab 12 in Arizona. He also served as a process engineer at various Intel locations. Krzanich joined Intel in 1982.

Krzanich was presented an Intel Achievement Award in 1999. He holds one patent for semiconductor processing.
Krzanich received a bachelor’s degree in Chemistry from San Jose State University in 1982.
They also named Renee James President of Intel.

So what does this new leadership change mean for Intel’s future?

We believe this move is quite strategic and sets up an important new phase in Intel’s history. Brian’s strong role in running manufacturing will help Intel drive even more aggressive research and potential partnerships to keep their fabs running at full capacity. Intel is moving fast from 22 nm to 14 nm process designs, which fundamentally says Intel is doubling down in mobile and see’s this as their real future.

It is important to note that Brian’s role is to drive Intel’s strategy and be responsible for what R&D focuses on and anticipate future demands of their partners and what consumers will want in the future. This is what Otelinni has been doing and this top focus will now be in the hands of the new CEO. However, Brian’s intimate understanding of manufacturing and what makes the fabs tick is just as strategic.

We have heard that with the slowdown in the PC industry, most PC semiconductor fabs are not running at full capacity. However, from a bottom line standpoint, fabs need to run at full capacity if they are to be profitable. Intel recently announced the Intel Custom Foundry, which they offer fab manufacturing to fabless companies and has already started doing work for some small fabless design firms. However, Otellini has said that over time they could do work for big companies. I believe Intel’s top priority is filling the Fabs with their own chips, but one possible reason for this move is that over time Intel’s Custom Foundry could become even more strategic to Intel’s future.

Intel has also been criticized for not have a strong succession plan in place. I believe naming Renee James as president is also strategic. Intel has to deal with the possibility that if anything happened to Brian, Renee James could step in and a transition to new leadership in this situation would be seamless. One could decipher from this that James could be the next Intel CEO when Brian leaves the office (Intel has an age cap on CEOs) but I don’t think this necessarily so. I suspect her role as president could set her up for this but strategically speaking, this is in probably in place to protect a line of succession for the immediate future.

We are entering a new era in personal computing and quickly moving to what Steve Jobs called the post PC era. While PCs are not going away, mobile and embedded processors need to be the future of a company like Intel. Brian will have a daunting task to migrate Intel from its PC past and into a new era of personalized computing. I believe this move is the right one for Intel and naming someone with a long history at Intel and a strong manufacturing background is best for Intel at this time.