Bob Swan takes the helm on a permanent basis after seven months in an interim role, becoming Intel's seventh CEO...
SAN FRANCISCO — Robert Swan, who has been serving as Intel's interim CEO since Brian Krzanich abruptly resigned last summer, has been awarded the job on a permanent basis.
Swan, who has also been the company's chief financial officer since 2016, becomes the seventh CEO in Intel's 50-year history. He was also named to Intel's board of directors.
Andy Bryant, Intel's chairman, said the company's search committee chose Swan after conducting "a comprehensive evaluation of a wide range of internal and external candidates to identify the right leader at this critical juncture in Intel’s evolution."
Bryant said a key to the board's decision was the "outstanding" job Swan did was interim CEO for seven months. "Bob’s performance, his knowledge of the business, his command of our growth strategy, and the respect he has earned from our customers, our owners, and his colleagues confirmed he is the right executive to lead Intel," Bryant said.
Prior to joining Intel in 2016, Swan's career included a nine-year stint as CFO of eBay as well as other CFO roles at Electronic Data Systems Corp. and TRW Inc. He also served as CFO, CEO and chief operating officer at Webvan Group after 15 years at General Electric.
Immediately prior to joining Intel, Swan had been an operating partner at General Atlantic LLC and served on the board of directors of leading semiconductor equipment firm Applied Materials.
Swan's Mission: Turn Around Battleship Intel
Intel remains a dominant force in chips, but the jury is out on how long that will be the case. Analysts say big decisions on the immediate horizon will determine where Intel stands years down the road.
Time for Swan to roll up his sleeves.
"It's a daunting task," said Jim McGregor, principal analyst at Tirias Research, to "turn around this aircraft carrier."
Intel's short-term prospects are certainly not dire. Despite losing the No. 1 ranking semiconductor sales that it held since the early 90s to Samsung last year, Intel just reported record sales for the third straight year. And the company is forecasting another record year in 2019.
What worries McGregor and other analysts is Intel's long-term strategy. Selling PC processors remains Intel's bread and butter, but with meaningful growth in PC sales vanishing earlier this decade, the company has been seeking to diversify for a number of years. The results have been mixed (though the company derived 46% of its fourth quarter revenue from its "data-centric" business, including data center, IoT, memory and programmable logic chips).
Despite its strength today, big decisions — including product and manufacturing strategy decisions — may ultimately determine whether Intel travels the road of another U.S. company that was once a chip making heavyweight but ceded its position — IBM.
"Intel is kind of standing on that cliff," McGregor said. "They need to decide how they can be a leader over the next 20 years."
Among the big decisions that Swan will have to make, perhaps none is more important than the future of Intel's manufacturing operations. Intel's struggles with 10nm yields over the past two years notwithstanding, the company's manufacturing muscle has always been one of Intel's crown jewels. But maintaining this manufacturing prowess is costly, and some believe the company might be better served outsourcing manufacturing in the long run.
"Quite honestly, I think this is the best move Intel could make," McGregor said of Swan's hiring. "He's a business guy, and Intel needs to make some strong business decisions because they need to grow."
Other analysts who spoke to EE Times also applauded the decision to award the job to Swan, who has served as Intel's chief financial officer since 2016. Swan's previous work experience includes mostly finance, including stints as CFO of eBay and several other firms.
"I do think Intel‘s strategy is the right one," said Patrick Moorhead,president and principal analyst at Moor Insights & Strategy. "The company needs to improve its execution, and bringing in an outsider without Intel experience didn’t make sense."
McGregor noted that Swan is not the first Intel CEO to come from a business rather than technical background. Paul Otellini, who served as Intel's CEO from 2005 to 2013, was the first non-engineer to hold the post.
"At this stage, I think he is the best choice Intel's board could make," said Kevin Krewell, also a principal analyst at Tirias.
Not a Technologist
Krewell said he initially thought choosing Swan would be a mistake, akin to "kicking the can down the street." But seeing Swan in person and listening to him talk about the company and strategy, Krewell was won over by Swan's balanced view of Intel's position in the market.
"I think that while he's not a technologist, he has a deep reserve of technical executives he can draw on," Krewell said.
Indeed, Swan demonstrated during the seven months he served as interim CEO that despite his lack of technical background he asks the right questions and was informed enough to make strong decisions, McGregor said. Intel could also benefit from the cultural change that a leader with Swan's background brings, McGregor said.
Intel has never had a CEO that was brought in from outside the company. While Swan is technically not an outsider, his relatively short tenure with the company also means he's not an Intel lifer, which could have major advantages in terms of perspective and injecting some new blood at the top of the organization.
"Some are talking like he's an Intel insider, but he only joined Intel in 2016," Krewell said. "He does bring an outsider's view of the company, while he has also established good connections within the company. And as acting CEO he's not been afraid to make changes and has pursued the board's plans."
While Swan clearly has a tall task in front of him, some in the chip industry wondered why it took Intel seven months to pick the guy that they already had running the show. Rumors swirled that some of Intel's top choices weren't interested in the job.
Moorhead noted that Swan initially said he wasn't interested in the job on a permanent basis. "I am a bit surprised as Swan said he didn’t want the role," Moorhead said. "But I always thought that he should be considered."
Moorhead said that Swan has told him that he really started to enjoy the job once he held the interim job. (In a letter to employees, customers and partners posted Thursday, Swan alluded to this change of heart and said he jumped at the opportunity when approached by the board).
According to Moorhead, the CEO search took a long time because Intel's board didn't know exactly what it wanted at first. Moorhead added that Swan will have plenty of help steering Intel.
"Intel has a very strong bench — two who were considered for the CEO role — that will help Swan and Intel," Moorhead said.