Semiconductor factories are the oil reserves of the 21st century, Intel CEO says
My assignment at Brainstorm Tech yesterday was to interview Intel CEO Pat Gelsinger, who is a man on a mission. And it’s a mission not just to turn around the most iconic company in Silicon Valley, but also to address what may be the greatest geopolitical vulnerability that the U.S. faces today. As Gelsinger told the group, where semiconductors are made is as important for the 21st century economy as where oil reserves were located was to the 20th. And right now, the bulk of them are made in Taiwan, which is 100 miles off the Chinese mainland and considered by Beijing as part of its territory.
The internal challenge Gelsinger faces is big enough on its own. The company has fallen behind its competitors, and in Gelsinger’s view, has underinvested in technology. He is spending tens of billions of dollars to turn that around, building new fabs in the U.S. and Europe, and opening them up to manufacture for outside designers. That’s a business in which Samsung and Taiwan Semiconductor have years of experience. Catching up with them won’t be easy.
Then there’s the geopolitical challenge. Gelsinger is unapologetic about asking the U.S. and EU governments for help. He says both Samsung and TSMC benefit from large government subsidies, and Chinese chip companies get even more. But the CHIPS act is stuck in Congress, and Gelsinger is spending a good chunk of his time trying to unstick it. The bill provides support to all three companies—Samsung, TSMC and Intel—for building fabs in the U.S., but Gelsinger believes Intel, as a U.S. company, deserves an extra advantage.
I asked Gelsinger how long it will take for us to know whether his bold strategy to reposition Intel is succeeding. He said two to three years. There are lots of reasons to hope he succeeds.
Separately, I participated in a luncheon discussion that raised the question: Will “impact investing”—investing in companies that have a positive social impact—eventually become just good investing, much as “stakeholder capitalism” will eventually become just good management? Steve Ellis, co-managing partner of TPG’s The Rise Fund and Lo Toney, founding managing partner at Plexo Capital, both agreed. “At some point, this does become just good investing,” said Ellis. “When, I don’t know.”
More from the conference here. More news below.
Omicron jitters continue on Thursday, a day after the U.S. said it would tighten travel restrictions. The rise in cases is threatening the rebound in the eurozone, and already hitting consumer spending as restrictions mount; meanwhile, the OECD has warned that the virus looks likely to only intensify the inflation and labor shortages gripping much of the globe. FT
Echoing other optimistic statements from scientists that Omicron might not be as terrible as feared, GSK says an antibody cocktail it is developing with Vir is likely to be effective against the Omicron variant, following tests against viruses that model the new strain's mutations. Meanwhile, the U.K. regulator approved the drug, called sotrovimab, for treatment of COVID-19. Reuters
The Future 50
Fortune's Future 50 list is live this morning. You can explore the companies who made the grade here, and then walk through the trends that are shaping fast growing companies—and how the returns on previous years' lists have fared since. Fortune
Will Moderna's run continue?
After exploring the list, take some time to dive into Rey Mashayekhi's magazine piece on Moderna's turbo-powered, pandemic-fueled run—and whether the company, now essentially a one-product business, can continue that run. Rey writes: "The big question for investors now: Is most of Moderna’s upside already priced in, or is it still early days for what could become one of the world’s leading health care companies?" Fortune
AROUND THE WATER COOLER
From Square to...Block?
Name changes are popular these days. Just days after Square's CEO, Jack Dorsey, resigned his other role as head of Twitter, the company said it is changing its name—perhaps as an allusion to Dorsey's investments in cryptocurrencies. The company currently holds $220 million of Bitcoin, and its market cap has far outstripped that of Twitter. Fortune
Amsterdam's SPAC boom
Despite Shell's departure for London, Amsterdam is having a roaring year of IPOs—the city's AEX index is up 27%, more than double that of the FTSE 100, and was home to 40% of this year's European listings. Bloomberg
China's real estate wealth
"China is a nation of savers, and real estate is where the country stashes its money," writes Fortune's Yvonne Lau. But after an incredible real estate boom, she writes that Beijing is trying to wean the country off its property debt, and the country's housing prices are suddenly starting to tick downwards. The collapse of Evergrande, the real estate giant, has only increased the jitters. Fortune
Supply chain crisis
Canada's British Columbia has been hit hard by disaster after disaster this year: droughts, fires, and now floods—which threaten to cut the port of Vancouver off from much of the country. But the compounding natural disasters snarling the supply chain are merely a sign of what's to come, writes Kat Eschner. Fortune
This edition of CEO Daily was edited by Katherine Dunn.
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