It was the beginning of 2021 when Greg Lavender, at the time the chief technology officer at VMware, received a career-altering phone call from then-CEO Pat Gelsinger.
Gelsinger, who had steered VMware for more than eight years, would be leaving the cloud-computing firm to return to chip maker Intel, where he had spent three decades of his career.
“I wish you a lot of luck,” Lavender recalls telling Gelsinger. “I’ll be cheering from the sidelines.”
The pair worked together for three years at VMware and Lavender’s plan was to ride it out as CTO a bit longer until retirement. But Gelsinger called again two months later, asking Lavender to steer Intel’s software division.
“It’s hard to say no to Pat,” says Lavender, who put his retirement plans on hold and joined Intel as CTO in June 2021.
One of the first projects Lavender took on was getting execution buttoned up for Intel’s latest Xeon processors, which were already running 18 months behind schedule and would take another 18 months to get to market.
Part of Lavender’s job has involved changing the mindset at Intel. For years, the chipmaker had a dominant market position. But with great success came arrogance. Intel was spending too much money on stock buybacks and dividends to please Wall Street investors and not enough to support innovation. And as AI has taken off, Intel is now on its back foot against Nvidia and AMD. (AMD is a sponsor of CIO Intelligence.)
Lavender went on a listening tour with customers, who were quick to share that Intel had been tone-deaf. “Just because you build it, doesn’t mean they will come,” was the overriding message Lavender came away with. “The loyalty only goes so far with the brand.”
He’s also turned his ear inward, looking for valuable internal insight to help guide his approach. When developing products, for instance, Lavender thinks of Intel’s IT team as customer zero. They test everything and give feedback to improve Intel’s products before they are sold to customers. “I want them to talk to my CIO and say, look, it works for us, and here’s what we do with it,” says Lavender.
Intel’s efforts to right the ship were on display at the Computex tech conference in Taiwan this week. Intel aims to undercut its AI chip competitors on price with its Gaudi 2 and Gaudi 3 AI accelerators. Demand for Gaudi 2 has been “through the roof,” Lavender tells Fortune, in an interview conducted ahead of Computex. Beyond Gaudi 3, Lavender says Intel’s next-generation graphics processing unit (GPU) is set “on competing with Nvidia and we think we can exceed AMD and get into second place.”
By 2030, the global semiconductor industry could be a $1 trillion market, bolstered by growth in AI, electric cars, and wireless. Intel is unique in that unlike Nvidia and AMD, it not only designs the company’s chips but also makes them. Intel’s manufacturing business is huge, generating $18.9 billion in sales last year but posting an operating loss of $7 billion.
As the U.S. seeks to lessen its reliance on overseas chip manufacturing, particularly in Taiwan, Intel is hoping its manufacturing know-how will position it to thrive in a changing landscape. Already, Intel is planning a $100 billion spending spree over the next five years to build projects in four U.S. states, bolstered by $19.5 billion in federal grants and loans, and billions more in tax breaks. Analysts expect the spending will help stabilize the American chip industry, though China is also improving its position.
“Pat called it the new oil of the 21st century,” says Lavender. “It’s the most important commodity that the world needs.”
John Kell
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NEWS PACKETS
The AI chips war heats up with new releases from Nvidia, AMD, and Intel. A trio of chip makers made a splash in Taiwan, with Nvidia angling to retain the company’s 70% AI semiconductor market share and AMD and Intel seeking to challenge that dominance. Many CIOs and CTOs will say they welcome greater competition in the market, which would result in more elasticity on price. But Nvidia is making it difficult with the whirlwind pace of new chip launches—the company's newly announced Rubin family of AI chips will succeed Blackwell, which was only just announced in March.
PwC inks a new deal with ChatGPT to boost enterprise sales. Accounting firm PwC, which last year announced plans to invest $1 billion in generative AI, says it will become the largest customer and first reseller of OpenAI’s enterprise product called ChatGPT Enterprise. PwC will use ChatGPT Enterprise to test the technology internally before passing along those learnings to clients. Firms like PwC have been some of the earliest winners when it comes to generative AI, as companies turned to consultants for help on how to best deploy the tech. Businesses are expected to spend $1.52 trillion on IT services this year, up 9.7% from 2023, reports the Wall Street Journal.
Data breach adds to Ticketmaster’s woes. Only one week after the Justice Department sued Ticketmaster and its parent company, Live Nation, for allegedly violating antitrust laws, Live Nation said it was investigating a data breach that may affect more than 500 million customers. Media reports say that ShinyHunters is claiming responsibility for the breach, a hacking group that’s marketed stolen data from over 60 firms globally since early 2020, according to the Justice Department. Live Nation says it is working with law enforcement and doesn’t believe the hack will have any financial or business operation impact.
ADOPTION CURVE
A rising AI tide. Rising interest in generative AI is resulting in a cascading demand for a broader set of “traditional” AI capabilities, a new survey from McKinsey shows. For the past six years, AI adoption had hovered at around 50% but this year, McKinsey’s survey showed adoption leaped to 72%. And these gains are global: The 2023 survey found that AI adoption didn’t reach 66% in any region but this year, more than two-thirds of respondents in nearly every region said their organization is using AI.
But as other surveys have shown, generative AI adoption remains pigeonholed in productivity-related tasks: marketing and sales, product and service development, and IT functions. Generative AI has made fewer inroads in strategy and corporate finance, manufacturing, risk, and supply chain/inventory management.
JOBS RADAR
Hiring:
- Redaptive, a firm that specializes in making commercial and industrial buildings more energy efficient, is seeking a CTO based in Denver. Posted salary range: $300K to $350K/year.
- Snowflake, a cloud data firm, is seeking an industry field CTO for media and entertainment, a remote role. Posted salary range: $150K to $210K/year.
- WestEd, a nonprofit education research organization, is seeking a VP of IT based in San Francisco. Posted salary range: $217.6K to $272K/year.
Hired:
- MidWestOne Financial named Paul Ho-Sing-Loy as CIO, one of three new executive leaders appointed by the Iowa-based bank. He joins MidWestOne from Lakeland Bank, where he served as EVP and CIO and focused on digital strategies and cybersecurity. He also previously worked at Wells Fargo and Bank of America.
- ServiceNow appointed Kellie Romack as chief digital information officer, taking over the role from Chris Bedi, who is now chief customer officer. Romack joined ServiceNow in 2022 as SVP of digital technology experience and previously held leadership roles at Walmart and Hilton.
- Tricentis has appointed Damien Johnson as CTO for the Americas division. Johnson previously served as global chief architect for RISE with SAP and helped the German software company’s customers modernize and migrate to the cloud.
- Scripta Insights announced David Kershaw has joined as CTO, joining the venture-backed digital health startup with more than 20 years of experience leading engineering teams, including in health care and biotech. Kershaw most recently served as VP of engineering for retail software company Tactiq.
- Token announced two executive appointments, including naming Robert Osterwise as CTO. Most recently, Osterwise held a VP role at Stanley Black & Decker and previously held tech roles at AT&T and Giesecke & Devrient.
- EverCommerce appointed Ellora Sengupta as CIO. A 2022 Bay Area CIO of the Year ORBIE award winner, Sengupta brings more than 25 years of experience in leading IT and digital transformation, including at Procore Technologies, Samsara, Workday, and Cisco.
