Enterprise

Intel had a major shareholder meeting. It did not go smoothly.

The company said at its annual shareholder meeting in San Francisco that it won’t be able to make chips in the future without assistance from the U.S. and EU.

Patrick Gelsinger, chief executive officer of Intel Corp., right, speaks with U.S. President Joe Biden

“The Intel turnaround train is leaving the station, and I hope you all get on board," Intel CEO Pat Gelsinger said.

Photo: Yuri Gripas/Abaca/Bloomberg via Getty Images

Intel’s been struggling to right its business for years, but you would never know that from its shareholder meeting.

Lattes with its corporate logo stenciled into the foam were available to order, and executives finished the day with investors on the 39th floor of a posh downtown San Francisco hotel with expansive views of the Bay Bridge.

On stage and in small rooms crowded by shareholders and financial analysts, Intel executives outlined the company’s strategy for the foreseeable future: to double down on its manufacturing business, which now includes the $5.4 billion acquisition of Tower Semiconductor; to remake its chips to once again become dominant; and to enter new markets for graphics processors and other chips that are currently ruled by Nvidia and AMD.

“I want to double the earnings of this company and double the multiple of this company as you build confidence in what we're doing,” CEO Pat Gelsinger said Thursday. “The Intel turnaround train is leaving the station, and I hope you all get on board. It's an ambitious goal, but I am confident Intel's best days are in front of us.”

But the actual train tracks ahead are still being built, and the company could be in for a rough ride at times. After Intel outlined its strategy for the next five years, the company disclosed that it was delaying the first server chip it planned to make with its most advanced manufacturing process, which it has struggled with for years.

An Intel Sapphire Rapids wafer on display. An Intel Sapphire Rapids wafer on display. Photo: Max A. Cherney/Protocol

Intel is running up against another problem, too: Chip manufacturing is measured in sums of cash numbering in the hundreds of billions of dollars. According to a lesser-known observation from Intel co-founder Gordon Moore, the company — and every other chip manufacturer on the planet — will be unable to afford the equipment needed to make chips, as the costs increase exponentially above revenue. Moore didn’t outline a time frame for it to occur back in 1995 when he first made the observation, but the equipment is steadily getting pricier.

The plans Intel outlined at the shareholder meeting are going to cost $85 billion over the next three years, according to Jefferies chip analyst Mark Lipacis. That sum is the equivalent cost of constructing roughly half of the NFL’s 32 teams a brand-new stadium, like the one recently built in Los Angeles for the Rams and Chargers. Beyond that impressive amount of cash, Intel did not offer up a forecast for its spending plans beyond this year, saying only that its profit will be hurt in the short term as a part of its effort to return to its past glory. But even at that level, Intel said it can’t afford to spend all the money itself: It has enlisted the help of the U.S. and EU, as well as Brookfield, one of the largest asset managers in the world, for the real estate.

At the investor conference, Intel said that roughly 10% of the projected spending will come from outside sources. And in the future, the company said it will rely on governments to make up for the rising cost of chipmaking tools.

More than two-thirds of Intel’s bill for expanding its manufacturing capacity is from buying the thousands of complex tools needed to print chips. The marquee item is an order of machines exclusively made by the Dutch corporation ASML that are used for lithography, the step in the manufacturing process where beams of light draw the features onto silicon wafers. The current generation of extreme ultraviolet lithography tools cost roughly $180 million per machine. The next generation of high-numerical aperture EUV machines cost double the amount.

Each factory requires several EUV machines, depending on how big a manufacturing facility is. Typically lithography tools are the bottleneck for manufacturing capacity, since the hundreds of other machines needed are less costly and easier to build.

“This is where governments are stepping in,” Intel Chief Global Operations Officer Keyvan Esfarjani said. “It’s not just grants, it's the infrastructure … To preserve the industry, we need to make sure this goes beyond just Intel.”

Esfarjani said that the cost of accomplishing what Intel and other chipmakers have planned is understood at the highest levels of governments in the U.S. and Europe. The recognition has arrived largely because of geopolitical concerns coupled with the possibility that chip manufacturers will continue to expand their operations in jurisdictions in Asia and elsewhere that offer subsidies and other incentives for companies to construct facilities.

“The economics [are] going to force this whole industry to Asia and other places where they do give those kinds of offsets,” Esfarjani said. “This isn’t just, ‘Let’s subsidize this.’ Nobody has $20 billion to just go: next one, next one, next one.”

LA is a growing tech hub. But not everyone may fit.

LA has a housing crisis similar to Silicon Valley’s. And single-family-zoning laws are mostly to blame.

As the number of tech companies in the region grows, so does the number of tech workers, whose high salaries put them at an advantage in both LA's renting and buying markets.

Photo: Nat Rubio-Licht/Protocol

LA’s tech scene is on the rise. The number of unicorn companies in Los Angeles is growing, and the city has become the third-largest startup ecosystem nationally behind the Bay Area and New York with more than 4,000 VC-backed startups in industries ranging from aerospace to creators. As the number of tech companies in the region grows, so does the number of tech workers. The city is quickly becoming more and more like Silicon Valley — a new startup and a dozen tech workers on every corner and companies like Google, Netflix, and Twitter setting up offices there.

But with growth comes growing pains. Los Angeles, especially the burgeoning Silicon Beach area — which includes Santa Monica, Venice, and Marina del Rey — shares something in common with its namesake Silicon Valley: a severe lack of housing.

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Nat Rubio-Licht

Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.

While there remains debate among economists about whether we are officially in a full-blown recession, the signs are certainly there. Like most executives right now, the outlook concerns me.

In any case, businesses aren’t waiting for the official pronouncement. They’re already bracing for impact as U.S. inflation and interest rates soar. Inflation peaked at 9.1% in June 2022 — the highest increase since November 1981 — and the Federal Reserve is targeting an interest rate of 3% by the end of this year.

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Nancy Sansom

Nancy Sansom is the Chief Marketing Officer for Versapay, the leader in Collaborative AR. In this role, she leads marketing, demand generation, product marketing, partner marketing, events, brand, content marketing and communications. She has more than 20 years of experience running successful product and marketing organizations in high-growth software companies focused on HCM and financial technology. Prior to joining Versapay, Nancy served on the senior leadership teams at PlanSource, Benefitfocus and PeopleMatter.

Policy

SFPD can now surveil a private camera network funded by Ripple chair

The San Francisco Board of Supervisors approved a policy that the ACLU and EFF argue will further criminalize marginalized groups.

SFPD will be able to temporarily tap into private surveillance networks in certain circumstances.

Photo: Justin Sullivan/Getty Images

Ripple chairman and co-founder Chris Larsen has been funding a network of security cameras throughout San Francisco for a decade. Now, the city has given its police department the green light to monitor the feeds from those cameras — and any other private surveillance devices in the city — in real time, whether or not a crime has been committed.

This week, San Francisco’s Board of Supervisors approved a controversial plan to allow SFPD to temporarily tap into private surveillance networks during life-threatening emergencies, large events, and in the course of criminal investigations, including investigations of misdemeanors. The decision came despite fervent opposition from groups, including the ACLU of Northern California and the Electronic Frontier Foundation, which say the police department’s new authority will be misused against protesters and marginalized groups in a city that has been a bastion for both.

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Issie Lapowsky

Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University's Center for Publishing on how tech giants have affected publishing.

Enterprise

These two AWS vets think they can finally solve enterprise blockchain

Vendia, founded by Tim Wagner and Shruthi Rao, wants to help companies build real-time, decentralized data applications. Its product allows enterprises to more easily share code and data across clouds, regions, companies, accounts, and technology stacks.

“We have this thesis here: Cloud was always the missing ingredient in blockchain, and Vendia added it in,” Wagner (right) told Protocol of his and Shruthi Rao's company.

Photo: Vendia

The promise of an enterprise blockchain was not lost on CIOs — the idea that a database or an API could keep corporate data consistent with their business partners, be it their upstream supply chains, downstream logistics, or financial partners.

But while it was one of the most anticipated and hyped technologies in recent memory, blockchain also has been one of the most failed technologies in terms of enterprise pilots and implementations, according to Vendia CEO Tim Wagner.

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Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Fintech

Kraken's CEO got tired of being in finance

Jesse Powell tells Protocol the bureaucratic obligations of running a financial services business contributed to his decision to step back from his role as CEO of one of the world’s largest crypto exchanges.

Photo: David Paul Morris/Bloomberg via Getty Images

Kraken is going through a major leadership change after what has been a tough year for the crypto powerhouse, and for departing CEO Jesse Powell.

The crypto market is still struggling to recover from a major crash, although Kraken appears to have navigated the crisis better than other rivals. Despite his exchange’s apparent success, Powell found himself in the hot seat over allegations published in The New York Times that he made insensitive comments on gender and race that sparked heated conversations within the company.

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Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.

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