Most transformational segment at intelligent edge will be transportation or mobility: Bob Swan, Intel

Legendary Intel CEO, Andy Grove, talked about “strategic inflection points,” periods of fundamental change in a business, an industry, or even the world. At such times, he said, clarity about what you uniquely do and why you do it is essential to defining your path forward.

The emergence of data as a transformational force is such a moment—for the world and for Intel. We already create technology that enriches lives, serving every industry, every sector of society, and nearly every person on earth, every day. But now nearly everything looks more like a computer and therefore what it means to have “Intel Inside” is changing.

A computer is no longer simply a PC or a server in a data center, or even a phone. Computing is permeating all of our interactions: the global communications network, every retail experience, vehicle, hospital, farm, and factory floor. This is helping unleash the potential of data in every part of our lives and create societal and economic value on a global scale.

Intel Inside now goes well beyond the familiar CPU in your PC to include processors that orchestrate a network, visual processing units that help give a car awareness of its environment, and ASICs specially tuned to machine learning algorithms. Also, new, highly flexible packaging technologies enable platform solutions that solve our customers’ biggest challenges.

This profound evolution in computing opens a much larger opportunity with implications for every aspect of our business. As Intel’s leadership team, we must re-imagine the world through this change, and move forward boldly, not constrained by history. This includes the iconic Intel culture that helped define not just our company, but Silicon Valley itself.

In some regards, that culture is more differentiating than ever, particularly the value we place on brilliant engineering, integrity, truth, and transparency. But we also know that we must continue to evolve our culture. We must approach every day with a growth mindset.

Steps in 2019

We took important steps in that direction in 2019. Our focus on data drove record financial performance, informed strategic investments, and gave us the conviction to make tough decisions about what not to do. The result is an Intel that is more relevant in a world where AI is pervasive, networks are transforming for unprecedented amounts of data, and more intelligence is moving to the network edge. These emerging opportunities all benefit from Intel’s unique ability to re-imagine the boundaries of innovation, achieve economies of scale, and build global ecosystems.

Our progress on this journey and our record results are gratifying, but they're not a reason for complacency. Our ambition is to play a much larger role in our customers’ success. Therefore, we need to ensure that we exceed their expectations and deliver what they need when they need it. Sometimes, we failed to do that last year, and that was unacceptable.

Customers look to Intel for a predictable cadence of high-performance products and technologies that are integral to their success. They also look for products that are designed for privacy and security, and manufactured in a sustainable, ethically sourced way. Accountability comes with the territory. We will improve our execution.

We are positioned for another strong year in 2020. We will continue to make significant investments in R&D and capital expenditures to deliver an unmatched portfolio of leadership products, increase capacity for our customers, and accelerate our Moore’s Law transitions. We expect to return in excess of 100% of free cash flow in 2020 through our dividend and share repurchases.

Finally, we will leverage our leadership position in the global tech ecosystem to help Intel and the industry make more progress in corporate responsibility, environmental sustainability, diversity, and inclusion. No one company, no matter how significant, can solve these problems alone. We will soon outline long-term goals to extend our positive global impact through 2030 and beyond.

To explain why I am so confident in our future, let me briefly address three key elements of our journey going forward: investing in strategic technology inflections to accelerate growth; executing and innovating inspired by Moore’s Law; and, critically, taking our culture forward.

Embracing strategic inflections

Intel at its best creates technologies that have true global impact. The PC, the Internet, and the cloud were fully realized in part because of the power of our technology and the richness of our ecosystem. The technology inflections now driving the data revolution—AI, 5G, and intelligent edge—will similarly rise on a foundation of great technology, shared standards, and scale economics that unlock the creativity of innovators around the world.

As a result, our opportunity and our ambitions have never been greater. Our strategy to help customers unleash the potential of data has increased our addressable market by about five times, to nearly $300 billion. And, we made significant progress in 2019, repositioning Intel for these new inflections.

According to IDC, 75% of enterprise applications will use AI by 20212. That's why we're infusing AI into everything we build. One reason Cascade Lake is our fastest ramping Intel Xeon processor ever is its unrivaled AI performance, including built-in Intel Deep Learning Boost technology. Our Intel Movidius Vision Processing Unit is a performance leader for AI at the edge, and we recently acquired Habana Labs, further strengthening our broad AI portfolio.

With products spanning from the cloud to the intelligent edge, we generated billions in AI-driven revenue in 2019, growing in strong double digits.

We also have a very significant networking business helping our customers transform their networks with a cloud-style infrastructure that’s more flexible and efficient, virtualizing workloads on Intel architecture-based servers.

The 5G era will significantly increase demand for computing throughout the network. Many services delivered from a distant cloud today will be processed nearby to improve the experience—at what we call the intelligent edge—whether the context is AI-assisted retail or a super-efficient factory.

Perhaps, the most transformational segment at the intelligent edge will be transportation or "mobility,” where Intel is a leader, thanks to our acquisition of Mobileye two years ago. We couldn’t be more excited about our progress toward winning the $70 billion-plus opportunity for advanced driver-assistance systems, autonomous vehicles, and crowd-sourced maps generating valuable data. We aim to play an even larger role in the $160 billion opportunity for mobility-as-a-service.

We recently demonstrated our capability in a very public way when analysts and media from around the world test drove our technology on the demanding roads of Jerusalem, where the industry’s leading autonomous vehicle solution navigated a wide variety of driving complexities and delivering unmatched agility and safety.

Executing, inspired by Moore's Law

Our co-founder, Gordon Moore, articulated a law of exponential improvement for semiconductors in 1965 that led us from tens, to tens of billions of transistors per chip. His simple thought experiment still inspires our team every day to continue reinventing not only transistors, but everything we do.

To keep his vision alive, we are innovating and investing across six pillars of technology that will fuel our product leadership: process and packaging, architectures, memory, interconnects, security technologies, and software. At the same time, Intel Labs is researching completely new approaches to computing—such as neuromorphic, probabilistic, and quantum—that could unlock completely new opportunities.

Our process technology and design engineering teams are working closely to simplify design and balance schedule, performance, power, and cost, leveraging each of our six pillars. In 2020, we will continue to make progress with important new products, platform initiatives, and software optimizations.

* Data center performance will advance when our 3rd generation Intel Xeon scalable processor debuts in the second quarter of 2020 with "Cooper Lake," followed by initial production shipments of 10-nanometer "Ice Lake" in the latter part of the year. We will also continue to deliver platform solutions in the data center, combining advancements in CPU with technologies like Intel Optane DC persistent memory.

* Client performance in mobile has excellent momentum to date on the strength of 10-nanometer Ice Lake system designs, and will advance with our newest Intel Core mobile processors, code-named “Tiger Lake,” later this year. Our Project Athena program also helps the industry create laptops with truly exciting innovations that consumers and businesses really care about, including longer battery life and instant wake features. Together with our partners we expect to have verified more than 70 Project Athena designs across Windows and Chrome by the end of this year.

* Software optimization is critical for any workload on an individual silicon architecture, but it isn't enough to approach each in isolation when customers' problems increasingly demand diverse computing architectures. That’s why we launched the oneAPI industry initiative to deliver a unified and simplified programming model for application development across a global ecosystem on diverse architectures.

* Our pipeline of innovative 10-nanometer products is strong. We are accelerating the pace of process node introductions, moving back to a two- to two-and-a-half-year cadence with 7-nanometer based products and we are well down the engineering path on 5-nanometer.

Evolving our culture

Intel has a wonderful culture, and we want to keep all the elements that have made our company special. But, we also know that healthy and successful organizations evolve and adapt as circumstances change.

When you are the clear leader in any field—as Intel has been in semiconductors for PCs and servers—there is a danger that your listening skills and your curiosity about the world will erode. This is a big part of what Andy Grove meant when he said, “Only the paranoid survive.” That comes into sharp focus when you aggressively reposition your company to address a major new market opportunity, as we are today. In an estimated $300 billion market opportunity, we have under 25% share, with a more diverse universe of customers and increased competition.

This has several important cultural implications:

We must be customer obsessed. When you want to play a bigger role in your customers’ success, and when the sources of that success are shifting, you must understand their ambitions and their challenges so you can anticipate their needs.

We must show up as “One Intel.” When you expand your horizons, you have a lot of new competitors. You must bring everything you have—your collective talents—in order to win.

We must be fearless. When you become a challenger, you’re highly motivated to reinvent yourself and your portfolio, and not simply protect what you built. Fortunately, we have the best team of problem-solving engineers on the planet. It’s the job of our leadership team to foster the risk taking and learning mindset of a challenger.

We need truth and transparency. Success over decades and fear of failure can inhibit the free flow of information between teams. It can make the constructive confrontation for which Intel is famous too uncomfortable. Or you may fail to truly confront what data is telling you. You can’t do that in a fast-emerging opportunity.

We must create a diverse and inclusive workplace. It’s essential to a growth strategy. We’ve made good progress and have set an example as a company that is open about our diversity and inclusion journey, but we have much to learn and to do.

Our cultural evolution will be a significant focus for me and the Intel leadership team in 2020. Our success evolving our culture will determine how we perform over the next decade and how we fulfill our purpose to create world-changing technology that enriches lives.

The opportunities and profound strategic inflections that this data revolution represents are evident. Intel is both positioned and driven to seize them. I could not be more proud to lead this group of people. I want to thank our many stakeholders for their belief and partnership with Intel.

-- Bob Swan, CEO, Intel Corp.