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00:00He has spent almost his entire career as a finance chief rising through the ranks at G.E. and then working at eBay for nine years alongside Meg Whitman. After overseeing the eBay PayPal split he joined Intel as CFO in 2016 and less than two years later became interim CEO following the sudden resignation of his predecessor Brian Percentage. He was then chosen for the role permanently after the chip maker conducted an extensive search . Today it's his job to protect Intel stronghold on the market for computer processors and deliver on promises to find new markets for its chips among growing competition. I'm Brad Stone in for Emily Chang. Joining me today on Bloomberg Studio 1.0 Intel CEO Bob Swann . Tell me what you were like as a young kid growing up in Syracuse New York. I grew up with . With eight siblings on pretty tight rein. Where were you. And I was right middle. OK so I had the opportunity to a very early age to learn from eight different siblings about how they think . What did your parents do. My dad started a swan and company a jewelry store with my uncle. Two of them started 20 companies . They were entrepreneurs are entrepreneurs. And my mom was a kindergarten teacher for 30 plus years. Did you travel to do it . Did the family take international vacations. No no no. We drove to the Green Lakes which was like 15 minutes away. And that was a big trip. No nine kids. We could barely fit in the one car that we had. So I didn't. I jumped on a plane for the first time I think when I was 25. That's remarkable. Do you remember where you were going. Yeah. Yeah. From Binghamton New York to Philadelphia. This is when you were at Gino's Itchy . Yeah. Fast forwarding a little bit. You came to Silicon Valley right in the heat of the dot com boom and then the bus ride. You became CEO briefly of a company that was almost synonymous at the time with the dot com bust toward Dixon. Did that turn you off to Silicon Valley. Not at all. But it was a bit humbling. And I would yeah think about I had down I had spent 16 years and what I'd considered at the time the best company in the world which was G.E. But at the time in the late 90s you know we started inside gee this thing called Destroy Your Business Dot.com. So it was the chairman. It's time Welch's way of kind of turning inward and say hey we need to innovate . We need to think differently think bolder. And I got into that in the late 90s and I was in the lighting business. And from that I thought both professionally and personally I realize now is a real chance for me and my family to do something different. So in nineteen ninety nine when you're in the midst of thinking about destroy your business dot com and how it will disrupt the breadth and depth of what she had to offer . I thought I if I go out west to Silicon Valley I know I accomplished one thing I will never compare to G. So I joined a startup internet company in the height of the bubble called Web then and in so many ways failed miserably and in so many ways benefited tremendously from trying to create something rather than being part of something that was created long before I got there. And then of course you spent nine years at eBay as CFO when the company was sort of very acquisitive. There were some acquisitions like the Skype deal you know that maybe didn't work out so well. Of course then you were responsible for spinning out PayPal. Obviously a big win for the company. But what did what lessons did you take from the eBay experience in terms of sort of focusing on the core market or looking abroad for growth in eBay. We had so many opportunities to say yes and we had a lot of opportunities where we had to say no. And if something didn't work based on its original premise we had to be OK letting it go and in some ways dust ourselves off and go and try something. I guess when you look at AK at those years CEOs should you have been more selective. By definition anything that we did that didn't quite pan out the way we thought probably could have done something different. But that being said yeah and these high technology industry she got to be prepared in DAX. She got to be prepared to take risk. And in doing so you got to be prepared that everything doesn't work out . And if it doesn't. What do you learn from it. So in that sense yes there's things that we did that with the benefit of hindsight . No but I think that challenge in tech and in my role today is how do you take calculated risk. You know the opportunities are endless. There's it's not it's not where can you grow. Because there's lots of opportunity for grow. And I just think you have to I've learned you have to open up the aperture a little bit . Be prepared to take a little risk. So we'll talk about where you're taking the risks. Now at Intel I remember a year ago my colleague Ian King was writing about the leadership transition . Your predecessor stepped down. You became the temporary CEO . And he reported that you told employees that you didn't want the job permanently. What were you thinking during that time period . Well first I was thinking that I absolutely loved the job I was in. And I had been I'd been a CFO for 20 plus years. I had this wonderful opportunity to join this incredible company. And I loved the role of the CFO. Didn't really have aspirations to be in the CEO role. I love the job that I did. And then that evolved a little bit over time. And during the interim period I was the interim CEO which was six or seven months. I know this will be corny but in some ways I love my job as a CFO. I fell in love with the company in that interim period. And so when the board came around and asked me if I would entertain it I was you know I just felt humbled honored excited overwhelmed. And I thought what a great company and what a great honor. So I didn't start out that way . I loved my job and I fell in love with the company that I think has a real purpose and a real role to play in the world . You're also a sort of non technical CEO and you're a relative outsider. Was there any kind of internal resistance to the CFO getting the job. I mean we are a technology company so the technology blood is very strong. I would not have taken the job if during the interim period. I didn't feel in some way shape or form embraced by the technical community . We play a large role in China a reasonably large manufacturing base and we have a large chunk of employees in our design centers in China. So it's a very important market for us . Is Intel still a chip company. Would you describe it that way . I'd call it a data company. You know we talk about going from a P.C. centric company to a data centric company. And by that I mean software in a variety of different chips are enabling the ability of technology to meet this insatiable appetite for consumers and businesses to create more and more data and make it more and more relevant. Intel had had a moment where some customers like Dell and HP were complaining about production problems. Right. They wanted more supply. And you actually had to apologize. Well I mean our our desires and ambitions as I said are to play a much larger role in our customer's success . And today given the breadth of the things that we do we play a pretty large role. They count on us. We constrained their growth by not having enough supply to meet the growing demands . We've added over 14 billion dollars in revenue to the company . The growth in the demand for high performance products was higher than we had anticipated. And the capacity to put in place to meet that demand we didn't get after it as quick as we needed. So was that a failure of forecasting or production . Well I think it's the challenges where demand for our products were bigger. The amount of products we made were much broader . And our process technology what we call Moore's Law generically but 10 nanometer or more specifically moved out to the right . And as a result we had to add more performance by building larger chips by moving under the radar. It was it took longer to get that production up and running. And so we had to go back to the previous generation. Go to back to the previous generation. So to deliver performance for our customers the chips were larger larger chips consumed more capacity. And in parallel we had to build more facilities. We expect to add 25 percent more next year. And third we're building out shells around the world. So in the event there's a spike in demand we can respond to those much quicker than we ever had. Do you feel like you lost trust with customers. I think we put them in a very awkward position. And yes I feel like personally I told them we'll be there for you. And we were short. So we need to reestablish that trust to make sure they understand that when they make decisions on who they're going to hang around with that we're there for them and they don't have to worry about us. Speaking of customers Microsoft Amazon and Google are these these hyperscale cloud companies they use Intel chips in their data farms but they're also talking about building their own processors and they've all acquired companies. To what extent does is that a competitive threat for Intel. I think it to the extent that any company stand still including Intel you by definition moved behind in a world where everything's changing. So you have to innovate whether it's OEM PC manufacturers datacenter companies automobiles or factories. We have to continue to innovate. And if we don't somebody is going to fill the void. So what's key for us is continue to innovate and make sure that the things we're investing behind are deliver more more performance for our customers and our customers customers such that they don't worry about being a data centric company. They worry about serving their customers and they leave the chip and the software and capabilities to us. So we have to innovate. But in these three explicit cases they're not leaving it to you. Right. They see the same competitive needs and feel like silicon could be a competitive advantage. I mean the wish that you know they'd leave it alone and just use Intel chips or is that just unrealistic in this environment. You know in so many ways the amount of innovation and even investment in the semiconductors and silicon is somewhat encouraging. And it's encouraging because lots of smart people whether they're customers or whether they're investors looking at startups as there's a lot of money flowing into this. The semiconductor industry and the silicon to a certain extent as a company with a mere 30 percent share in a large market that has incredible demands for the things that we do it's reinforcing reinforcing that people invest in the things that we're pretty good at. So we have to move faster. We have to solve customers problems maybe customize our CPR use as opposed to selling general purpose computer. But we need to be solving their problems at a time when the demands for data and compute continue to grow. So Bob I have to ask you about China. You have been a voice of reason urging the Chinese and the U.S. governments to engage in constructive dialogue. We're still going to a trade war. What impact has it had for a global company. We have a huge R.A. and manufacturing presence here in the U.S. so winning in markets outside the US creating value for our customers and making money. He gives us more capacity to invest here in the U.S. and our Indian fat. So we've all had to adjust and adapt in a variety of different ways. And I say that meaning we have a we play a large role in China. Big consumption market for us both on the P.C. and on the server side. We have a reasonably large manufacturing base and we have a large chunk of employees in our design centers in China. So it's a very important market for us and for our customers in many ways. So we've had to adjust and adapt our supply chain to have flexibility to allow some of our own ends to move their assembly so they don't have to deal with tariffs. We've had to stop in some cases as export control laws evolve and change. We've had to stop shipping to some customers. So our primary and our focus are about retaining market access protecting our IP and adjusting adapting to the rules of the road. How serious is the risk that in response to the trade war China could double down on the development of its own indigenous chip making capability . Is that I know they're nowhere close right now but over the longer term is that a threat to Intel. I look at it in a slightly different way whether it's a hyper scale with incredible capabilities whether it's venture capital going into semi whether it's China building their own capabilities for. For us it all leads back to the rate and pace of innovation to continue to defy the odds and do things that nobody else can do such that when they have to make these decisions. Intel and the role that we play in the world is near the top of their list. But that presumes they're thinking rationally and they may be. But another sort of irrational aspect is going to enter into the thinking which is kind of national security and national independence. So is it more realistic that China develops a chip capability because of all all of these global tensions . You know in so many ways we have to focus on things that we can control but we also focus on things that we can control and influence. And along the way I still come back to the same answer . Pace of innovation to deliver things that nobody else can do is the best path to continue to trajectory for the company . Speaking of things you can't control. Have you moved any production out of China. No you have I think some memory chip production in China. So we have a very global footprint in the U.S. predominantly Israel Ireland. That's our fabs. And in a fab in Dalian which is our memory fab. And then we have assembly and tests in Malaysia and Vietnam and China. So we have a very global footprint. So we have the flexibility to adjust and adapt to where we make things around the world. So now so far we know we have diversity in our footprint. We call it a virtual virtual factory. So we always have the ability to move things around to optimize create opportunities and manage risk . The technology we're building will be an accelerant of the adoption of technology for autonomous driving . Let's talk about the future. So in 2017 Intel bought an Israeli company called Mobile Eye for 15 billion dollars sensors for driverless cars. I know you've taken rides in mobilize. How close are we to that. That paying off until it's paying off now . I mean we're two years in. We couldn't feel better about not just mobilize a business but the role that mobilized that team plays in the ecosystem of a market that is going to be significant for us. We are leveraging data to make maps better and better which creates more and more opportunities to get more data more more data. We can monetize it new in different ways . We're going to enter into mobility as a service in conjunction with a partnership that we have in Israel with VW a company called Champion Motors. Intel mobilized with the Israeli government to solve some of the problems of congestion and safety on the roads in Israel. And that will we believe lead us to autonomous driving. There's been a little bit of a sense lately that that autonomous future might be farther out than we all imagined. Is that skepticism unwarranted. You think we'll be seeing full autonomy say in the coming decade . I was gonna say it probably depends on where you started. I think during the course of two thousand twenty five to 2030 we will see autonomous driving. We think that technology we're building will be an accelerant of the adoption of technology for autonomous driving an increasingly safe environments. Another development that will be impacting Intel's future is the opening of this very large new fab facility in Arizona. You guys have been working on this for a long time. Tell me a little bit about the Chandler Arizona fab and how that will impact say the production problems we've talked about and the future of Intel . Currently you know our fab in Arizona is a source of 14 nanometer equipment. So it's not an idle fab by any stretch . But that's the last gen or that's that's kind of the current generation. We've expanded the facility. It's about roughly a mile long. We've connected four different buildings almost into one. Probably one of if not the most sophisticated manufacturing plant in the world. And what does that mean for your customers and for consumers. The 10 nanometer technology in essence allows for more transistors and a smaller and smaller space so that we can deliver more feature functionality whether it's graphics longer longer battery life unique experiences . That's what 10 nanometer technology will deliver into the P.C. environment or into the data center environment for our employees. You know we've added it's one of our largest facilities. We have almost 12000 people. We've added about 2000 people in Arizona over the last 12 months. So more Intel employees delivering more products for our customers. And I think is you know our employees play a huge role in the communities in which we operate in. And we have roughly 2000 more of them in Arizona. Bob we are in this environment of remarkably increased scrutiny of big tech companies. You know it's kind of the consumer companies. It's it's Amazon and Apple and Google and Facebook. But Intel went through this in the 2000s right. There were there were there was a New York state antitrust case. There was an FTSE case of some private case . Now this is all before your time at Intel. But what do you what do you think. You know the lessons are for big tech companies right now. All right. I think at the most macro level you've got to be a good citizen. The responsibility we play for designing and building technologies that have a real positive impact on the world . You have to have you have a real responsibility to ensure that those technologies are being used for the better. You've been a member of the Silicon Valley community now for a while. Do you think the tech industry has understood that responsibility well enough. For the most part yes. I mean I do think that companies know that technology with development of technology comes a sense of responsibility. And yeah I do think that my peers and in my neck of the woods understand the responsibility that comes along with changing the world with today's technologies. Are there moon shots at Intel. Sure. What are you excited about . It's hard not to be excited about autonomous driving. Yeah the impact. It does have on society congest you have to talk about the role of tech and CEOs congestion fewer cars operating 24/7 to reduce congestion and save lives is extremely exciting. And we're in that very early stage of that. We made great progress. But as you said whether it's 2025 or 2030 there's a little ways to go in terms of fully autonomous vehicles. That's that's very exciting. So Bob earlier in the discussion we talked about the kind of inadvertently a messy succession process that brought you into the into the CEO chair at Intel not to usher you out of this job . But as we wrap up what is the next succession at Intel look like. The next the next CEO. That's right. Can you give me a break . But have you thought about that. Oh of course. I mean to a certain extent one of the responsibilities of any executive whether it's the CEO or the CFO or is. And how are you building a team such that you can hand the reins off to somebody that can do something more special than you could have ever done yourself. So I think that's that's a role of every executive. And so my role clearly is deliver on the present . Create the future whether it's moon shots or whether it's you know how do you position the passing of the baton to the next generation of leadership. And so yeah it's a sense of responsibility that I think that the CEO and the board really play that you have wonderful contrary of people around you that you encourage them challenge them learn from them so that they can play at a different level. So ultimately when the baton gets passed hopefully not too soon that that cut that that team can take the company to a whole new level. OK. Bob Swann thank you very much .

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Intel CEO Bob Swan on 'Bloomberg Studio 1.0'

Intel Chief Executive Officer Bob Swan speaks to Bloomberg's Brad Stone about the company's global supply chain, the trade war between the U.S. and China, and the company's role in autonomous driving. He appears on the latest episode of "Bloomberg Studio 1.0." (Source: Bloomberg)

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