Silicon sands

Mark Sutton spoke to Paul Otellini, president and chief executive officer for processor manufacturer Intel, during his recent visit to the Middle East about the firm's ambitious plans for the region

Tags: Intel CorporationUnited Arab Emirates
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Silicon sands OTELLINI: With Craig Barrett’s retirement I thought it was important that I started spending time here as well.
By  Mark Sutton Published  May 9, 2009 Arabian Computer News Logo

Intel announced plans to outsource some system on a chip production to TSMC in March. At the same time you closed several plants in Malaysia and the Philippines - does this mark a change in strategy for production of Intel chips?
Our strategy hasn't changed, we still see ourselves as an IDM or integrated device manufacturer. It is from our perspective the best way to have lowest cost, best technology, and the best matching of our design capabilities for products with the processes that they run on. conceptually, nothing has changed.

We just announced that we are investing $7 billion into three existing US sites to upgrade the facilities at those sites to 32nm, which is the next generation of technology that we will be deploying. That investment will happen over the next 18 months.

We chose the US sites because we have large factories there already that were capable of being upgraded, and that was the shortest time and cheapest pass to getting this technology online. We have wafer fabrication facilities in the US, in Israel, in Ireland, and we have one under construction in China, our first wafer fab in Asia - although that facility will not be leading edge, it will produce older technology for older products.

Does Intel face a threat from the Chinese government's intention to develop its own processor manufacturing industry, and its collaboration with Sun on making chip architecture open source?
The only stuff you have seen on open source is older technologies, or niche technologies. The old product that AMD had purchased from National Semiconductor, they put that open source, and there really isn't stuff that is purely competitive from our perspective. One of the things that we hope to attract with the TSMC announcement is the ability for IP-centric companies to be able to do semi-custom system on chip designs around the Atom core using their own abilities. To me, that would be a natural evolution for some of our customers in China.

Do you think we will see chip manufacturing, from Intel or any other companies in the same space come to the Middle East at any point in the future?
I think at some point you get there. When I was visiting Dubai and Abu Dhabi we talked nascent silicon design capability being established there, this is sort of first generation activity now. I don't see anything precluding that now, particularly as the universities start generating graduates with those kinds of skills. I was particularly pleased to see that is a key focus of the university education that is being targeted for a science-centric education approach.

If the education is there - but the industry isn't - won't that mean that these developing regions will permanently suffer from a ‘brain drain', losing talent overseas?
It is one of these things you have to look at over a long period of time, we watched it happen in Israel, we watched it happen in Ireland, and we even watched it happen in China, and now we have seen all of those countries get to the point where they are able to create very large local industries that can consume the bulk of their graduates.

Of course there are always people that want to go overseas for cultural and business opportunities, but I think it becomes a process, and you are already starting to see some of that with graduates from US schools coming back to work in the Middle East, and open companies here, and the announcement we made about the venture investments we made, those people had all worked in the US, so there is a part of this is seeing the flow of human capital return home.

A part of your visit to Dubai was to announce three investments made by Intel Capital in three UAE companies, but the funds had been committed in 2005. Why has it taken so long for Intel to find investments in this region?
We committed the fund, and as you can imagine, doing deals right now is more difficult than it was two or three years ago. Intel's policy is that we are not the only investor, we like to co-invest with people, it's important that we find other people coming in for a variety of reasons, there are issues of governance, and local commitment, and that process is just taking a little bit longer now than it did in the boom times.

Does the economic situation make it as difficult to do those deals in all markets at the moment?
Yes - absolutely, from Silicon Valley to the Silicon Oasis.

What else did your visit to the UAE and Saudi Arabia involve?
It was my first trip to the region, so from my perspective, it got me up to speed personally on the business and government leaders in the region and to get a feel for the region's economic basis.

You can read about things, but until you go and see for yourself, and meet the people you get a whole different perspective. Dr. Barrett has been coming to the region for quite some time, and with Craig's announced retirement I thought it was important that I started spending some of my time there as well.

You had several discussions with rulers from the region - what were these centred on?
We talked about education - mostly it was bringing me up to speed on the various [Gulf] initiatives, bringing in industry, and upgrading the calibre of graduate schools. It was more about getting to know each other than a commercial discussion.

Were you impressed with what you saw?
It was very good. It's not just what you see in the papers, there is a lot more depth here than the big buildings, I was very impressed with the calibre of the people I met, the depth of understanding of the industry, the desire to look forward beyond the immediacy of the oil revenues and make sure that the economies have a solid foundation for the inevitable time when those oil revenues decline. I thought that was really quite remarkable.

Last year Craig Barrett said that he had discussions with the Saudi government over possible research activities such as nanotechnology, broadband wireless and the development of algorithms to harness the power of multi-core processor technologies. Did these discussions eventually lead to any joint projects - and if so and what is the status of these developments?
Yes. They are progressing; we have efforts there in the science cities around advanced microprocessors and server-centric computing.

I think that the other part of my trip was to talk about the commitment that Intel has made to continue investing in the downturn. It takes new technology to create new products and get people interested in buying when the recession ends, and the economy recovers. We are placing pretty big bets on new technology, new products and market areas that we hope will not just help Intel as the economy turns, but also help our customers and their customers over time.

A lot of our discussions with government and telecommunication companies around the region are around WiMAX, because that is a very cost effective way to bring wireless broadband into a large geographical area quickly.

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