Krzanich Says Intel to Focus on IoT, AI, 5G Wireless for Future Growth

In a memo to employees, Brian Krzanich says that taking risks and making bold moves into growth markets is now the “new normal” at the chip maker.

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Don’t expect Intel to slow down on its efforts to gain traction in such growth markets as artificial intelligence, machine learning, the internet of things (IoT), 5G wireless technologies and autonomous vehicles.

In an internal memo Dec. 19 to employees, CEO Brian Krzanich said Intel has been “radically” changing and that the change will continue as company officials look expand beyond its core PC chip markets to move into these new growth areas. Intel won’t be complacent in the face of new technologies that are roiling the IT industry, Krzanich wrote.

Intel is making strong progress in the move into new markets, Krzanich said.

 “We’re just inches away from being a 50/50 company, meaning that half our revenue comes from the PC and half from new growth markets,” Krzanich wrote. “In many of these new markets we are definitely the underdog. That’s an exciting challenge—it requires that we develop and use new, different muscles.”

And his memo emphasized that Intel won't shy away from trying new things.

“The new normal for Intel is that we are going to take more risks,” he wrote in the memo, a copy of which was obtained by CNBC. “The new normal is that we continue to make bold moves and try new things. We’ll make mistakes."

However, Krzanich asserted that "bold doesn’t always mean right or perfect. The new normal is that we’ll get good at trying new things, determining what works and moving forward. The new normal is that as we go after new business, people will come after us. The new normal is that we embrace change and act as One Intel—a hungry, aggressive company not content to play defense but instead fired up to after a $260 billion" potential market.

Before Krzanich took over as CEO in 2013, Intel executives were heavily criticized for failing to anticipate what would become a massive market for mobile devices like smartphones and tablets, essentially ceding the mobile chip market to Arm and its manufacturing partners, such as Qualcomm and Samsung.

After being promoted to the top spot, Krzanich said that Intel would not make the same mistake and proceeded to push the company in multiple directions, including some markets that the chip maker explored and then shed when they didn’t fit. Such markets include some wearable devices and chip products aimed at do-it-yourselfers and enthusiasts.

However, Intel has continued to pursue a broad range of markets and has made several acquisitions—such as Mobileye this year for $15.3 billion in the autonomous vehicle space, Movidius last year for AI, VR and IoT, and Nervana Systems in 2016 for machine learning.

Intel also has been leveraging its $16.5 billion purchase of Altera in 2015 to add field-programmable gate arrays (FPGAs) to its lineup. In November Intel officials announced it would begin building GPU accelerators to compete with those from Nvidia and Advanced Micro Devices for such applications as machine learning, AI and high-performance computing.

In his memo, Krzanich said that the core of these opportunities is data and that key to Intel’s ambitions is to power the systems that generate, gather, process and analyze that data.

“It’s almost impossible to perfectly predict the future, but if there’s one thing about the future I am 100 percent sure of, it is the role of data,” he wrote. “Data is becoming the most valuable asset for any company. That’s why our growth strategy is centered on data: memory, FPGAs, IOT, artificial intelligence, autonomous driving.

The CEO also said that Intel was succeeding in reducing its dependence on its PC business. The global PC market has continued to contract over the past five years as more IT and consumer dollars have been spent on smartphones and tablets.

Intel and a broad array of other IT companies have worked to grow business in other areas outside of PCs. Intel has continued to roll out more powerful and efficient PC chips—the most recent being based on the company’s 14-nanometer “Skylake” architecture—and as Krzanich noted represents the work of the company’s Client Computing Group, which includes PCs. The unit in the third quarter saw revenues of $8.9 billion, flat from the same period last year.