Why this chief technology officer put his retirement on hold when Intel’s CEO called with a daunting fix-it job

It was the beginning of 2021 when Greg Lavender, at the time the chief technology officer at VMware, received a career-altering phone call from then-CEO Pat Gelsinger.

Gelsinger, who had steered VMware for more than eight years, would be leaving the cloud-computing firm to return to chip maker Intel, where he had spent three decades of his career.

“I wish you a lot of luck,” Lavender recalls telling Gelsinger. “I’ll be cheering from the sidelines.”

The pair worked together for three years at VMware and Lavender's plan was to ride it out as CTO a bit longer until retirement. But Gelsinger called again two months later, asking Lavender to steer Intel’s software division.

“It’s hard to say no to Pat,” says Lavender, who put his retirement plans on hold and joined Intel as CTO in June 2021.

One of the first projects Lavender took on was getting execution buttoned up for Intel’s latest Xeon processors, which were already running 18 months behind schedule and would take another 18 months to get to market.

Part of Lavender's job has involved changing the mindset at Intel. For years, the chipmaker had a dominant market position. But with great success came arrogance. Intel was spending too much money on stock buybacks and dividends to please Wall Street investors and not enough to support innovation. And as AI has taken off, Intel is now on its back foot against Nvidia and AMD. (AMD is a sponsor of CIO Intelligence.)

Lavender went on a listening tour with customers, who were quick to share that Intel had been tone-deaf. “Just because you build it, doesn’t mean they will come,” was the overriding message Lavender came away with. “The loyalty only goes so far with the brand.”

He's also turned his ear inward, looking for valuable internal insight to help guide his approach. When developing products, for instance, Lavender thinks of Intel’s IT team as customer zero. They test everything and give feedback to improve Intel's products before they are sold to customers. “I want them to talk to my CIO and say, look, it works for us, and here’s what we do with it,” says Lavender.

Intel's efforts to right the ship were on display at the Computex tech conference in Taiwan this week. Intel aims to undercut its AI chip competitors on price with its Gaudi 2 and Gaudi 3 AI accelerators. Demand for Gaudi 2 has been "through the roof," Lavender tells Fortune, in an interview conducted ahead of Computex. Beyond Gaudi 3, Lavender says Intel's next-generation graphics processing unit (GPU) is set "on competing with Nvidia and we think we can exceed AMD and get into second place."

By 2030, the global semiconductor industry could be a $1 trillion market, bolstered by growth in AI, electric cars, and wireless. Intel is unique in that unlike Nvidia and AMD, it not only designs the company’s chips but also makes them. Intel’s manufacturing business is huge, generating $18.9 billion in sales last year but posting an operating loss of $7 billion.

As the U.S. seeks to lessen its reliance on overseas chip manufacturing, particularly in Taiwan, Intel is hoping its manufacturing know-how will position it to thrive in a changing landscape. Already, Intel is planning a $100 billion spending spree over the next five years to build projects in four U.S. states, bolstered by $19.5 billion in federal grants and billions more in tax breaks. Analysts expect the spending will help stabilize the American chip industry, though China is also improving its position.

“Pat called it the new oil of the 21st century,” says Lavender. “It's the most important commodity that the world needs.”

John Kell

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This story was originally featured on Fortune.com