Under CEO Pat Gelsinger, Intel has significantly jacked up its commitment to R&D. Thus, he is trying to right the wrongs of his predecessors.
In its fiscal year 2021, Intel invested $15.19 billion in research and development. That is more than 20 percent of its total revenue, which was $74.7 billion. Compared to 2020, CEO increased the R&D budget by about 12 percent. It has been since 2012 since Intel made such a turnaround.
In recent years under CEO Brian Krzanich and also replacement Bob Swan, the R&D budget remained more or less the same. Intel’s pennies went mostly to the stock market, where Krzanich bet on dividend payments and share buyback programs to boost the stock price. That worked: Intel’s stock soared. Behind the scenes, however, Intel lost its leadership position little by little.
Engineer’s View
Gelsinger, unlike his direct predecessor Swan, is a techie. The company has a long history of engineers being promoted to CEO and that has generally served Intel well. Gelsinger hopes that a solid boost in R&D will help Intel get back to competitive levels and then jump over them again.
Intel and Gelsinger have a lot of work ahead of them. Just this year, the manufacturer must come up with its own 7 nm process, which is equivalent to 5 nm at competitor TSMC. This will be followed later by new even more advanced manufacturing processes that require Intel to redesign the nanotransistor. That is currently the focus of the company’s research. By 2024 or 2025, we will know if Gelsinger’s strategy is paying off.