Longtime Intel Exec Barrett Takes on Tough Challenge
When John Foust takes Craig Barrett through the rivers of western Montana on his monthly fly-fishing outings, the guide is invariably impressed by the casting skills of the man just chosen to be chief executive of the world’s largest chip manufacturer.
“It’s quite rare to find someone who doesn’t have much time but is this good,” Foust said. “He’ll try just about anything. That gives him an advantage over people who are stubborn about trying new techniques.”
Barrett, 58, will become chief executive of Intel Corp. on May 20, succeeding industry legend Andrew Grove. And he will need every advantage he can muster as he leads the firm beyond its stronghold supplying most processors for personal computers into the far more competitive consumer and corporate markets.
Although it was Grove who pulled the firm out of a dangerous slump and turned it into a global giant, “in many ways Barrett has a much tougher job,” said Dan Hutcheson, president of the market research firm VLSI Research and a longtime observer of the industry. “He has to leverage the technology into areas that are dominated by other companies.”
But Grove says Barrett has done a better job over the last decade as chief operating officer than Grove himself did when he was in a similar position, and that he is confident Barrett will perform admirably as Intel chief executive.
“His personal style is more organized, more steady,” Grove said. “I tend to be a bit more random and volatile.”
Friends are impressed by Barrett’s ability to juggle a complicated life. He commutes from his home near Phoenix, where he lives with wife Barbara, a lawyer and aspiring politician who was a Republican candidate for governor of Arizona. He spends just three days a week at Intel’s corporate headquarters in Santa Clara, Calif.
At the same time, he has remained active in the Semiconductor Industry Assn. and took five trips abroad last year, working 15-hour days to study the overseas markets where the company has 60% of its sales.
Although Barrett, known for his cool demeanor, can be hard to read, he is intensely competitive and demanding, Intel employees say. An employee once told Barrett that whereas Grove was “big bark, little bite,” Barrett was “little bark, big bite.”
If anything, Intel insiders say, they expect Barrett to move faster and more confidently than Grove into a wide range of markets. Since becoming president last year, Barrett has gradually taken on more day-to-day responsibilities, and analysts expect little change in corporate direction for the time being.
Unlike many Silicon Valley companies that have little depth of management and face crises when leadership changes, Intel carefully grooms its senior executives, said Tony Scott, managing director for the technology practice of executive search firm A.T. Kearney. “Intel is a train that is on a track that is well-defined,” he said.
Barrett, who joined Intel in 1974 after spending 10 years as a materials science professor at Stanford University, cut his teeth in the mid-1980s, when he was put in charge of manufacturing and given the task of responding to competition posed by the high-quality Japanese chips flooding the U.S. market.
With strict quality-control programs and an eye for detail, Barrett brought Intel up to par with the Japanese manufacturing prowess, and today most people believe that Intel is the worldwide leader in manufacturing.
Barrett was also instrumental around that time in establishing Sematech, an industry consortium designed to boost the competitiveness of America’s ailing semiconductor equipment manufacturers. And he was the driving force behind the industry’s unusual decision to produce an annual “Technology Roadmap” to ensure a coordinated effort in tackling common technical obstacles.
“He’s been a real visionary for the industry,” said Frank Squires, senior vice president at Austin, Texas-based Sematech. “He’s very organized, he’s very disciplined and he’s very tenacious.”
But Barrett faces new challenges as the company takes on more consumer-oriented markets.
“Where Craig has to prove himself is in the fuzzy world of consumer marketing,” said VLSI’s Hutcheson. “With technology, it’s usually pretty clear what you have to do. But with marketing it’s more like diplomacy--there are lots of other factors involved.”
Intel has been caught off-guard by the sudden growth in demand for cheap processors to run everything from set-top boxes to sub-$1,000 home computers. Analysts say its long monopoly in PCs has led to some gold-plating in its manufacturing and design process that make it less competitive in those markets.
But experts say Barrett is tackling the challenge with his traditional thoroughness. The same executive who once drove plant managers crazy by checking under semiconductor manufacturing equipment for signs of dust is now leading an aggressive effort to slash production costs.
“We lost the first round,” Barrett said in a recent interview. “Maybe we’ll win the second round.”
Barrett said he isn’t going to allow the array of emerging markets to distract him from Intel’s critical PC market. “It’s still growing at 18% a year. That’s phenomenal,” he said. “Ask General Motors how they would like to be building 18% more cars each year.”
When it comes to style, Barrett’s levelheadedness could help Intel deal with a Justice Department that is increasingly aggressive in enforcing antitrust laws.
It was Barrett who led the effort to end a bitter seven-year battle in the courts between Grove and Jerry Sanders, chief executive of Advanced Micro Devices, over AMD efforts to clone Intel chips. And Barrett said he is careful not to antagonize antitrust officials.
“There are things you can do in the market if you are a small player that will be construed as an illegal activity if you are a big player,” he said.
If there are still questions about whether Barrett is a strategic thinker, Hutcheson of VLSI recalls that when Grove succeeded Intel founder Robert Noyce as chief executive, “we all thought Intel would go into the shoals.”
And Barrett has plenty of the characteristic Grove says has been critical to his success: paranoia.
“The only time you get in trouble is when you slip,” Barrett said. “Then you get run over.”
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The New Chip on the Block
Grove’s Legacy
Andrew Grove has presided over a remark-able run at Intel. Profit and revenue have soared and the company’s stock price has soared more than 2,000% since the late 1980s.
Seen as a tactician who focuses on the details of Intel’s business, Craig Barrett, 58, was named chief executive officer of the world’s preeminent chip maker Thursday. Barrett, who is credited with making Intel’s plants the most productive in the industry, has been with the firm for 25 years.
What Barrett Faces
As the Intel Corp. mantle is passed from Grove to Barrett, the company confronts new risks and opportunities:
Challenges
* Falling PC prices. Intel thrives on selling high-powered, high-priced chips, but consumers are flocking to low-cost models.
* Processing power ahead of what prevailing software demands. Most consumers still use their PCs for word processing and other tasks that don’t require super-fast chips.
* New devices that don’t need Intel chips. The company still has a lock on the PC market, but not on new products such as set-top boxes for cable television.
Strengths
* An $11-billion cash reserve. Only Microsoft Corp. has a comparable financial cushion.
* Deep management and engineering talent. Many of Intel’s top employees could be CEOs at other companies.
* Unrivaled market influence and manufacturing muscle. Other companies follow Intel’s lead, and no other chip maker has near as much capacity.
Bio: Craig Barrett
Some highlights of Craig Barrett’s career:
* Received undergraduate, master’s and doctorate degrees in materials science at Stanford University, where he taught in the materials science and engineering department until 1974, when he gave up a tenured professorship to join Intel.
* Began his career at Intel as the technology development manager. Promoted to vice president in 1984, senior vice president in 1987, executive vice president in 1990 and chief operating officer in 1993.
* As head of production in 1985, helped convert Intel from a memory maker to a microprocessor maker just in time to supply the brains for IBM’s personal computer.
* Became Intel’s fourth president in May 1997. Lives in Paradise Valley, Ariz., with his wife of 12 years, Barbara. Spends three days a week at Intel’s Santa Clara, Calif., office.
Quarterly revenue (in millions)
4th quarter 1997: $6.5 billion
Quarterly stock prices (except latest)
Thursday:
$78.19: +2.13
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* MAIN STORY: A1
