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David (Dadi) Perlmutter. Eyeing CEO position
David (Dadi) Perlmutter. Eyeing CEO position 
 
Intel plant in Jerusalem. More to come? Photo: Alex Kolomoisky
Intel plant in Jerusalem. More to come? Photo: Alex Kolomoisky
 
 

Intel: We have other alternatives besides Israel

Following best quarter in microchip giant's history, Executive Vice President David Perlmutter tells Calcalist government grant may determine whether or not company establishes new plant in Israel

Meir Orbach, Calcalist
Published: 07.29.10, 07:29 / Israel Business

When David (Dadi) Perlmutter started his first day on the job at Intel in 1980, he couldn't imagine that by 2010 he would be executive vice president and second in command at a company worth $120 billion.

 

Perlmutter single-handedly manages Intel's largest, most important division – Intel Architecture Group (IAG), which is responsible for all of the company's products.

 

In an interview with Calcalist, Perlmutter does not hesitate to say that he wants the Intel CEO position. "I feel very close to the position of CEO. If it is offered, I won't turn it down."

 

Israeli love affair

Intel and Israel have had a long love affair of grants and establishing plants. At present the company is the country's largest private employer in the high-tech industry, with more than 7,000 employees, and it is also the largest exporter, with exports of two billion dollars in 2009.

 

In two different rounds, Intel received grants of hundreds of millions of dollars from the State of Israel, which resulted in the establishment of two plants in Kiryat Gat. In 1999 the company received a $600 million grant for an investment of $1.7 billion, and in 2005 Intel was given a $525 million grant for a $3.5 billion investment to establish a second plant. The first plant was sold to Micron, and Intel currently seeks to upgrade the second plant.

 

To upgrade the plant, Intel submitted a request for a $405 million grant, as part of an overall investment of $2.7 billion that it is implementing. Perlmutter is not conducting negotiations with Israel on the matter, but he is familiar with and understands the company's needs.

 

What is your position on the grant?

 

"The grant has a great deal of importance in decision making. It is important for me to clarify that the decision on the grant will have a deciding influence on whether we establish the plant here or not. Intel has other alternatives."

 

Intel was approached by the Ministry of Industry, Trade and Labor on Tuesday, with a demand to detail all of the Israeli government officials it met with as part of the negotiations on securing the grant. In the coming days one of the company's senior vice presidents will arrive in Israel to continue deliberations on the matter.

 

Best quarter ever

Intel's last quarter was the best since its establishment, surprising analysts. The company posted profits of 51 cents per stock in the second quarter of the year, while it was expected to make 43 cents. The company's profits stood at $2.9 billion, compared to a loss of $398 during the second quarter of 2009. The company's revenues stood at $10.8 billion.

 

The company sees its future as very bright; Intel expects revenues of $11.2-12 billion in the third quarter of the year, compared to a forecast of $10.8-10.9 billion.

 

How do you feel after such a successful quarter?

 

"A good quarter has its pros and cons. The major advantage is achieving such a good quarter, but the disadvantage is that if we don't have as successful a quarter in the future, everyone will say that it was a fluke. Now I need to worry that we'll have quarters this good in the future.

 

"I wasn't surprised by the intensity of the last quarter. Even at the height of the major crisis in 2009, the number of PC computers that we sold did not decline, there was just a drop in dollar values," Perlmutter claims. "The major change in the last quarter was that the large companies and corporations, which had halted their purchasing, began to loosen their budgets and purchase computers and servers."

 

Alongside the company's immense success in the field of servers and PC computers, where it has successfully beaten the competition, Intel has experienced failures in the field of tablet computers and smart phones.

 

In the past, the company acquired D.S.P.C., an Israeli company, for $1.6 billion, believing that it would storm the cellular phone microchip market, but the acquisition concluded with a sale to Marvel for $600 million, as Intel left the field. The Architecture Group that Perlmutter heads is trying to minimize the gap created between competitors.

 

What are Intel's objectives?

 

"All of the systems that include computerization capabilities are a central objective for Intel, ranging from parts that incorporate sophisticated computerization capabilities through tablets, as well as smart phones, etc. We are aware of the importance of these markets, and we have no intention of neglecting them.

 

"We are currently developing a number of microchip systems for these markets, including systems for the smart phone and tablet markets. We collaborate with a number of leading companies that will offer tablets with our microchip sets. We have had a great deal of success in the netbook market with the ATOM, which at present serves as a foundation for our entry into the tablet computer and smart phone domains."

 

Share of tablet market

At present Intel is not a significant player in most of the new markets, aside from netbooks, but Perlmutter does not seem to have any intention of giving up on them.

 

"I know that competition there is tough, but we have very good products and we are ready to compete," he says. "Along with Sony television systems, we now offer television systems that integrate the capabilities promoted by Google, Sony and ourselves. In the same manner, we are trying to operate in other markets."

 

Are you considering quitting WiMax technology?

 

"We stand behind this technology and we are partners in a number of projects in the United States associated with its implementation. In tandem, we are reviewing entry into different technology fields. I believe that if the market wants us to enter technology fields like LTE, which is a fourth generation cellular phone, we will.

 

Did Intel's development center in Haifa lose value due to development centers in India, Nepal and Poland?

"We employ thousands of workers at our development center in Haifa and believe the site is of utmost importance. In the last committee meeting held by company CEO Paul Otellini, he chose to focus on only one technology, one which was developed in Israel."

 

 

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