Intel Corp.The “Headless Chicken” Syndrome

We have a good reason to believe that Brian Krzanich (BK) resignation from Intel Corp. was a “Roger Stone” style diversionary PR stunt, chosen by the Intel Board of Directors to protect the stock price from negative effect of vacating the top executive position. While supposedly, BK resigned his position as CEO due to ethical violation of company rules, in reality, BK was responsible for significant blunders that kept sinking the company position as a leader of the semiconductor manufacturing business.

The fact that Intel has not filled the CEO position since June 2018, indicates one or more of these points:

1. No reasonable candidate is willing stick their head in the mess that is left behind BK’s legacy.
2. The Board of Directors is complicit in letting BK run the company unchecked for such a long time and any well qualified candidate who interviewed with the board, figured out that they will be working against the tide and without backup.
3. The Board of Directors is aware that CEO replacement will not solve the problems that Intel Corp. is facing, because the problems are much more profound and involve general lack of trust within the organization. Consequently, they are only focusing on damage control and can live with an interim CEO who is “absolved” of long-term responsibilities.
4. The U.S. economy is currently running in full swing. The Board of Directors is focusing on “making hay while the Sun is shining”. A new CEO, particularly one who comes from the “outside” may come up with demands for radical changes to the internal organizations and consequently put the current stock price at risk. It is likely that the Board prefers to maintain the status quo over any "revolutionary" actions.

Brian Krazanich replaced the late Paul Otellini as Intel Corp. CEO in May 2013. Although presenting himself as an “engineer” in practice, BK had a very short engineering experience and very quickly, after being hired as a “process engineer” (a manufacturing position) at the New Mexico Fab, he shifted to a management track, where the rest of his career at Intel Corp. was spent. Most of BK career growth took place as a manager at the Technology and Manufacturing Group (TMG), which operates the silicon manufacturing lines (known as the "Fabs"). BK had no background in circuit design, electrical engineering, systems engineering, or software engineering which together, create the actual IP value of today's computer systems products.

For many decades since its foundation, Intel Corp. held itself to high standards of transparency by keeping low overhead and sharing information with all of its employees. As part of this exercise of transparency, the company annually conducted an employee feedback study known as the Organization Health Survey (OHS). The OHS presented employees with a large number of questions, asking them to grade the company performance over a wide range of issues. The OHS goal was to give managers a realistic assessment of the efficacy of management practices. The results of the OHS were published and distributed to employees, as a matter of course, followed by a public discussion of the issues exposed by the annual OHS. As the late Paul Otellini used to say "OHS goal is to keep Intel Corp. management in tune with company employees".

In 2013 (the first year in which BK was the CEO), Intel Corp. "C-Suite" issued a message to employees that the pending, annual OHS will not be conducted for that year. This was supposedly, because BK was in his position for less than a full year. This was the first time that the OHS was not run, since inception of the practice at Intel Corp.

In 2014, though the OHS questioner was distributed to employees on time, executive management refused to publish the OHS results for the first time in the history of the company. The only points that were exposed, came out of the personal blog that Richard Taylor (head of Intel HR at at the time) published on Planet Blue, the internal employee social network. The major issues mentioned on that blog included the fact that the OHS revealed significant trust issues among corporate entities, as well as lack of trust between managers and technical leaders, serving within the same business units.

Since Richard Taylor’s blog was open to all employees, his comments about the OHS received a flood of comments and questions. Like other company employees, I contributed a few of these comments at the time. My comments specifically addressed the growing lack of knowledge and many times complete ignorance of significant technical issues on the part of company managers at all levels. I also mentioned the systemic diminishing of the authority bestowed upon technical leaders and the overt effort to cut their numbers in company ranks, while staffing a growing number of manager positions. At the time, we did not know that BK and his cronies were planning to lay off a large number of employees in 2015; however, in retrospective, it becomes clear that the ground work was already set for this action to happen.

Interestingly, the 2015 mass layoffs were heavily skewed to exclude managers, compared to employees in individual contributor positions. This fact is clearly demonstrated by the OWBPA report filed by Intel Corp. in June of 2015.

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2014 was the year in which during the course of my work as the systems architect of the Electrical Validation department, I had first row view of the 14nm process yield failures. Upon closer look and a thorough investigation I came to the conclusion that the systems used for engineering audit of the wafers coming out of the Fabs were ineffective for determining a cause-effect correlation. Establishing such correlation is a fundamental requirement for effective failure analysis and subsequent correction of mass manufacturing production flaws. While 20^th Century methodologies were sufficient to monitor silicon defects and determine corrective actions for fixing silicon production flaws for many generations of Intel silicon products, it became apparent that these methods have reach their limit at the time that the last 22nm fabrication process (Haswell family of CPUs) was used at the Fabs.

Looking at the vast amounts of data coming out of the production monitoring systems, I was astonished to find out that no-one on the engineering side of the company, knew how to effectively use the collected data for proper analysis as well as how to apply the analysis towards fixing outstanding yield problems. Further, it was shocking to find out that most of the petabytes (millions of gigabytes) of data was never seriously examined or utilized. In fact, most of the collected data was  unfit and useless for engineering analysis. After years of inertia this revelation was the first indication of a systemic failure. A Laissez-faire approach to running a critical part of the business suddenly falling into obsolescence, mostly due to lack of scrutiny and common sense among managers.

In an effort to correct the situation I began working on an initiative to revise the procedures and the methodologies used for identification of root-causes in silicon wafer failures for the 14nm and the upcoming 10nm fabrication processes. In concerted cooperation with other engineering leaders I devised 21^st Century methodology, specifically using “big data” and artificial intelligence techniques for collection, organization, and analysis of silicon wafer failure handling. The foundation for this framework became internally known as the INTELligence Initiative.

While it took a significant amount of time to educate and convince people that the methodology change is critical for success, a significant number of technical leaders within the engineering organizations at Intel Corp. became convinced that the new direction that I proposed is the right way to go. Further prototyping and application of the methodology were applied to real-life data demonstrating significant success. The only objections, came from high level managers, who had no technical background and were risk averse. The message that I received at the time was “go ahead and implement your solution, if you are successful, we will support you...”.

The INTELligence Initiative and all the process improvements that I was leading at the time, went on the chopping block after the 2015 mass layoffs. C-Suite executives enjoyed their bonuses at the end of 2015 and the orchestra continued to play while the boat was sinking.

Though my immersion in the analysis of the 14nm production problems allowed me to understand the depth of trouble that hat the company was in, I was still convinced that commonsense would prevail and the new methodology would be adopted to help the recovery process. Now, four years later, I see that the common sense never floated to the top, because the Intel Corp. organization became increasingly dysfunctional, year after year.

It is now the end of 2018, BK is no longer the CEO, many thousands of experienced Intel Corp. employees had been permanently laid off in 2015 and 2016 and most of them do not wish to ever return to employment with Intel Crop.

Let us do a reality check as of end of October 2018:

• BK received the dubious credential of being the “First Intel Corp. CEO to Break Moore’s Law”, an attribute that he certainly worked hard to earn...
• BK appointed more Vice Presidents during his tenure as CEO, than any one of his predecessors. The question remains open: "What does the company have to show for this generosity?"
• Intel Corp. has trouble finding competent people who are willing to work for the company, due to its diminished reputation as a fair employer.
• The employee trust issues that were revealed in the 2014 OHS have never been attended to and the employee scare tactics, subsequently employed by BK for more than four years, further eroded chances of repair.
• Intel Corp. sustained tremendous production yield problems with its 14nm silicon production processes while other semiconductor manufacturers, including Global Foundries, TSMC and Samsung proceed to offer reliable 14nm, 12nm 10nm and 7nm products.
• Intel lost its place as the number one semiconductor manufacturer in the world, more than likely, forever.
• AMD business success due to its reliance on external Fabs is capitalizing on Intel Corp. failure to lead in manufacturing technologies and product intellectual property development.
• While still fighting yield problems with the so called “mature” 14nm process current industry news give the impression that the 10nm silicon manufacturing process will never see the light of day, due to both technical and economical factors.
• Apparently the pressure on the limping 14nm production process is so bad that Intel Corp. is moving the system integration “Chip-set” parts back into the older 22nm production line.
• Intel Corp. began selling assets, to offset losses. The latest such action is apparently, the sell off of the memory business, back to Micron Technology, for $1.5 billion

My analysis is that Intel Corp. is facing a plethora of technical problems that are real. However, the overwhelming problem for the company is the presence of incompetent management at all levels, in addition to lack of trust and cooperation inside business units and absence of leadership direction. The current production yield problems are only a symptom of the underlying organizational weakness and lack of leadership resolve. I define this phenomenon as the “headless chicken syndrome”.

--Dr. Flywheel

The Cheap Labor LoopholeOPT is the Name of the Game

Over the last three years I have been looking at the systemic abuses of F1 visa to OPT conversions. OPT, which euphemistically stands for "Optional Practical Training" is one of the major loopholes that large tech employers are using to circumvent the H1B visa caps while recruiting cheap and captive foreign workers residing within the United States. This loophole facilitates major layoffs of older (and more expensive) domestic employees and subsequently, replacement of these employees with cheap (entry level) foreign employees, using the OPT program for stay/work visa extensions.

Recently, the Pew Research Center published a comprehensive report on the subject of F1 to OPT visa conversion program. This program, driven mostly through the lobbying efforts of large High-tech employers continues to increase in size, completely unchecked.  The Mercury News outlet published a summary of this report in the latter part of this week. As you can see from the article referenced below and the PEW Research Center report, taking advantage of the OPT loophole, has become a standard operating procedure for many high-tech companies. The number of F1 (student visa) holders converted to OPT has grown 400% between 2008 and 2016, as shown in the chart below.

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Note that foreign workers who remain in the U.S. under the OPT program, are effectively, "indebted workers". They are being paid low wages and they are totally dependent on the graces of their employer, to maintain their residence and work permit. This makes them "ideal" target for exploitation. Employers would simply be "stupid" to not take advantage of this loophole to reduce the cost of labor. In the meantime, older domestic workers continue to be laid-off in droves.

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As can be seen from the chart above, Intel Corp. is one of the top companies taking extensive advantage of the F1 visa to OPT conversion loophole. Actually, as the chart above shows, Intel Corp. is No. 1 on the chart, leading all the employers listed above, including Microsoft Corp.

Without a doubt there is a price to pay when a company only focuses on cutting expenses and gets rid of its more experienced (however, more expensive) workers. In the case of Intel Corp. there is no reason to guess where this executive management policy fails. The writing is on the wall for Intel Corp. has been there since the 2015 mass layoff. Recent news about the 10 nm production line failures (see references below) serve as indicators of much more substantial problems to come. The company's ability to execute has diminished significantly, following the 2015 and 2016 massive employee layoffs.

The Mercury News outlet covered the OPT stay/work visa conversions loophole in a recent article, which is mostly based of the Pew Research Center report.

This is a quote from the Mercury News article referenced below:

OPT has caught the attention of critics pushing for reduced immigration. John Miano, a fellow at the Center for Immigration Studies, called the 2008 STEM extension a “scheme” by Microsoft to “circumvent the H-1B quotas.” The program started out giving work-experience opportunities to foreign students but has since been “transformed into a full-blown guestworker program whose stated purpose is to provide labor to American business,” Miano wrote in a September blog post for the center

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Clearly, the numbers shown on the map above speak for themselves. It is difficult to come to any other conclusion other than that the OPT program is pandering to the interests of high tech employers, by supplying access to cheap foreign labor, at the expense of domestic workers.

The Pro Publica article: CUTTING ‘OLD HEADS’ AT IBM, covers the multitude of ways in which older employees in the high-tech sector are loosing their jobs to foreign workers, through a variety of legal loopholes and shenanigans committed by Corporate America.   

When we examine the growing trends in the high tech industrial sector, of laying off older employees and replacing them with cheap and indebted guest workers, it seems that the OPT program lost its original purpose and de facto, under the intense lobbying of big business, was transformed into a U.S. Government sponsored, older worker mass displacement program!

--Dr. Flywheel

References:

• The full Pew Research Center report (PDF)
• The Mercury News article: H-1B visa alternative ‘OPT’ grew 400 percent in eight years: report
• Tableau public information graphics
• Pro Publica article: CUTTING ‘OLD HEADS’ AT IBM
• Slashdot posting: How the "Tech Worker Visa" is Remaking IT in America
• Tom's Hardware: Intel's 10nm Is Broken, Delayed Until 2019
• AnandTech Blog: David Schor: Intel 10nm in big problems
• The Motley Fool: The Price of Intel Corporation’s 10-Nanometer Failure

While the Orchestra is Playing is Intel Corp. on a collision Course with the Iceberg

Intel Corp. (INTC) stock enjoyed a significant rise over the last year+. Today it stands at around $52.35/share, in spite of significant recent corrections in the equities market.

From the PR campaign that Intel CEO Brian Krzanich and his executive staff are running, investors could get the impression that it is smooth sailing, or even better, it is time to take a cruise to an exotic destination and enjoy the sunshine. If you are a short-term investor, perhaps it is time to consider selling your INTC shares and use the proceeds to finance the cruise of your life with your profits. However, if you are more concerned about long-term prospects of retirement, perhaps it would be wise to look at Intel Corp. odds of riding the waves of success, before committing to keep your stock for the long haul.

Note that the latest (2017) Intel Corp. Annual Report (10K) is listing quite a few potential perils on the way to paradise. These (verbatim from the 10K report) include, among other things the following items:

1. Demand for our products is variable and hard to predict.
2. Due to the complexity of our manufacturing operations, we may be unable to timely respond to fluctuations in demand and we may incur significant charges and costs.
3. We face significant competition.
4. Changes in the mix of products sold may impact our financial results.
5. We are subject to risks associated with the development and implementation of new manufacturing process technology.
6. We face supply chain risks.
7. We are subject to the risks of product defects, errata, or other product issues. 

Intel Corp. is a major player in the global semiconductor business, though it is no longer the leading player (see: Does Intel Corp. PR Hype Truly Compensate For These Facts?). As such the company's exposure to all of the above risk points is very similar to other players in this field. However, for Intel Corp. the main risk factors, into both the near and mid-term future are the ones highlighted above.

Back in 2015, when I had close exposure to Intel Corp. the company already began the experimental R&D manufacturing of 10 nm processes. At the time, the Technology and Manufacturing Group (TMG) had a rosy expectation of driving 10 nm products into high-volume manufacturing, within two years. Note that at the time, Intel Corp was able to ship 14 nm products into the market place; however, with significant yield issues (note Broadwell). While Intel Corp. was able to overcome many of the 14 nm manufacturing yield problems over time, finding solutions to these problems came at a significant cost. Though this cost was really a manufacturing cost, it was actually covered in the books as R&D cost. This explains the rising R&D expenses, reflected in the 2015-2016 annual reports (21.9% and 21.5%, respectively).

While merchant semiconductor Fabs around the world continue to make progress with their smaller geometry high-volume manufacturing, Intel Corp. is essentially standing still. Why did the company stop at 14 nm processes, and continued to use the euphemism of "14+" and "14++" to indicate progress?

My guess is that Intel Corp. has no advantage in pushing its 10 nm process into high-volume manufacturing, due to massive failure of its advanced Fabs to produce the quality level required to show profit from its products, using this manufacturing process. Among other things, over expectations and over reliance on advancements related to EUV lithography, resulted in major disappointments on the executive level. This disappointment led to considerable slow-down of the migration to smaller geometry processes and cautionary fiscal investment in rigging the advanced Fabs.

The mere fact that Intel Corp. 10 nm products are absent from the market, three years after they were "promised", is a clear indication of things going wrong in the navigation path of the Intel Corp. cruise ship. Considering potential loss of Apple business as well as, item number 3 on the list ("competition") above, does Intel Corp. current sailing plan leading, sooner or later to a collision with the iceberg? 

Apparently I am not in a minority opinion on this subject.

See:

• This Sounds Like Disastrous News for Intel Corp.
• 3 Reasons I Might Sell Intel Stock
• Intel-Apple Rumor: Bears Mull Existential Risk

All the best.

--Dr. Flywheel

Life in a Lifeboat

Nowadays that a growing number of Intel Corp. employees are forced to leave the company under duress of forced retirement and massive layoffs, we would like to encourage these people and assure them that there is still life worth living, after their Intel career has unexpectedly and prematurely ended.

If you have been an Intel Corp. employee that was affected by the company's executives ill conceived move to rid itself from senior and consequently older employees, I would like to provide you with positive encouragement and provide you with a (figuratively speaking) a flotation device that may ease coping with your situation.

I am taking the liberty to use an analogy to explain your situation:

Imagine that as an affected employee you and your family members were present on the deck of cruise ship when it suddenly hit an iceberg.  Luckily and through the aftermath of the collision, you somehow, managed to escape the sinking ship and transferred into a lifeboat.

Of course, as is usually the case, there is a reason why the cruise ship hit the iceberg, in the first place: the captain and the deck officers, spent too much time partying in the ballroom, to notice that they were on a collision course with the iceberg.

Regardless of the officers' shortcomings, you are now facing a new reality. You can thank Gaia or the Holy Ghost for not ending your life in the freezing ocean water, and you have to accept that surviving without the luxurious amenities of the cruise ship is still a better alternative than swimming in brine and dying from hypothermia.

Imagine that the cruise ship is still not fully submerged under water; however, a big open gash keeps letting sea water in, the captain and his officers remain intoxicated from last nights party. It is very unlikely that they were in a state of mind that enabled them to admit to the reality that suddenly hit them in the face. They still expected their cheese cakes to be brought to their cabins, alongside their coffee and breakfast. They never imagined that the next party that they will attend would be referred to as "The Donner Party".

The 28th page of Patrick Breen's diary, recording his observations in late February 1847, including "Mrs Murphy said here yesterday that thought she would Commence on Milt & eat him. I dont [know] that she has done so yet, it is distressing."

While your life has been saved for the time being, the limited space of the lifeboat is crammed with many other passengers (most of them you have never met or interacted before). you must consider how to proceed with your life when the probability of hitting land or being rescued is unknown. The water and provisions in the lifeboat are limited. Some of your fellow passengers might have navigation skills, others might have useful mechanical, or perhaps medical skills. Others may have no skills that seem that could be relevant to your current situation; however, they might be equipped with mental toughness that makes them ready to make good decisions and help others who might be in a state of shock.

As the day go by life on the crowded lifeboat becomes intolerable, as food an water become scarce. Dire situations of this nature lead most people into two possible states of mind:

1. View your lifeboat mates as resources and work cooperatively to maximize the chances of survival for all of you. This might be tough; however, if you read about many survival stories, you will find that resourcefulness and cooperation among individuals are key to survival.
2. View your boat mates as competitors for the limited water and provisions available in the lifeboat emergency supply. As much as the thought is disturbing, under "normal" circumstances, your survival instincts may drive you to view your unlucky lifeboat companions as food source...

If we leave the above Titanic analogy I would like to return to the main points of this article, which are:

Give yourself a reality check:

• Most of you should have money to last through at least a few months without additional income. The money would last longer if you spend it wisely and control your expenses.
• Most of you are entitled to Unemployment Compensation, which may not look like your regular paycheck; however, it is an additional income that is available to you for up to a maximum of 26 weeks, during a period of 12 months, after your last day of work.
• COBRA (alternative) medical insurance coverage is guaranteed to be available to you by Federal Law, for a period of 18 months from your termination date. Besides the COBRA coverage you can find other medical insurance programs that could be more optimal for your needs.
• You have many colleagues who could provide you with a listening ear and a place to vent your frustrations without driving your family members nuts by repeatedly bitching about your condition.

 Find your support network:

• Join other people who found themselves in the same "boat", particularly those who have been through the same experience in prior years. The "Eliminati" group includes several dozen people who have been through the trials and tribulations of layoff from Intel Corp. and at least some of them are willing to help you cope with your hardship.
• If you have a Google account (which is easy to establish and free of charge), join this web site and receive automatic notification of events organized by our support group. Otherwise, just put the URL of the web site <www.pdx-tie.org> on your bookmark list and visit frequently.
• Check the instructions on this web site regarding how to join the Eliminati mailing list through Google Groups.
• Seek friends and family members with whom you can spend quality time that would allow you to be distracted from developing "circular thoughts" about your misery.
• Seek professional counseling for mental health issues. Experiencing depression is very common in the situation that you are facing now and when depression reaches a clinical stage, it is very difficult to recover form it without professional help.

Show solidarity to your colleagues and advance our common cause:

• Active solidarity can be a very constructive force. One foot tapping in the street, does not have the same effect as the march of hundreds or thousands of people. From the general public perspective, the power of an organized group is many times greater than the sum of its individual members power.
• Share information with your colleagues in a manner that would allow us to uncover significant facts. Each of us may view their case as "happened to me" and feel powerless to respond to injustice. The power at be use this "divide and conquer" method to diminish the conscientiousness, as well as the ability of the masses to respond. By sharing information among us, we can uncover some actionable information to the benefit of our members.
• Be willing to have skin in the game when action for the common good is required. There is no way to win by sitting on the bench.
• Dedicate some of your idle time while being unemployed to contribute to the welfare and the common cause of people in your support group.
• Share your discoveries, your experiences and your thoughts with group members. Each and every one of us has something to contribute that would also be appreciated by others.
• If you find opportunities that you yourself could not utilize or harvest, do not assume that they are not worthy to mention. Other members of our group may appreciate your sharing.

Happy navigation.

--Dr. Flywheel