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Intel exec on its turnaround: ‘We’ve got to build back that customer trust’

Intel (INTC) is working on a comeback. And part of that is acknowledging that it needs to deliver on its promises to once again stand as the most advanced semiconductor company on Earth.

The chip giant laid out the latest steps in its turnaround plan at its Intel Innovation conference in San Jose, California, this week, unveiling its 13th-generation Intel Core processors, and announcing that its top tier desktop graphics card, the Arc A770, will cost just $329. That lines up with Nvidia’s (NVDA) RTX 3060 cards, which cost between $400 and $450.

But showing off new chips and hardware isn’t enough, Michelle Johnston Holthaus, general manager of Intel’s Client Computing Group, told Yahoo Finance. And it will take time to win back the trust consumers and business customers had in the company before AMD surpassed Intel in the performance and price departments.

“We've got to deliver our cadence of products on a yearly drumbeat that is unquestioned…we’ve got to build back that customer trust,” Holthaus said.

She added: “I think [Intel’s 12th-gen chip] was a good step. [the 13th-gen chip], there's another good step. But it's going take us a few years of doing that continually for people just to be like, ‘Okay, that drumbeat of performance, and execution is back.’ And we're laser focused on that.”

After running roughshod on AMD (AMD) for years, Intel took a backseat to the smaller CPU maker in 2020 in terms of performance with its Ryzen chips. While Intel largely clawed back the crown with its 12th-generation chips in 2021, the damage was done.

What’s more, AMD started capturing market share from Intel in the server space. And in July, AMD’s market cap surpassed Intel’s. While Intel’s market cap is now larger at $110.9 billion, it’s not much higher than AMD’s $109.9 billion.

Intel CEO Pat Gelsinger arrives on stage to speak during a groundbreaking for a new Intel computer chip facility in New Albany, Ohio, Friday, Sep. 9, 2022. (AP Photo/Manuel Balce Ceneta)
Intel CEO Pat Gelsinger arrives on stage to speak during a groundbreaking for a new Intel computer chip facility in New Albany, Ohio, Friday, Sep. 9, 2022. (AP Photo/Manuel Balce Ceneta)

It didn’t help that Apple ditched Intel to make its own chips, claiming that Intel was holding it back. And while the company didn’t account for a huge amount of Intel’s sales, the loss served as a symbolic strike against the chip maker.

With its 13th-generation processors, mobile and desktop graphics processors, and renewed dedication to its developer community, though, Intel is in position to impress both consumers and its production partners, according to Holthaus.

Unfortunately, Intel’s turnaround plans come at a time when inflation is running wild, interest rates are on the rise, and consumer demand, especially for PCs, is plummeting. To contend with the economic storm, Holthaus says Intel will look toward commercial customers.

“I'm pretty steadfast in my belief that it is beneficial for companies to make sure that their employees, particularly in a hybrid environment, have the right PC device that allows them the access and capabilities that they need,” she explained. “With our next generation of parts, there are going to be a lot more AI capabilities that are going to make that hybrid environment better and better.”

Consumer customers, Holthaus said, will be trickier than businesses, because many purchased new PCs over the past two years as millions remained indoors during the pandemic.

Still, Intel has seen the number of people using its PCs increase since the start of the pandemic and is holding steady. That means consumers aren’t going back to relying on their smartphones as their primary productivity devices — at least not yet.

As for those consumers who haven’t updated their computers, Holthaus says Intel needs to convince those users that now is the time to step up to a new machine.

“There's hundreds and millions of units out there to be refreshed, and it's our job to explain to them why and why they want to do it on an Intel machine,” she said. “And I think graphics can play a role there. Obviously, integrated graphics, we have significant market segment share. But imagine a world in a couple of years where you can get the best of our integrated graphics and our discrete graphics.”

Of course, Intel losing Apple is still a sore spot for the company. And each time Apple rolls out a new chip, it makes sure to point out that its silicon is more power efficient than Intel’s — something that’s incredibly important when it comes to laptops.

Despite Apple’s lead, Holthaus says that Intel isn’t giving up on making Apple a customer again. And while the chances of that are slim, if it can continue to improve on its designs, it might make the iPhone maker regret ditching its former partner.

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Got a tip? Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

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