Sunday 20 August 2017

'There are three billion new capitalists - the world's economy has changed forever'

John Kennedy

Ex-Intel CEO Craig Barrett says Ireland needs to invest in skills and infrastructure to have a future.

HAD Craig Barrett embarked on his first choice of career - a forest ranger - would Ireland have attracted chip manufacturing giant Intel with over 4,000 jobs at its Fab in Leixlip 20-plus years ago?

Barrett, who is in Ireland this week to address the Engineers Ireland Annual Conference in Cork, led Intel as CEO at the height of the Nineties' PC boom and the early days of the internet, becoming the company's fourth president in 1997. It is a testament to Intel's operations in Ireland that it now counts three Irishmen - Jim O'Hara, Eamonn Sinnott and Rory McInerney - as vice-presidents.

Now retired from Intel, Barrett takes a keen interest in Ireland's development and has argued tirelessly that the country needs to be more entrepreneurial, turn its universities into economic wealth generators and, more than anything, produce more skilled talent.

Growing up in California in the Forties, Barrett came from a low-income family and says he probably would have become a forest ranger if he hadn't succeeded in winning a scholarship to Stanford University.

"I was always interested in maths, physics and chemistry and as a kid I used to build termite bombs. I enjoyed understanding why materials behaved as they did.

"This was the post-Sputnik era and there was an immense push in the US in the fields of engineering and material science from 1950 to 1963. There was a national imperative as well, which was supportive. You'd have to say it was a very different environment than we have today."

Upon his graduation from Stanford, Barrett went to work with NATO as a post-doctoral researcher, subsequently returning to teach at Stanford for 10 years. At this time Intel was a fledgling start-up in Silicon Valley, so Barrett, due to his expertise in materials, offered his services as a consultant. By 1973 he had joined Intel full time.

Intel was a totally different animal to the global giant it is today. "It was solely in Silicon Valley. I like to joke when I joined the company it was doing $50m a year in revenues; today it does something like over $100m a day. So it grew a little bit," Barrett laughs.

Intel's main product at the time was a 1k DRAM chip, the 1103, which was sold to computing giants of the era like IBM and Borroughs. Around the corner was the microcomputer and the PC revolution.

"The vision of Apple Computers and Bill Gates at Microsoft changed everything. But I think the growth of the PC exceeded most rational expectations. Not only this but the impact it's had when you take the PC and the internet and the cellphone today - those three things have changed the way you do everything.

"The smartphone has more computing power than Apollo 13 had when it went to the moon. It's almost ludicrous to think of the changes that have taken place and the interesting thing is they aren't slowing down. Moore's Law continues to advance and you get more and more functionality. The question is what do you do with it?"

What's going to come tomorrow is a question most Irish people would love answered. Barrett is unswerving in his view that Ireland is doing some of the right things but needs to do more.

"There's three billion new capitalists in the world; they all want the same thing that Ireland wants. They'll tell you: 'I want a good-paying job, a growing economy for my kids' future and a good environment to live in'.

"The glass is half full in this argument. If you look at it from the negative side, that they're competing for jobs, you get pretty discouraged. But if you look at it from the point of view of: 'Hey the market just expanded and doubled. China was nothing 20 years ago and now it is the world's biggest market. Well, golly, that's an opportunity'.

"So, if you've got the right idea and the right products, then you have a great chance. It doesn't do the politicians any good to get protectionist because if you do that you'll get left behind. You have to be proactive and say: 'Well, I'm going to compete'. The decision to compete is one of the toughest decisions governments have to make."

As Barrett asks: "What does Ireland want to be when it grows up? It did very well on foreign direct investment people creating jobs but now it has to create its own jobs, how does Ireland do that?

"People get engrossed in the current recession and they forget about the bigger trend - these three billion new capitalists and the world's economy has changed. We superimposed a short-term recession on that because of what the US and Ireland did - over-investment in housing and speculation and banking screw-ups - but that's a temporary blip.

"The longer secular trend says you have to wake up and compete with the rest of the world. What happened during the Nineties is not going to be the way it is in 2010 and you have to change.

"Governments are going to have to have different policies, citizens are going to have to understand they'll have to change, and the individual has to change and invest in their future and that's back to why education is so important. If you want a high standard of living, guess what, you have to add value to what you do. If you want to add value you have to have skills, and skills come with education.

"It's about making sure that, societally, you do not prejudice against taking a risk - your bankruptcy laws in Ireland are not great, they disincentivise people against borrowing money, taking risks. The opposite of that in the US is failures are a positive on your resume. In the US that's a gold star, everywhere else it's a black bar.

"That's part of the uniqueness of Silicon Valley, but it's also what everyone else wants to copy and if it were as easy as writing an equation everybody would be doing it. But if you have to have Government, society and the infrastructure, all of those things have to happen in parallel. It's more challenging."

Barrett says Ireland is probably leading the world, however, in terms of cutting public sector salaries.

"From the education side, there is also positive dialogue about the importance of maths and science, getting kids interested, putting more research scholars in and getting closer ties between industry and universities to emulate Stanford and MIT environments.

"These are not overnight changes, these are multi-year changes. It's going to be difficult - not just in Ireland. The US is still in denial. We're talking about increasing unemployment benefits rather than maybe talking about bright people and the right environment to start companies.

"So there's lots and lots of work to be done, and meanwhile those other three billion new capitalists are running as fast as they can!" he warns.

To watch a video interview with Craig Barrett, go to www.digital21.ie.

© Silicon Republic Ltd

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