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First on CNBC: CNBC Transcript: Intel CEO Brian Krzanich Speaks with CNBC's "Closing Bell" Today

WHEN: Today, Monday, June 1st

WHERE: CNBC's "Closing Bell"

Following is the unofficial transcript of a FIRST ON CNBC interview with Intel CEO Brian Krzanich on CNBC's "Closing Bell" (M-F, 3PM-5PM ET) today. Following is a link to the video on CNBC.com: http://video.cnbc.com/gallery/?video=3000384657.

All references must be sourced to CNBC.

KELLY EVANS: THE BIGGEST NEWS IN THIS M&A MONDAY IS INTEL BUYING ALTERA FOR NEARLY $17 BILLION. LET'S GO STRAIGHT TO THE SOURCE ON THIS DEAL. JOINING US RIGHT NOW IN A FIRST ON CNBC INTERVIEW IS INTEL CEO BRIAN KRZANICH WITH OUR VERY OWN JON FORTT. A WARM WELCOME TO YOU BOTH. BRIAN, LET'S JUST BEGIN WITH YOU AND WHAT THIS DEAL MEANS FOR INTEL.

BRIAN KRZANICH: SURE, THIS ACQUISITION IS ABOUT US BRINGING THE FPGA MARKET INTO INTEL. IT ALLOWS US TO USE OUR MOORE'S LAW AND OUR SILICON ADVANTAGE TO BRING ENHANCEMENTS TO THE PRODUCT PORTFOLIO AROUND FPGAs AND THEN THERE'S THIS CLASS OF PRODUCTS IN THE DATA CENTER AND THE IOT THAT CAN UTILIZE THE FPGA AND OUR PROCESSORS TOGETHER THAT CAN REALLY ACCELERATE PERFORMANCE CONSIDERABLY. UP TO 2X PERFORMANCE IMPROVEMENTS AS A RESULT OF THE COMBINATION OF THE PRODUCTS.

EVANS: BRIAN, IF YOU DO NOT MIND, WHAT DOES PGA MEAN IN KIND OF PLAIN ENGLISH?

KRZANICH: SURE, IT'S PROGRAMMABLE GATE ARRAY. AND SO YOU CAN THINK OF IT AS A SEA OF GATES OR JUST BASICALLY A BUNCH OF GATES THAT YOU CAN PROGRAM. YOU CAN PUT BASICALLY YOUR SOFTWARE DOWN INTO THE SILICON WHICH ALLOWS SOMEBODY – LET'S SAY YOU HAVE A FACIAL SEARCH ALGORITHM, SOMETHING THAT ALLOWS YOU TO LOOK AT A BUNCH OF PICTURES AND FIND A FACE, YOU CAN PUT THAT INTO THE SILICON WHICH MEANS IT GOES AT A MUCH, MUCH FASTER RATE THAN IF IT WERE SITTING IN MEMORY OR STORAGE.

JON FORTT: BRIAN, THANKS SO MUCH FOR JOINING US. AND YOU ARE A CHIP GUY THROUGH AND THROUGH, BEEN IN THIS INDUSTRY A LONG TIME. THE PAST WEEK HAS JUST BEEN AMAZING. WE SAW AVAGO AND BROADCOM ANNOUNCING THAT THEY WANT TO GET TOGETHER LAST WEEK FOR $37 BILLION, NOW THIS. SMART PEOPLE I TALKED TO SAY THAT THE SOME OF THE SAME FORCES ARE DRIVING BOTH OF THESE. MORE OF THESE IMPORTANT FUNCTIONS ARE GOING TO GET INTERGRATED ON A SINGLE CHIP, AND BOTH OF YOU GUYS ARE FIGHTING THIS FROM DIFFERENT SIDES OF IT. THEY'RE FIGHTING FROM THE SPECIALIZED POSITION TRYING TO STAY RELEVANT AS THAT INTEGRATION HAPPENS. YOU'RE FIGHTING FROM THE GIANT POSITION SAYING WE WANT TO BE THE ONES TO INTEGRATE IT AND INTEGRATE IT WELL. IS THAT REALLY WHAT IS GOING ON HERE? WHAT DO YOU THINK IS REALLY DRIVING THIS M&A ENVIRONMENT?

KRZANICH: YOU KNOW, I THINK THERE'S A CERTAIN AMOUNT OF THIS THAT'S JUST GOING TO OCCUR IN THIS INDUSTRY. THE INDUSTRY IS MATURING AND THERE'S GOING TO BE M&A OCCURRING NOW FOR THE NEAR FUTURE AT LEAST. BUT FOR US, THIS WAS REALLY ABOUT BRINGING THIS ARCHITECTURE, BRINGING THE INTELLECTUAL PROPERTY OF THE FPGA INTO OUR PORTFOLIO AND ALLOWING US TO MAKE THESE PRODUCTS. THIS IS WHAT IS IMPORTANT JON, IS OUR CUSTOMERS ARE ASKING US FOR THESE PRODUCTS BECAUSE THEY REALLY SEE THE PERFORMANCE IMPROVEMENT. WHEN YOU THINK ABOUT THE CLOUD INFRASTRUCTURE OR THINGS IN THE IOT LIKE DRIVER ASSIST, THEY WANT THIS POWER PERFORMANCE THAT THIS JOINT PRODUCT CAN DELIVER. AND THAT IS WHAT IS REALLY DRIVING US.

FORTT: TALK IF YOU CAN ABOUT THAT DATA CENTER OPPORTUNITY, WHICH IS IN THE $30 BILLION-PLUS ADDRESSABLE MARKET SIZE I BELIEVE YOU SAID. WHAT WILL THIS ALLOW YOU TO DO, HAVING ALTERA, THAT YOU COULD NOT DO BEFORE? MAYBE PARTICULARLY FOR SOME OF THESE MEGA SCALE CLOUD PLAYERS LIKE YOUR FACEBOOKS, MICROSOFT, GOOGLES, THAT ARE BUILDING THEIR OWN CUSTOM SERVICE AND YOU WANT TO KEEP THEM AS CUSTOMERS.

KRZANICH: YOU KNOW, ABSOLUTELY. THIS IS ALL ABOUT, AS I SAID, YOU CAN TAKE THESE WORKLOADS – WHETHER IT'S A SEARCH ALGORITHM OR ENCRYPTION FOR DATA AND YOU CAN TAKE THAT FROM WHAT IS RUNNING OUTSIDE OF THE CPU TODAY AND RUNNING SOMETIMES OUT OF MEMORY OR OUT OF STORAGE AND YOU CAN PUT THAT RIGHT ONTO THE SILICON. SO YOU CAN GET A UP TO A 2X IMPROVEMENT IN PERFORMANCE AT A LOWER COST THAN YOU COULD OTHERWISE BY PUTTING THESE TWO PRODUCTS TOGETHER IN THE SAME PIECE OF SILICON. AND FOR THE BIG CLOUD PROVIDERS A 2X IMPROVEMENT IN PERFORMANCE IS HUGE. IT REALLY PROVIDES THEM NOT ONLY WITH A COMPETITIVE ADVANTAGE, BUT A COST ADVANTAGE AS WELL. THAT'S WHAT REALLY FUELS THE CLOUD.

FORTT: NOW, YOU SAID THIS IS ABOUT FUTURE PRODUCTS MOSTLY. BUT YOU'VE ALSO GOT A BIG COMPETITOR TO ALTERA IN XILINX THAT HAS A BIG SHARE OF THE PROGRAMMABLE SEMICONDUCTOR MARKET. HOW IS THIS COMBINATION WITH INTEL GOING TO HELP ALTERA'S PRODUCTS VERSES XILINX'S? JUST THE ONES THAT THEY HAVE OUT RIGHT NOW THAT YOU ARE GOING TO CONTINUE TO ITERATE UPON.

KRZANICH: WELL, YOU KNOW, FOR THE NEXT NINE MONTHS WE HAVE TO GO THROUGH THE REGULATORY SO NOTHING REALLY CHANGED FOR THE NEXT NINE TO TWELVE MONTHS. BUT AFTER THAT, ALTERA ALREADY HAD THEIR PRODUCTS COMING ONTO OUR FOUNDRY. SO NOT A LOT CHANGES IN THE NEAR TERM. LONG TERM WE BELIEVE THAT WE WILL CONTINUE TO DRIVE MOOR'S LAW TO RATE FASTER THAN THE INDUSTRY AND BY INTERGRATING THE TWO COMPANIES, WE CAN GET OUR DESIGNERS AND THEIR DESIGNERS TO WORK MORE CLOSELY TOGETHER. KIND OF THE IDM MODEL THAT WE USE TODAY WITH OUR OWN PRODUCTS. AND THAT MEANS THEY CAN COME ONTO THOSE NODES AT A FASTER RATE.

FORTT: SO THAT MEANS PROCESS TECHNOLOGY YOU'RE SAYING, JUST THEIR CHIPS ARE GOING GET BETTER BECAUSE THEY'RE GOING TO BE ONE GENERATION BETTER IN TERMS OF THE PROCESS TECHNOLOGY THEY'RE ABLE TO USE VERSUS THE COMPETITION?

KRZANICH: THAT'S RIGHT JON. AND IN THE FPGAs, THE PERFORMANCE IS WHAT REALLY GETS PAID FOR.

EVANS: BRIAN, THERE'S A DEBATE GOING AROUND ABOUT TO WHAT EXTENT COMPANIES SHOULD BE BUYING BACK THEIR STOCK, INVESTING OR BUYING OTHER COMPANIES. TODAY WE SEE A VOTE FOR THE LATTER IN YOUR CASE. BUT GOING FORWARD, HOW MUCH MORE SHOULD WE EXPECT OF YOU PUTTING MONEY TO WORK THROUGH ACQUISITIONS VERSUS OTHER KINDS OF INVESTMENTS OR BUY BACKS?

KRZANICH: SURE KELLY. WE ALWAYS TAKE A LOOK AND WE HAVE THREE PRIORITIES. FIRST IS ALWAYS INVEST IN OUR BUSINESS. YOU WANT TO REALLY HAVE FOR OUR SHAREHOLDERS AN INVESTMENT PORTFOLIO THAT GIVES THEM A FUTURE. A FUTURE SET OF PRODUCTS AND INVESTMENTS. THEN AFTER THAT IS INVEST IN DIVIDENDS AND SHARE BUY BACKS. ANY TIME WE MAKE ONE OF THOSE INVESTMENTS IN THE BUSINESS, WE DO BASICALLY A NET PRESENT VALUE ON THAT AND COMPARE AGAINST THE ADVANTAGE OF INVESTING IN OUR STOCK OR IN GIVING DIVIDENDS. AND IT HAS TO PASS THAT HURL RATE. SO WE WILL ALWAYS DO THAT. WE DO THAT WITH EVERY INVESTMENT WE MAKE. AND WE ALWAYS MAKE SURE IT'S POSITIVE RELATIVE TO THAT GIVEN THE ASSUMPTIONS WE HAVE.

EVANS: AND BRIAN, WHAT ABOUT GETTING THE RIGHT PEOPLE ON BOARD? YOU KNOW, THERE'S A BIG STORY TODAY ABOUT UBER BASICALLY HIRING CARNEGIE MELLON'S AUTOLESS DEVELOPMENT DEPARTMENT WHEN IT COMES TO DRIVERLESS CARS. SO ARE YOU GUYS ABLE TO FIND THE TALENT YOU NEED? ARE YOU GOING TO BUY IT THROUGH ACQUISITIONS? IS IT IN ACADEMIA? ARE WE TURNING IT OUT OF OUR UNIVERSITIES? ARE YOU SEEING ANY HINDERENCES ON THAT FRONT?

KRZANICH: WELL, YOU KNOW, WHEN WE LOOK AT THOSE KINDS OF TALENT, YOU ARE RIGHT. YOU HAVE TO GO TO ALL OF THOSE SOURCES. AND YOU REALLY HAVE TO LOOK WORLDWIDE. ONE OF THE ADVANTAGES OF A BIG COMPANY LIKE INTEL, WE PLAY IN OVER 300 COUNTRIES IS WE CAN GO OUT AND ACCESS TALENT FROM ALL OVER THE WORLD. SO NO MATTER WHERE I AM AT, WE'RE IN CONSTANT SEARCH OF TALENT. SOMETIMES YOU CAN HIRE THAT TALENT RIGHT OUT OF THE UNIVERSITY, SOMETIMES YOU WANT TO ACQUIRE THAT TALENT AND SOMETIMES YOU CAN GROW THAT TALENT FROM WITHIN BY PUTTING PEOPLE THROUGH PROGRAMS LIKE UNIVERSITY PROGRAMS AND DEVELOPMENT PROGRAMS. BUT YOU ARE RIGHT. THE TALENT FOR THESE EMERGING AREAS – ROBOTICS, DRIVERLESS CARS, THE DATA CENTER AND BIG DATA – THOSE ARE ALL DRIVING DEMAND FOR VERY TALENTED PEOPLE.

FORTT: BRIAN, BACK TO THE ACQUISITION QUESTION YET AGAIN. THERE HAVE BEEN TIMES WHE INTEL HAS DONE A BIG BUY – I THINK MCAFEE WAS ONE – WHERE INTEL HAS THEN SAID OK, WE'RE GOING COOL OUR HEELS FOR A BIT. WE'RE GOING TO DIGEST THIS. WE ARE NOT GOING TO DO ANY MORE SIGNIFICANT ACQUISITIONS. BUT, YOU SAID SOMETIMES WE GO THROUGH THESE PERIODS WHERE IT'S TIME TO CONSOLIDATE. IF THIS IS ONE OF THOSE PERIODS, MIGHT YOU DO MORE ACQUISITIONS EVEN IF THEY'RE NOT OF THIS SIZE?

KRZANICH: YOU KNOW, WE'RE ALWAYS – WE DO A LOT OF ACQUISITIONS, JON. YOU KNOW, IN THE SMALLER RANGE. YOU WILL CONSTANTLY – PROBABLY A WEEK DOESN'T GO BY OR AT LEAST A COUPLE OF WEEKS DON'T GO BY WITH SMALLER – TENS OR MAYBE $100 MILLION ACQUISITIONS WHERE WE ARE GETTING THE TALENT LIKE WE JUST TALKED ABOUT OR UNIQUE IPs. AND WE WILL CONTINUE DO THAT – YOU KNOW, WE ARE TRYING TO GET INTELLECTUAL PROPERTIES THAT IS VERY UNIQUE. AND EVEN FOR BIG ACQUISITIONS, WE WILL ALWAYS BE ON THE LOOK OUT. THIS IS CERTAINLY A BIG ONE, AND WE WILL NEED TO TAKE OUR TIME, GO THROUGH THE REGULATORY PROCESS. I THINK WE WILL HAVE SOME RESONANCE TO DO ANOTHER BIG ONE TOO QUICKLY, BUT CERTAINLY WE ARE GOING TO BE LOOKING FOR VALUE TO OUR SHAREHOLDERS CONSTANTLY. BOTH INTERNAL INVESTMENT AND INVESTMENTS AND ACQUISITIONS.

EVANS: UNDERSTOOD. BRIAN, THANK YOU SO MUCH FOR JOINING US THIS AFTERNOON. WE APPRECIATE IT.

KRZANICH: IT'S MY PLEASURE.

EVANS: BRIAN KRZANICH IS THE CEO OF INTEL.

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