WHEN: Today, Monday, March 13th
WHERE: CNBC's "Squawk Alley"
Following is the unofficial transcript for a FIRST ON CNBC interview with Intel CEO Brian Krzanich on CNBC's "Squawk Alley" (M-F, 11AM-12PM ET) today, Monday, March 13th. Following are links to the video on CNBC.com: http://video.cnbc.com/gallery/?video=3000600777 and http://video.cnbc.com/gallery/?video=3000600784.
All references must be sourced to CNBC.
JON FORTT: INTEL ANNOUNCING TODAY ITS INTENT TO BUY MOBILEYE FOR $15.3 BILLION. IT'S AN ISRAELI COMPANY KNOWN FOR SELF-DRIVING CAR TECHNOLOGY. JOINING US NOW AT POST 9, FIRST ON CNBC, BRIAN KRZANICH, CEO OF INTEL. BRIAN, WELCOME.
BRIAN KRZANICH: GREAT TO BE HERE. THANK YOU FOR HAVING ME.
FORTT: LOTS TO COVER, BUT MOBILEYE, IT HIT A RECENT LOW IN DECEMBER. IT WAS TRADING ABOUT 10 BUCKS A SHARE, LESS THAN IT IS NOW. TELL ME ABOUT THE TIMING. WHY THIS DEAL? WHY NOW?
KRZANICH: SO, WE THINK IT'S CRITICAL NOW. YOU KNOW, THE STRATEGY AROUND THIS DEAL WAS REALLY BEING ABLE TO PROVIDE END-TO-END SOLUTIONS, A COMMON PLATFORM FOR OUR CUSTOMERS AROUND AUTONOMOUS DRIVING. IT'S IMPORTANT NOW, BECAUSE IF YOU TAKE A LOOK AT WHAT YOU'RE DOING, TALKING ABOUT CAR MODELS IN 2020, 2021, AND SO WE NEED TO GET IN THERE, WE NEED TO GET THIS PLATFORM DEVELOPED, BROUGHT TO THEM AND HAVE THAT CONFIDENCE SO THAT WE CAN REALLY INFLUENCE THE REAL START OF AUTONOMOUS DRIVING IN THAT TIME FRAME.
FORTT: QUALCOMM DID A BIG DEAL FOR NXP, IS IN THE PROCESS OF THAT, $38 BILLION AROUND. NXP'S GOT SOME RADARLIKE TECHNOLOGY AS WELL AS OTHER TECHNOLOGY IN THE CAR AS WELL. WHY HAVEN'T THEY OUTFLANKED YOU HERE?
KRZANICH: BECAUSE IT'S REALLY A DIFFERENT SPACE. IF YOU LOOK AT THE SPACE THEY WENT AFTER, THEY WENT AFTER MORE OF THE CENSORS, AND I'LL CALL IT THE EDGE DEVICES THAT AREN'T HEAVILY COMPUTE. WHAT WE'RE DOING IS GOING TO INTEL'S STRENGTHS, WHICH IS THE HEAVY COMPUTING. AND YOU CAN THINK OF IT AS TWO BRAINS INSIDE AN AUTONOMOUS CAR, THE MOBILEYE BRAIN, WHICH IS REALLY LOOKING OUT AND SEEING THE WORLD AND ADOPTING, WHAT IS IT, A CAR, A STOP SIGN, THAT. AND THEN IT FEEDS THAT INTO THE INTEL XEON AND XEON FAMILY, WHICH THEN PLOTS THE CAR'S PATH AND ACTUALLY DRIVES THE CAR. SO, ONE'S YOUR EYES AND ONE'S YOUR BRAIN THAT'S DRIVING THE CAR. AND WE'VE REALLY SAID THAT'S THE PLACE WE PLAY BEST IN, WHERE OUR SILICON TECHNOLOGY, OUR ARCHITECTURE AND OUR KNOWLEDGE BEST PLAYS.
FORTT: IS THIS REALLY A CAR PLAY, OR IS IT A REALITY PLAY? BECAUSE YOU'VE GOT REAL SENSE TECHNOLOGY IN PCs NOW. YOU'VE BEEN PUSHING ON THIS IDEA FOR A WHILE, NOT JUST IN THE CAR, THOUGH THE CAR IS, OF COURSE, IMPORTANT. IS THIS LED BY THE CAR? BECAUSE IN YOUR ANNOUNCEMENT, YOU FOCUS VERY MUCH ON THE CAR -- 4 TERABYTES OF DATA ARE GOING TO BE COMING OUT OF THE CAR IN THREE YEARS, EVERY DAY.
KRZANICH: IF YOU LOOK AT OUR BIGGER STRATEGY, THE COMPUTER VISION, WHETHER IT'S A DRONE OR ROBOT OR A CAR, IS GOING TO BECOME AN IMPORTANT SET OF DATA. AND SO, YOU SAW AN ACQUISITION IN MOVIDIUS LAST YEAR, FOR EXAMPLE,WHIXH IS REALLY TARGETED TOWARD THE LOW-END DEVICES, AND MOBILEYE IS TARGETED TOWARDS THE HIGH-END DEVICES. BUT THEY'LL BE IN MORE THAN JUST CARS, LIKE THE SPOTTING CAMERAS ON HELICOPTERS, THEY'LL BE IN HIGH-END DRONES, THEY'LL BE IN HIGH-END ROBOTICS AS WELL. AND SO, IT'S REALLY ABOUT COMPUTER VISION AND HOW COMPUTER VISION IS GOING TO CHANGE THE WORLD. IN ORDER TO HAVE TRUE ARTIFICIAL INTELLIGENCE OF A MOBILE DEVICE, YOU HAVE TO HAVE COMPUTER VISION. THAT SYSTEM HAS TO BE ABLE TO SEE THE WORLD IN ORDER TO BE ABLE TO INTERPRET THE WORLD AND NAVIGATE OR WORK WITHIN THE WORLD.
CARL QUINTANILLA: YOU MENTIONED 2020. THE PRESS RELEASE TALKS MORE 2030, $70 BILLION BUSINESS. VIEWERS HAVE A MILLION QUESTIONS ABOUT THE TIMING, WHEN THIS TRULY BECOMES A MASS MARKET STORY. WHAT YEAR IS THAT?
KRZANICH: SO, YOU KNOW, I THINK IT WILL ALWAYS GO FASTER. YOU KNOW, WE ALWAYS THINK THAT THESE TRANSITIONS ARE GOING TO TAKE LONGER, BUT AS PEOPLE -- I'VE DRIVEN -- I DID A SIX-MILE DRIVE IN AN AUTONOMOUS CAR WITH MY WIFE AT CES, AND WE BOTH WALKED OUT OF THE CAR GOING, WE GET IT. WE KNOW WHY THIS IS SO VALUABLE. SO, I STILL THINK MAYBE 2023, '24, SOMEWHERE IN THAT TIME FRAME, YOU KNOW, YOU ARE GOING TO SEE MANY OF THESE ON THE ROAD.
QUINTANILLA: DOES THERE NEED TO BE SOME FEDERAL HARMONIZATION OF REGULATION? MUNICIPALITIES, STATES, I MEAN, HOW IS THIS ALL GOING TO GET HAMMERED OUT?
KRZANICH: SO YOU KNOW, WHAT WE THINK IS THAT, AGAIN, BECAUSE WE ARE GOING TO HAVE THIS COMMON PLATFORM AND END-TO-END SOLUTION, WE CAN ACTUALLY HELP REGULATORS. WHAT REGULATORS WANT TO KNOW IS HOW DO THEY KNOW THAT AN AUTONOMOUS SYSTEM IS SAFE TO PUT ON THE ROAD. WE CAN WORK WITH OUR OWN TECHNOLOGY AND OUR PARTNERS TO DEVELOP TEST MODELS. THINK OF IT AS A COMPUTER PLAYING AGAINST ANOTHER COMPUTER IN AN AUTONOMOUS GAME. AND SO WHEN YOU BRING YOUR SOFTWARE AND HARDWARE MODEL TOGETHER, WE CAN COMPARE IT AGAINST THAT GAME AND MAKE SURE IT PASSES. THEN YOU KNOW YOUR SYSTEM IS SAFE TO GO ON THE ROAD. WE CAN BRING THAT TO MARKET, AND TO THE MUNICIPALITIES AND GOVERNMENTS, AND SAY THIS IS A WAY YOU CAN ENSURE THAT THESE SYSTEMS ARE SAFE TO HIT THE ROAD. IT'S WHEN THOSE KINDS OF STANDARDS GET BUILT THAT I THINK THIS WILL ACTUALLY TAKE OFF.
SARA EISEN: I WONDER WHERE WE ARE IN THE INVESTMENT CYCLE AROUND AUTO TECHNOLOGY. I MEAN THE TAKEAWAYS FOR THIS DEAL IS THAT IT'S CERTAINLY VALUABLE AND THERE'S GOING TO BE AN INCREASING AMOUNT OF PARTNERSHIPS LIKE THIS ONE.
KRZANICH: YEAH. I THINK, FIRST, WE THINK THIS DIFFERENTIATES US. IT'S END-TO-END SOLUTION. WE THINK WE WILL BE DIFFERENT FROM EVERY OTHER – WE'VE GOT FROM THE DATA CENTER ALL THE WAY OUT TO THE CAMERA AT THE EDGE OF THE CARD. EVERY COMPONENT, OUR FPGAs. SO WE'VE BEEN THINKING ABOUT THIS FOR AWHILE PUTTING ALL THE PIECES TOGETHER. ALTERA, 3-D CROSS POINT, AND NOW THIS. I THINK THAT YES, THIS IS A MARKET THAT IS GOING TO – AS WE GO THROUGH THE NEXT YEAR OR TWO CONTINUE TO GROW AND THERE'S GOING TO BE BETTER.
EISEN: HAVE YOU CONVINCED INVESTORS? THE STOCK IS DOWN ABOUT A LITTLE OVER 2%. BIGGEST LOSER IN THE DOW RIGHT NOW. MOBILEYE IS SOARING. ALMOST NEAR THE DEAL PRICE.
KRZANICH: YEAH. AND WHAT INVESTORS ARE GOING TO HAVE TO SEE AND WE WILL HAVE TO SPEND SOME MORE TIME, YOU KNOW, IT'S A BIG DEAL AND PEOPLE ARE TRYING TO FIGURE OUT HOW THIS FITS INTO OUR STRATEGY. AND WE JUST NEED TO SPEND SOME MORE TIME WITH THE INVESTMENT COMMUNITY SHOWING THEM HOW THIS PLAYS OUT. YOU KNOW, WE BELIEVE THAT THE NEXT DATA REVOLUTION, YOU KNOW, WE ALL TALK HOW DATA HAS SHIFTED THE WORLD. THE DATA ON YOUR CELL PHONE KNOWS KIND OF WHERE YOU ARE, WHAT YOU'RE SEARCHING. THE NEXT DATA REVOLUTION IS GOING TO BE VISUAL DATA. THOSE CARS SEE THE WORLD. AND SO AS WE'RE LOOKING FOR THINGS, AS VISUAL DATA BECOMES IMPORTANT, THAT IS A NEW WHOLE BUSINESS AND NEW WHOLE REGIME OF DATA MANAGEMENT THAT IS GOING TO BECOME AVAILABLE. WE NEED TO SPEND SOME TIME WITH THE INVESTMENT COMMUNITY JUST TO KIND OF EXPLAIN THAT TO THEM AND HOW WE SEE THAT PLAYING OUT.
FORTT: I'M GOING TO BE BLUNT. INTEL DOESN'T HAVE THE BEST TRACK RECORD WHEN IT COMES TO M&A AND INTEL HAS TENDED TO BUY SMALLER THINGS. BUT UNDER YOUR LEADERSHIP, YOU'VE DONE ALTERA, WHICH WAS BIG. THIS IS ALSO BIG. IT LOOKS DIFFERENT, IT IS A DIFFERENT KIND OF M&A FOR INTEL. WHY IS IT GOING TO GO BETTER NOW THAN IT HAS IN THE PAST WITH McAFEE AND BASIS AND SOME OF THOSE OTHER THINGS?
KRZANICH: SO I'LL BE A LITTLE SELFISH HERE. IT'S GONE WELL UNDER ME. IF YOU GO BACK TO McAFEE INTEL SECURITY. WE FIXED IT, RIGHT? WE BROUGHT NEW LEADERSHIP IN THAT REPORTED DIRECTLY TO ME AND WE GOT IT PROFITABLE AND WE GOT IT BACK ON COIURSE AND WE THEN HAVE GONE OUT AND FOUND A PARTNER AND ARE MOVING THAT OUTSIDE. WE THINK THAT'S A GOOD, STRATEGIC MOVE. ALTERA, WE HAVE HIT EVERY ONE OF OUR NUMBERS. ACTUALLY, EXCEEDED THEM. DAN MCNAMARA WHO RUNS THAT GROUP HAS DONE A PHENOMENAL JOB. IT'S ABOUT PICKING THE RIGHT LEADERS, PUTTING MY PERSONAL ATTENTION ON IT AND HAVING CLEAR MEASURABLES WITHIN THE FIRST SIX TO 12 MONTHS. AVIRAM, WHO RUNS MOBILEYE, WILL BE RUNNING THIS GROUP. I'VE SPENT A LOT OF TIME OVER THE LAST TWO YEARS WITH AVIRAM. HE'S A GREAT LEADER. HE WILL REPORT DIRECTLY TO ME AND WE HAVE CLEAR MEASURABLES OVER THE FIRST YEAR AND ONCE WE GET THIS THROUGH REGULATORY, TO MAKE SURE THAT WE'RE MAKING PROGRESS. SO I WILL USE THAT SAME RECIPE TO MAKE SURE IT'S SUCCESSFUL.
QUINTANILLA: HOW DO YOU SEE THE BALANCE RIGHT NOW BETWEEN – WITH REGARDS TO AUTONOMY AND MOBILITY – BETWEEN TECH COMPANIES AND CAR COMPANIES. WHO HAS THE EDGE?
KRZANICH: WELL, SO WE LOOK AT IT AS PARTNERS. AND JUST LIKE WHAT WE DO AND I THINK THAT'S ONE OF THE STRENGTHS INTEL REALLY BRINGS TO THIS. WE DON'T COME ON TO THIS SCENE AS A THREAT. WE COME ON AS A KNOWN TECHNOLOGY PARTNER THAT WILL PROVIDE A SOLUTION. AND SO THE CAR OEMs, WHICH WE HAVE GREAT RELATIONSHIPS, DON'T SEE US AS TRYING TO HOARD THE DATA OR TRYING TO TAKE THE DATA FOR US. THEY KNOW WE'LL BUILD A PARTNERSHIP SO THAT WE CAN BOTH BENEFIT FROM THE DATA, FROM THE TECHNOLOGY THAT'S GOING TO BE DELIVERED. AND THE WAY I LOOK AT IT IS JUST LIKE A CAR COMPANY HAS CAR MODELS, THEY'RE GOING TO LOOK FOR A CONSISTENT PLATFORM THAT THEY CAN BUILD CARS FROM A LOW LEVEL OF AUTONOMATION TO A HIGH LEVEL OF AUTONOMY. AND THAT COMMON PLATFORM WE CAN PROVIDE, THEY CAN PROVIDE SERVICES ON TOP AND NOT HAVE TO HAVE DIFFERENT SERVICES BASED ON THE DIFFERENT MODELS THAT THEY'RE SELLING.
FORTT: IS THAT A CHANGE? BECAUSE INTEL AND MICROSOFT USED TO TALK ABOUT THE PC IN THE CAR. MY SENSE WAS THE CAR COMPANIES WERE WORRIED ABOUT GETTING TURNED INTO DELL, INTO HEWLETT-PACKARD, INTO GRAY BOX MAKERS WITH YOUR TECHNOLOGY INSIDE. ARE YOU SURE THEY'RE NOT GOING TO FREAK OUT AT THIS AND START LOOKING FOR OTHER PARTNERS TO DIVERSIFY WHO HAS GOT THE TECHNOLOGY INSIDE?
KRZANICH: SURE. I MEAN, THAT'S MY JOB TO GO CONVINCE THEM THAT IT'S NOT. THAT WHAT WE'RE GOING TO DO IS BUILD A COMMON PLATFORM SO THEY DON'T HAVE TO DO ALL OF THE HARD ENGINEERING WORK. AND THERE'S A LOT OF ENGINEERING ABOUT BUILDING A COMPUTER THAT CAN SEE THE WORLD AND INTERPRET THE WORLD AND MANAGE ITSELF AROUND THE WORLD. WE WILL THEN BUILD A SET OF COMMON APIs, THINK OF IT, AS A COMMON LAYER THAT THEY CAN BUILD THEIR SERVICES AND THEIR INDIVIDUALIZATION AROUND. SO WHAT WE'LL DO IS PROVIDE THEM THAT ENGINEERING BASELINE FROM WHICH TO BUILD FROM.
EISEN: I THOUGHT IT WAS INTERESTING, BRIAN, VERY QUICKLY, THAT YOU USED OVERSEAS CASH BECAUSE OF ALL OF THE DISCUSSION ABOUT REPATRIATION RIGHT NOW. BRINGING THAT MONEY HOME TO BUY AMERICAN COMPANIES AND GROW AMERICAN JOBS. THIS WAS AN OVERSEAS DEAL.
KRZANICH: YEAH, I MEAN, WHAT WE'RE GOING TO ALWAYS DO IS GO WHERE THE RIGHT TECHNOLOGY IS. AND IT HAPPENED THAT THIS TECHNOLOGY WAS IN ISRAEL AND WE TRULY BELIEVE MOBILEYE IS THE WORLD LEADER. AND IF YOU TAKE A LOOK AT THEIR MARKET SHARE TODAY AND WHERE WE SEE THEM GOING, WE WENT WHERE THE MARKET LEADER WAS. WE WERE ABLE TO USE OVERSEAS CASH. BUT IF YOU TAKE A LOOK AT MANY OF OUR OTHER ACQUISITIONS, THEY WILL BE U.S. BASED. AND REMEMBER, MY MANUFACTURING IS STILL ROUGHLY 70% U.S. MANUFACTURING.
EISEN: WE SAW YOU THERE.
FORTT: BRIAN KRZANICH, CEO OF INTEL. BIG DAY WITH THIS MOBILEYE ACQUISITION. $15 BILLION PLUS. THANKS FOR JOINING US FIRST ON CNBC.
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