Intel's Maxine Fassberg Is Going Home
The first lady of Israeli tech is retiring, and this time it is final
Maxine Fassberg is retiring from Intel. You might have heard that once before, but this time it is final—she bought a private vehicle. The company car she has received from Intel, where she spent close to four decades as one of the strongest players in the company, is parked outside her home, waiting to be collected.
“I worked at Intel for 37 years; that is enough,” she told Calcalist in a recent interview. “Now I want to have fun.”
Fassberg, 67, first announced her resignation from the corporation at the end of 2016. At the time, she was the general manager of Intel Israel and a global vice president. Her bags were packed, her career was toasted by the office, but then Intel launched its greatest venture in Israel to date—the $15.3 billion acquisition of automotive chipmaker Mobileye. Once the deal was signed, Fassberg was made an offer she could not refuse, to be in charge of Mobileye’s integration.
Intel, as Fassberg herself admits, has a record of messing up its acquisitions. Between 2010 and 2017, the company spent $30 billion on a series of acquisitions, from Altera Corp. to McAfee Security, resulting in just a $4 billion annual increase in earnings.
Fassberg was not part of the negotiations with Mobileye, but Intel’s CEO at the time, Brian Krzanich, brought her in when he realized he needed someone at a key position at Intel, who was also a Hebrew speaker and well-versed in Israeli culture. “Someone strong enough who could explain to the people at Intel why there is no integration,” is how she defined it. “There were some very strong players there who wanted to put Mobileye on Intel’s IT system and match employee compensation. In such a situation, Mobileye would have spent all their time on that instead of on work.”
The challenge of helming a successful merger proved tempting enough for Fassberg. “I talked about it a lot with Amnon,” she said, referring to Mobileye co-founder and CEO Amnon Shashua. “In this merger, we performed a non-merger. We wanted to enable them to do what they know best, without getting in the way. Eighty percent of mergers fail because the acquired company is stripped bare and the culture differences are ignored. Management retires, and two weeks later the buyers do not understand what they paid for.”
To keep Mobileye independent, Fassberg served as a gatekeeper. “Mobileye had to receive only what it needed from Intel, not what it did not need or want,” she said. “Nothing reached Amnon without going through me first. But after three years you do not need me full-time anymore. A person needs to know when to take a look around and say it is time to hand the reins over to someone else.”
In hindsight, the Intel-Mobileye deal was somewhat of a game-changer for the domestic automotive industry. It created a new local industry, one that served as a drawing stone for the global tech giants that took part in the race for the first autonomous vehicle. Israel has turned into a veritable Mecca of automotive innovation centers, from Mercedes-Benz to Ford. The earning reports are also optimistic; in Intel’s reports for 2019, Mobileye’s revenue was listed as $879 million, an annual growth of 26% and 2.5 as much as Mobileye reported for 2016, its last year as a public company.
But it is Shashua who spoiled the party when he announced in a July blog post that the autonomous car dream is even farther than previously thought. Intel was once again left with the $15 billion question: had it paid too much for Mobileye?
“I sat on many calls with Intel Capital President Wendell Brooks about how the rationale for the Mobileye deal was formed,” Fassberg said, referring to the man who until recently was her direct superior. “It is not just a piece of paper that you wave about, but an in-depth, real-time analysis of reality versus planning. The measurements are revenues and profit.”
Currently, Mobileye’s sales are barely 1% of Intel’s total. According to Fassberg, both short-term and long-term development were taken into consideration for the deal. Intel will make back its investment in 2025, if autonomous driving is achieved by then, she said.
She does not seem too bothered by Shashua’s announced delay or by the critics who say Intel paid $15 billion for a fancy hazard system. The company sold over 54 million of its ADAS (advanced driving assistance system) chips to date, she said. “Furthermore, the investment in Mobileye provided Intel with a real growth engine. All the analysts who took a ride in our autonomous car said ‘wow’ and that it is more advanced than they thought.”
Much of the delay in the development of autonomous cars has been attributed to reluctant regulators and market unreadiness, but according to Fassberg that is only true for private vehicles. “If you listened closely to Amnon, he said the delay was in the private market, but when it comes to public transportation the autonomous vehicle is progressing as planned.”
While public transportation may be a limited market, it is but one of several developments that were not even on the table when the Intel-Mobileye deal was signed. “Take data, for example. The vehicles that drive with Mobileye’s current system draw up very accurate maps that many companies need. These maps do not only show the streets, but also the location of potholes and other important details. Mobileye already signed a $60 million contract with the U.K. mapping authority, and that was not even in our calculations. It is due to Amnon’s amazing vision.”
Mobileye is still the driving force behind Mobileye, Fassberg said. “There was no division between us—he is the manager and I was the enabler. My job was to provide them with whatever they needed, and to be the translator—most acquisitions fail because there is no translator.”
She gives as an example Intel’s 2010 acquisition of the wireless solutions business of Infineon Technologies. Intel paid $1.4 billion in an attempt to make up for its own failure to develop mobile processors, instead trying to break into mobile networks. But this attempt, too, was a failure—one of Bob Swan’s first actions as interim CEO was to get rid of the business, which was sold in July to Apple for $1 billion.
“The CEO was a brilliant German, but Intel’s management did not understand him conceptually, and he did not understand what Intel wanted from him,” Fassberg said. “At the time, I also asked to be a translator, because I understood from the start that it was doomed to fail.”
In December, Intel acquired Tel Aviv-based artificial intelligence chip developer Habana Labs Ltd. for $2 billion. The deal, according to Fassberg, is not expected to go through a similar non-merger process. The way the Mobileye acquisition was handled was unique, she said. “The idea for a non-merger was born out of an agreement between Amnon and Brian about Mobileye’s independence because Brian understood that if he paid $15 billion, something of what he paid for should remain,” she said. “But Habana’s acquisition is very different. It was acquired for its artificial intelligence abilities and will be integrated into Intel’s existing business.”
Intel is currently expanding Mobileye’s operations, which are concentrated mostly in Jerusalem. The new facility it had planned for southern Israeli town Kiryat Gat, though, is on hold. Intel is currently busy establishing a factory in Ireland, set to manufacture 7-nanometer chips, and reevaluating its non-U.S. operations due to President Donald Trump’s tax reform, Fassberg said. Between the lines, she admits that the future of the Kiryat Gat facility is uncertain—Intel has yet to even decide if the new factory will manufacture 7-nanometer chips or 5-nanometer.
Halting work on its planned Israeli factory could prove a touchy subject for Intel; the company has faced much local criticism throughout the years regarding the many tax benefits and exemptions it has received. At the end of 2018, Intel announced it will invest $10 billion in Israel for a grant worth 9.1% of the planned investment. Intel is also slated to receive a regional grant worth 4% due to the facility’s rural location, and pay a reduced corporate tax rate of 5% instead of 23%.
“Tales about the tax Intel pays are not the most accurate,” Fassberg said. “We have always paid tax. When we needed to choose a taxing route, and that was back in the days of Dov Frohman”— the first general manager of Intel Israel—“Intel’s management said that tax is not something permanent, and they wanted to know what they were getting. That is why we chose to go for grants.”
For a company such as Intel, the change will not happen in one day, Fassberg said—what has already been invested in Israel, or Ireland, is here. “We just have to make sure it is renewed.”