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Andrew Grove
CEO, Intel
Answers to Written Questions from the Floor:
Q. President Clinton has made a highly publicized promise to give necessary support to the corporations of Silicon Valley. How much will it help your company?
A. He hasn't really told me anything, but his public pronouncements are appreciative of the value of high tech industries. We need sustained action in the protection of intellectual property; we need to address the inadequacies of the court system in terms of timeliness; and we need to establish a pragmatic trade policy. He seems to be committed to all of these. We also need the ability to shuffle funds to where they are needed from where they are less needed.
Q. Can we afford to lose low tech manufacturing jobs as we protect high tech jobs?
A. If the economy is vital and competitive, it will determine what jobs need to be created. It should not be a government decision; it is a decision for the free market. But the free market needs to be stimulated and protected from unfair competition.
Q. Ross Perot said that the NAFTA agreement would destroy much of U.S. industry and eliminate large numbers of good jobs. Do you agree?
A. No. NAFTA will open up a vast potential market for American products if our economic infrastructure is vigorous. It will reallocate capabilities, resources, and training to the right types of industries in this country to supply those new markets.
The computer industry is a perfect case in point. Prior to the appearance of NAFTA, the South American economies were absolutely closed to computer products. They insisted on local manufacturing and put prohibitively high tariffs on high tech equipment from the U.S. Computer prices were four or five times as high in some South American countries than in the U.S., and consequently the computer industry went nowhere there.
The very notion that there might be a North American free trade agreement has already had an impact on South American computer prices. Computer prices are coming down, and importation of high tech equipment is taking place. It is giving you an indication of what a free market can do in revitalizing markets for the kind of products that the U.S. economy in fact produces best.
Q. Making a dramatic change in the U.S. economy is more complex than changing a business. How can our nation get around the politics and special interests to make the changes that are necessary?
A. I concede to the first point of this question. The job of changing a multi-trillion dollar economy is much more difficult than changing a piddly little company. But the principles are somewhat the same in the same way that a drop of water contains all the elements of the ocean. The principles that relate to the problem are, first of all, that resources are finite.
Therefore, if you want to accelerate development in evolving new directions, you have to take away resources from the less important ones. You have to prioritize. Prioritizing is hard, and the harder it gets, the harder the task of leadership-corporate or governmental-to motivate these changes.
We will never get this perfectly right, but doing it better than we did last year is absolutely within reach. Government, industries, and the interactions of lobbyists and special interest groups can all be improved upon by strong and consistent leadership.
Q. What is the outlook for manufacturing jobs in the Silicon Valley?
A. Not good. It is not just Silicon Valley, but the California economy in general. Taxes are high, wages are high, and property values are high. Silicon Valley competes with other areas-both within and outside the country-for jobs the same way that corporations compete for sales. Since the costs of doing the same kind of work are less expensive elsewhere, California has been losing manufacturing jobs and it will probably continue.
Q. Why did Intel develop its new facility in New Mexico, rather than in California?
A. New Mexico was the more favorable of the two. In addition, we have our largest manufacturing operation there already, so from an operational standpoint New Mexico was very viable.
Q. Will our defense industries be able to successfully convert to the civilian sector? What areas appear to be the most promising?
A. The defense industry will have a very hard time converting. Marketing to the defense establishment and marketing in a commercial world are very different. Because these are very competitive worlds, they will have a very hard time adopting to the reality of the commercial world. Though there will be successes along the way, there will have to be a lot of downsizing. There is nothing that can be done about it short of declaring a war.
Q. How can we protect software proprietary secrets in foreign lands?
A. Stealing software is the same as stealing hardware; it is just not taken as seriously. People think nothing of copying software, yet few would steal a purse. This mind-set needs to be changed with persistent legislative and judicial processes that communicates by its action that stealing software is the same as stealing tangible property.
Barring that, technology will most likely come to the rescue. Companies like Intel are working with software producers to build technological locks and keys in the software which will make copying a lot more difficult. This will not come for free. Information technology consumers will have to pay for it, and they will have to pay for it two ways-both monetarily, and having to put up with a far clumsier way of operating their computers than they have today.
Q. We seldom hear of Japanese companies suing each other for patent or copyright infringement. Why?
Their conflict resolution process is very different from ours. In place of lawyers they have administrative personnel and contract negotiators-a whole army of people involved in the process. The process is just as onerous as the lawyer-ridden U.S. corporations. A lot of things take place in Japan that we are not accustomed to.
These companies have their own way of resolving disputes, but in private they will confess their frustration with the slowness, clumsiness, and the expense of their system. It is just not as public as ours.
Q. Has the decline of the U.S. educational system posed problems for your company?
A. We find it less of a problem than it may appear. Our technical universities are outstanding. They make up for the inadequacies of secondary education in math and science. By the time an engineer comes out of an American university, she is as good as her counterparts from anywhere else in the world. Consequently, due to the good work of our universities, we are sheltered from the inadequacies of the secondary education system.
Q. How successful is our new trade representative, Mr. Kantor, likely to be?
A. Persistence and consistency will be key in achieving results. I can't predict whether he will be successful or not. But his start is right and I am delighted with that.
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