Comment by ComputerGuru | Hacker News Reader

Comment by ComputerGuru | Hacker News Reader

It's not much of an article, but the question is certainly on everyone's mind.

The crazy part is that this is all after how much Intel has benefitted from the CHIPS act (financially, not strategically, as it's too soon for that). They're unable to compete even with unfair advantages funded by the American tax payers.

From everything I've heard and read, Gelsinger is a great CEO and a good person to have steering the ship during this crisis. He's been back 3 years, but a behemoth the size of Intel (with the burden of all the strategic mistakes it made in the Krzanich/Swan era) probably takes a lot longer than that to course correct.

The thing is, it's not in anyone's interest for Intel to fail. There are so few competitors at the top end of the scale that any one dropping out would be catastrophic for the market and the tech/industry. I don't know about the INTC stock price, but I pray that the company finds a way to keep relevant and competitive.

(At the same time, I'm reminded of all the juggernauts of the 70s and 80s and how incredulous it was that they ceased to exist and am reminded of the all too real possibility that this could be the beginning of the end for Intel.)

>they're unable to compete even with unfair advantages funded by the American tax payers.

In countries like South Korea where industrial subsidies have been used successfully this was only the case because governments at the same time enforced export discipline policies, meaning they made subsidies dependent on companies being able to meet export targets which is a big indicator of competitiveness.

Given that the US is turning insular at the same time as its trying to subsidize domestic industry and increasingly putting trade barriers and tariffs up across several industries you basically have the perfect combo for a disaster.

> this is all after how much Intel has benefitted from the CHIPS act

From what I've read they haven't actually received that $8.5B yet. The other thing to consider is that they're they're needing to spend $100B to build fabs that are competitive with TSMC - and they need to do it kind of all at once here because they underinvested in the 15 years prior due to bad management. $8.5B is kind of a drop in the bucket. $100B is a huge amount for a private company to spend - possibly the largest CAPEX ever. And the time from when shovels hit the dirt till the time a fab is in operation is about 5 years.

Meanwhile Apple is over there sitting on $160B in cash wondering what to do with it. And Apple is the one facing huge geopolitical risk if something happens to Taiwan. It seems like a shotgun wedding between Apple and Intel could be beneficial for both.

Apple built their own chips to get away from Intel. They might start thinking about some sort of joint venture to get a TSMC-US working, but they have no interest in working with Intel.

Apple does not build their own chips. TSMC builds them for them. Apple designs chips that are fabbed by TSMC. Apple supplies the recipe, TSMC supplies the ovens.

> they have no interest in working with Intel

They do if they would like to have a safe, domestic supplier insulated from geopolitical instability. Also in the scenario I mention (some sort of merger or acquisition) they'd be owning Intel and driving it in (hopefully) a beneficial direction.

Semiconductors are an important strategic manufacturing capability. Strategic in a “you want homegrown foundries to make smart-bombs” sense, and also in a “chips are a basic component that every other industry uses” sense.

Their main competition is TSMC which also gets subsidies. Everybody who wants semiconductor manufacturing pays up. CHIPS is the US taking the first step toward getting back in that game. It isn’t an unfair advantage really, it is an attempt to level the playing field.

Is Intel the ideal recipient? Not sure. A pure foundry seems like a better (more strategic) candidate to me. But no US foundry is that competitive, right?

Sure, I don’t disagree with the basic premise. I actually wasn’t passing judgement (despite my wording!), rather I was merely trying to say that despite such a massive unexpected windfall, their finances are still in the gutter.

I worked at Intel during the BK days, and their decline was already well under way at that time. What's happening now seems like a natural progression.

Maybe 'BK' was kind of a warning (finance people say 'BK' as shorthand for bankrupt). But he wasn't the only bad CEO they had. Swan wasn't even from the semiconductor industry. Otellini told Jobs 'no' when Apple came inquiring about Intel fabing an ARM chip for their new iPhone thingy. It's been a series for rolling disasters since the early aughts, really.

I worked at Intel during the AG days, and by far the most noticeable change is the larger number of non-profitable activities Intel is engaged in. 130,000 people is just too many for the products they sell and the revenue they generate.

If they had 70,000 employees, their revenue and profits would look great. The question they have to answer is can they do that revenue with 70,000 people, not 130,000.

There is always Samsung and if Intel fails, there might be a more aggressive push from customers to give Samsung more business to ensure that they are successful.

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