Stop squashing your commits. You're squashing your AI too
2 points by jannesblobel 5h ago 5 comments
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100 points by pixelworm 2d ago 89 comments
US Intel
119 maguay 119 8/26/2025, 10:47:46 AM stratechery.com ↗
Very well argued. It's such a stunning dereliction the US let things get to this point. We were doing the "pivot to Asia" over a decade ago but no one thought to find TSMC on a map and ask whether Intel was driving itself into the dirt? "For want of a nail the kingdom was lost" but in this case the nail is like your entire metallurgical industry outsourced to the territory you plan on fighting over.
From this lens, the silver lining of the software layoffs going on may be to stem the bleeding of semiconductor workers to the field. If Intel were really smart, they’d be hiring more right now the people they couldn’t get or retain 3-5 years ago
This was a poor business decision for exactly the reasons you’re pointing out. The market is dictating their failure and we’re now undermining it.
They literally cannot have a culture that encourages the now-traditional job hopping that is so pervasive in American business culture. They can't afford it.
It's a side effect of systemically putting short term gains ahead of long term research. CHIPs act may be too little, it is certainly too late...
Financialization is a dead end when you face a nation state determined to control steps in you value chain. How profitable will apple be if they can’t get chips?
Intel switched to a "service the stockholders before the customers" mode and they have never recovered.
Our system has no breaks for this. In fact it works actively for this, hence the neolib ideal of "just move towards efficiencies, and let the chips fall where they may." This is ideal under capitalism. As long as we avoid the needed migration to socialism, this is the best we can do.
Neolib economies generally work as much as anything "works" under capitalism. The GDP of the USA, median salary, quality of life, etc was the envy of the world until the recent nationalist movement that's based on "insourcing" and tariffs. You can't go back and capitalism migrates to efficiencies, which means outsourcing. Its more efficient to export factories and keep cushy office/service jobs here and drain the profits from those factories overseas.
Nationalism/protectionism and capitalism are fundamentally incompatible, so here we are. Demagogy and populism and "return to the past" mentalities used to win political power are the actual problem here.
Also what exactly happens if intel goes under? We have to buy 'foreign' licensed ARM? Manufacture in Asia? We're already doing that. And we have AMD which is a good, if not, superior product, regardless of manufacturing locale. We don't need local fabs the same way we don't need local factories for a lot of other things. You can't just depress wages with a wave of a hand nor do tariffs work outside of some really focused edge cases.
>The U.S. will be completely dependent on foreign companies
This is true of nearly all things in nearly all countries. Recent nationalist movements won't change how capitalism works and recent tariffs and protectionism has only hurt these industries and the working class. The toothpaste is out of the tube and it cannot be put back in. What we're seeing with the government buying intel is an attempt to do that, and it will fail. Expect more tomfoolery like this until we get responsible leadership, but until then we all have to sit here and watch these various economic horrors unfold. Be it this, inflation, mindless tariffs, etc. This will fail and its obvious it will, but currently it buys political power, so we will go this route because voters, largely uninformed on how capitalism works, think this is the "one weird trick" that will make them wealthy. It won't. In fact, all recent indicators are more negative as these policies continue. It will instead make them poor.
This is the same short sighted nonsense that got us into this mess. What happens if China invades Taiwan tomorrow? They can cut off the supply of chips to most of the world and global economies will collapse overnight. You really haven't thought through the implications of having critical dependence on a single small island that a global power is incredibly invested in controlling.
It can mean outsourcing, but I think your broader point is undercut by the fact that the USD holds a very special place as the world reserve currency. This creates high foreign demand for the USD which pushes up the exchange rate and leads to US exports being less competitive on the international market (i.e. our manufacturing base gets hollowed out because it cannot compete). This is a large market distortion that the US actively defends because it benefits us in other ways. Tariffs and general protectionism is not a good thing in a free market, but that's not really what is happening at the international level.
Huh? France and Germany are prime counter examples of your statement.
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Even for integrated graphics, Intel has been behind Apple’s/TSMC ARM based processor before the Mx based Macs.
The reason they are in the shape they are in right now is because they didn’t have the volume to invest in the next generation and even now the CEO said they aren’t going to invest in making a cutting edge foundry until they have customers committed to it.
IMO that's much less of a case for laptop and desktop (let alone server). Even if people don't understand the technical details e.g. Apple's superior performance per watt (or its implications at least) is something a lot more people notice.
Intel focus on low volume high end chips is another reason they are behind.
If the last 8 Months of this year has shown something, it's that every decision the US takes could be considerate, but as likely also completely random and reversed and bent at any moment in the future.
Accepting those risks in order to sell in the US-market (assuming it would be required) requires that the US-market also provides the commercial rewards.
For now I don't see that this is secured in sufficient volume to justify such an investment, considering that it will take YEARS for Intel to actually become a viable foundry and have a customer product ready to be produced there. And I'm not even talking about the potential cost-increase vs. an established high-volume foundry...
This my main problem with this investment. I can certainly appreciate the benefit of US government investment to ensure "homegrown" production capabilities. However, this depends a lot on a level of understanding, intelligence, and planning from the US federal government which is monumentally lacking. If no one trusts Intel now, I cannot begin to imagine how anyone would view Intel plus the current US government as more trustworthy.
Just look at the current approach to tariffs as a good example for how current "industrial policy" is being carried out. Unpredictable, vengeful, and declared with little plan or forethought. Why should we expect any differently from other policies?
Everything can for now be put under the umbrella of "US semiconductor sovereignty", but actually making this happen involves much more strategic planning and investment from the government.
For example, I doubt that Intel has sufficient experience as a foundry to support design-finalization for ARM, they are JUST starting NOW with this.
So who will pay for closing such gaps? Would they force e.g. Apple to use Intel as foundry and swallow all the associated cost, or would they rather accept Apple to source from a TSMC fab (which is built in US for the big customers like Apple and nVidia)
The Pentium -> Core2Duo was a great era for intel, but I feel like ever since then they've started a decline in both price/value proposition as well as just general hardware.
The i-series was arguably pretty good for gaming, but then they started exploiting that position by having relatively poor price-to-performance, thinking they wouldn't have any competition.. and they kept the 'we are winning' mindset even while AMD was hot on their heels.
On the one hand, I strongly agree with this article. This kind of state ownership never brings anyhing good. I don't see how this is different.
On the other, it is hard to deny how impressive the new wave of Chinese manufacturing is. No longer are they just making knock offs of Western products with stolen IP. BYD for example seems genuinely innovative, a top product. There are many other examples.
Now, these are clearly not state-ran enterprises, but equally the state is heavily involved. Or, Nvidia is concerned because China can mandate that the whole country pivots to using Chinese GPUs, seemingly with no deteiment to their AI research, while amazingly benefitting their own chip production ability.
I'm not sure how I reconcile these two.
There's short term stable and long term stable.
Having a BDFL can, when the BDFL is genuinely concerned with the welfare of whatever they are managing, result in something much better than what would be created if designed by committee. This is equally true for software projects and nation-states. China, Singapore, Linux, Python, etc.
In the long term, having a BDFL really relies on that "B" being there, and especially when a nation state is involved, the tendency of human nature to corrupt will likely eventually take over.
Basically, while China is acting with great coordination from the now with good results, they are doomed to eventually either fall to pieces when the diktat is bad, a la "Great Leap Forward", or else transition to a more stable (less authoritarian) system.
They can only do things like:
> China can mandate that the whole country pivots to using Chinese GPUs
so many times before getting it wrong disastrously, and the longer it goes the more likely someone will get it wrong.
Im also confused why you say China's inaction on Taiwan isnt about TSMC its about patience, but patience is running out because China wont need TSMC in 10 years. That seems to contradict itself.
It's easy to grow very fast when you are starting from a very low base. Especially when you are chasing someone.
It's a bit like China's GDP per capita. If it continued growing at the same pace as between 2000 and 2020 it might have had a chance to catch up with US in a few decades or so from now. Certainly Western Europe.
Yet based on current trends they will never close the gap (then again who knows what will change in the next 10-20 years or so).
Of course demographic collapse is not that far either. US and Europe at least have immigrants propping them up.
I think the issue is not just that that its capitalism causing wage issues, its the fact that people think they can control the painless socioeconomic transition that comes with incomes increasing with matching productivity gains, or worst halt and try and reverse it. One or more things will eventually cause a pop/crash/revolution:
- Endless high returns on capital: Wealth accumumlation for < top 50% of the people causes high enough inflation as these highly capitalized groups look to buy every single asset (think blank street day care and paying 200$ per month for trash disposal) to turn them into rent seeking ones.
- Large debt countries moment of reckoning: At some point a black swan event leading to higher inflation with no leg room for more borrowing like 2008. Bond markets will dictate fiscal tightening and politicians will likely take control of monetary and fiscal policy ending capitalistic bedrocks for them. This will feed into the Endless high return on capital cycle. Government will bow out of every service to service the debt through taxes.
- People not seeing any upward progress in their economic status or careers: Large populations find high upfront cost/headwind to enter into new economies. Failure to adapt, political choices become extreme.
- Deflationary effects due to progress of china, korea, japan etc due to cost of innovation crashing: At some point large economies become advanced enough that cost of highly specialized goods exported by private companies in highly indebted countries will fall causing non dollar currencies to experience deflation and undermine reserve currencies.
The only countries with leverage left would be the ones the ones with technology that is highly integrated into the society at a level that its people can rapidly change behaviors and adapt without losing wealth/landing on the street. After all you can convince a person he wasn't cheated by God/Demagogue, but you cannot convince them that they are not hungry.
Some of this is already happening in fits-and-jerks motion relative to pace of progress since industrialization. Add things like climate change to the mix and you might not be able to ask "how fast?".
my understanding is that they are still doing well in the datacentre world, unless that has changed?
its worth keeping in mind Intel is quite a big company... and naturally, the parts that are chugging along just fine are not going to be making headlines (or much noise at all really.)
Other possibilities:
- Standard Circuit
- Standard Semiconductor
- Standard Microchip
And where is the example of a successful govt run business?
Why dont we encourage businesses here w free trade zones?
> And where is the example of a successful govt run business?
This is a bit of a loaded political question until you first define "success" and "business". Many of the reasons you'd even want a company to be run by the government in a mixed-market economy are precisely because you want it to be run differently than a private company.
>How is this ‘equity stake’ different than nationalization?
Ownership scope and control. A nationalized company is owned and run by the government. This equity stake is the US buying stock in Intel instead of issuing the money as grants. I would agree this creates conflicts of interests for both parties. And that it shouldnt happen. But this is wildly different than nationalization.
This isn't unprecedented - I think Trump really set the tone with TRUMPcoin saga, which was very wild-west. a lot of people lost money, and others got awfully wealthy in a flash. but ultimately, it was legal: both winning, and losing.
Then you had Trump dipping the S&P and telling everyone "nows a great time to buy!", which IMO was even more diabolical than the trumpcoin stuff.
I think the signal is clear: the concept of "securities fraud" has become the financial equivalent of arranged marriage & dowries, and in its place we welcome the "free & open market", double edged and all.
hold it carefully or you'll cut yourself!
like it or not it seems to be working. the wealth disparity between the US and everyone else is growing (to the US favour). I think if the US starts arguing 'youre either with us or against us', most people today will go full FOMO into the US - even the most ardent patriots will quietly shift all their assets into the US side.
now we hear that Trump will allow 600k Chinese students to study in the US - has there ever been a greater inditement against the CCP? What does it say about the "Chinese Century", when their brightest minds are clamouring to get into Stanford or MIT?
Pax Americana for yet another century, I'm all in.
or is it just an alternative way of taxing capital? instead of taxing wealth and capital, just take an equity stake in it ?
Well it's complicated... Is China socialist? What about state capitalism in general?
If you wanted to tax capital via equity stakes, you'd simply have demanded a much larger stake.
What we're doing is starting down the road of "capitalism with Chinese characteristics". It's a tacit admission that the Chinese model can be effective at achieving a nation's strategic economic goals. (More effective than the model we previously championed.)
The real flip side in all of this is that everyone else sees what we're doing for what it is, and they also implement capitalism with Chinese characteristics. Which in and of itself wouldn't be bad. But what if nations like India or Indonesia turn out to be just flat out better than us at it?
Or, God forbid, the nightmare scenario, which would be nations like Brazil being better than us at it?
Most importantly, Intel's market cap is minuscule $100 bln, it doesnt allow control over meaningful amount of capital
Socialism with Chinese characteristics - it reduces private wealth and curbs control of oligarchs like Jack Ma. I feel like US is the opposite, where oligarchs directly control the government already
I didn't mean the intent is to control Intel's capital.
I meant controlling capital flows. In this particular case, controlling the flow of capital in a strategic sector out to TSMC et al. The idea is that regulation, state backed companies, etc etc all concert to oblige the market to keep those capital flows inside of your jurisdiction.
China does the same. It's extraordinarily difficult to exfiltrate capital from China. One of the only ways to do it is to turn the capital into products and exfiltrate those products out of China in the place of the capital.
I think, long term, the US wants the same sort of environment over here.
Holding significant stakes in domestic companies just seems like light state capitalism.
https://en.wikipedia.org/wiki/Public_Investment_Fund#List_of...
In the past, most people (including myself) just assumed the worst case was merely Intel selling its chip manufacturing division to some other US company which would then continue to develop new advanced nodes like 14A.
But that was not at all what Lip Bu-Tan (the new Intel CEO) suggested at the earnings call. He said Intel would simply stop developing new nodes and just use the existing 18A fabs as long as there is demand. And then, presumably, closing all the fabs and fully switching to TSMC, becoming another AMD.
Now the US government can coerce Nvidia, Apple or someone to use Intel's fabs with no real political repercussions...
Really? A decade and a half ago the US government owned a 60.8% of GM and none less than Barack Obama was directing management changes.
The US has a long and well established history of being a mixed-market economy to varying degrees.
> Intel’s board prioritizing government interests over their fiduciary duties
How about Disney, Mozilla and every major corporation? You must hire right people (including this lame CEO and board), or no loans and contract for you!!!
US government pushed really really hard their agenda onto ALL industries without any lube for past 40 years!
If US gov actually directly express what they want, and just buy 10% of strategic company on open market, it is super refreshing!!
[1]: https://en.wikipedia.org/wiki/Nationalization
The difference with Intel vs the banks, is Intel has assets that take decade plus to procure (foundries), and not something easily replaceable.
I think the US messed up big time in terms of national defense by not having some Gov program that does semiconductor manufacturing owned 100% from the start by the DoD. Now we need to do some grey area purchase of a failing company.
George W Bush (also a Republican) was POTUS in 2008 and it was his administration that oversaw the bank bailouts (the program continued under the Obama administration but was designed and implemented by the Bush admin) and the nationalization of Fannie and Freddie.
Uh.. they've been GSEs since their founding. (12 U.S. Code § 1717)
"Yeah but in 2008 the government bought shares in th.." Doesn't matter. Still GSEs before that. "But they were privatiz.." Doesn't matter. Still GSEs after that.
Every time someone says "both sides are the same" a billionaire flooding media with 'both sides' messaging in order to distract from what is going on's taint twitches.
The republican game is to call democrats <insert_any_label_here> and then do the same thing they allege democrats do.
Powerful and continuing nationalism
Disdain for human rights
Identification of enemies as a unifying cause
Rampant sexism
Controlled mass media
Obsession with national security
Religion and government intertwined
Corporate power protected
Labor power suppressed
Disdain for intellectual and the arts
Obsession with crime and punishment
Rampant cronyism and corruption
Credit: UNITED STATES HOLOCAUST MEMORIAL MUSEUM
Alas, I'm afraid some people would take it as an instruction manual instead of a warning.
This is recognized by the current administration but is also a continuation of the previous administration's pivot toward undergirding and supporting key industries. I hope it's also recognized by any subsequent administration.
I think even neocons now recognize the "new world order" is not sustainable if some players don't play by the rules that they all agreed on.
No country with an ability to avoid it wants to be subject to being held by the neck.
Let me just say, for those of us who remember the 1990s and 2000s, Intel's drop off has been something nobody would've predicted. It's hard to overstate just how dominant they were (other than the fairly brief but significant Athlon64 era). And even when they were behind on consumer CPUs, which they were until the Core Duo/Centrino platform (which was really the Pentium 3) saved them from the Pentium 4 disaster, their fab ability was second to none.
So what happened? Capitalism happened. More specifically, financialization happened. Everything US companies does comes down to simply cutting costs and increasing profits for short-term financial performance. There is (now) absolutely no long term thinking. CEOs get parachuted in and stay just long enough to collect a huge golden parachute before the merry-go-round continues. And who are approving these massive CEO pay packets? Other CEOs who sit on the board.
We've seen this exact same thing happen with Boeing. The only things holding Boeing together are the inertia from earlier successes, the 737 type rating monopoly for budget airlines and defense contracting. Just look at the Starliner project to see Boeing actually try to build anything.
An example of this financialization is the likes of Dell, Gateway, IBM, HP, Compaq, etc all started to cut costs by offshoring parts of their operations to Taiwan. At first it was just assembly and then it was certain parts (eg motherboards) and at some point they had completely funded the Taiwan PC industry and created Asus, Acer, MSI, etc. US computer manufacturers completely paid for the Taiwan PC industry by short-term profit seeking.
There are multiple ways to describe China's economy but the most accurate and relevant for this topic is that it's a command economy and the coming years will show just how much more devastatingly effective this will be. Really the only thing stopping Chinese companies from destroying Western competitors is trade barriers (eg BYD).
So I think the US government should take equity interests in companies they bail out rather than just giving them gifts or even loans. The government should (IMHO) also take equity stakes in any extraction companies (eg oil and gas). China shows this can work.
So why won't it work here? Because the administration is both corrupt and incompetent. Everything done by the administration is to line the pockets of politicians and the wealthy on a very short-term basis. You see it in Congressional stock trades (eg buying up Intel ahead of the announcement).
As for the author, I suspect he represents the American corporate view that any kind of government intervention (beyond bail outs) cannot work because they don't want that long term. It would reduce profits and/or make a few people slightly less wealthy. They spend a lot of money on propaganda to convince ordinary people that corporatism is good and collectivisim of any kind is bad, that governments aren't capable of anything, etc.
All Western companies and billionaires want is public-private partnerships because they're a massive wealth transfer from the government to the wealthy. They don't want the government taking away profits from private hands.
https://docseuss.medium.com/the-biggest-threat-facing-your-t...
Intel needs a major shakeup, it has been brewing for a long time, but coffers were too full. Cushion is gone now, urgency is now understood by everyone; now it takes a visionary and some successful execution, for once.
If you say corruption is the difference, maybe - but I wouldn't be so pessimistic... yet.
Please no one take this the wrong way, but I hope AMD is not the model of "success" we're going for here.
That brings up an interesting point. It seems to be a conventional wisdom that centrally planned economies don't work (and did not work in cases where they were tried) as well as Western-style capitalism because of the communication and command bottlenecks.
But what if those bottlenecks have been greatly increased in the information age of Internet, other global communication networks, and data collection? The western-capitalist system has the problem of getting stuck in local minima, being driven as a network of actors. What if the downsides of that are finally greater than the performance hit due to central planning bottlenecks?
The US government never gave bailout and gifts to Intel. The original agreement was profit-sharing with Intel through the CHIPS act is standard with any business wanting the funds. All Trump did specifically for Intel was alter the deal to be an equity stake instead, which will still only be beneficial is Intel is profitable.
Your entire comment is faulting on this premise. Please stop spreading this lie.
But really I was talking generally, such as the bank bailouts in 2008. When a bank normally fails the FDIC comes in and takes control of it including ownership. The shareholders are SOL. In my mind, this is exactly what should've happened to all the banks that were essentially insolvent.
As another example, the US government bailed out LTCM in the 1990s when there was a willing buyer (Warren Buffett).
Emotionally you call it a bailout but it is not and by trying to enforce that fact you are ignoring the truth and pressing a lie.
Plain and simple the CHIPS Act is not a bailout. [0]
[0] “Biden to require chips companies winning subsidies to share excess profits” >> https://www.reuters.com/technology/us-require-companies-winn...
> Recipients who receive more than $150 million in direct funding "will be required to share with the U.S. government a portion of any cash flows or returns that exceed the applicant’s projections by an agreed-upon threshold," the department said.
> Companies winning funding are also prohibited from using chips funds for dividends or stock buybacks, and must provide details of any plans to buy back their own shares over five years. The department will consider an "applicant’s commitments to refrain from stock buybacks."
They all ignore how 'market principles' have decimated the majority to ramble support for a scheme they almost certainly benefit greatly from.
To me, it's all nothing more than emergent anxiety of their biology. The world be changin' (due to many reasons but mostly generational churn) and who will they be relative to that new world? No different than a religious person shrieking about the decline in adherence to religious principles.
Biological VHS tape re-counting a fuzzy recollection of lived experience, these words. Nothing more.
Make of that what you will; the arrogance of some people to assume they know better than anyone else sure is stunning.
So you make this comment right after making a really reductive, ignorant comment on the Soviet planned economy collapse?
Yeah I'm 49. I was there. Watched Soviet Union fall on live TV. Berlin wall too. After years of intentional outside effort to force it to fall.
Market-driven has worked because media told everyone it has to work, and no other nations were strong enough to exert outside influence until modern China came along.
Tell everyone the Soviet economy must work without outside influence to collapse it, does it still collapse?
You're shipping propaganda of your culture.