I’ll be honest: there is a very good chance this won’t work .... At the same time, the China concerns are real, Intel Foundry needs a guarantee of existence to even court customers, and there really is no coming back from an exit. There won’t be a startup to fill Intel’s place. The U.S. will be completely dependent on foreign companies for the most important products on earth, and while everything may seem fine for the next five, ten, or even fifteen years, the seeds of that failure will eventually sprout, just like those 2007 seeds sprouted for Intel over the last couple of years. The only difference is that the repercussions of this failure will be catastrophic not for the U.S.’s leading semiconductor company, but for the U.S. itself.
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.
georgeburdell · 1h ago
If I may add my view as a formerly high-achieving semiconductor worker that Intel would benefit greatly from having right now, a lot of us pivoted to software and machine learning to earn more money. My first 2 years as a software engineer earned me more RSUs than a decade in semiconductors. Semiconductors is not prestigious work in the U.S., despite the strategic importance. By contrast, it is highly respected and relatively well remunerated in the countries doing well in it.
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
troad · 1h ago
We have developed an economy oriented around selling one another websites, and we are only belatedly noticing that none of our enemies seem to have followed.
otterley · 1m ago
Let’s not forget here that Chinese companies operate some of—if not the—most popular social networks in the world. WeChat and TikTok are enormous.
bix6 · 57m ago
It’s ridiculous. It’s so easy to find VC funding for software but heaven forbid you try and make agricultural innovations. Biotech is slightly better but still a struggle. Hardware only counts right now if it’s defense tech but even then people would rather have another SaaS.
klooney · 10m ago
A16Z gets a lot of guff for their bad politics, but their "American dynamism" portfolio, if a little defense heavy, seems great
makestuff · 21m ago
Yeah seeing the innovations DJI is making in agriculture makes me wonder why VCs do not want to fund other startups like it. I know the margins are worse and it takes way more capital to fund hardware companies, but that has to be better than funding another chat-gpt wrapper. I guess that is why I am not a VC though lol.
RealityVoid · 16m ago
They're just hard. What is the US robotics startup that you would use as an example of success? iRobot? It barely broke even.
deepsquirrelnet · 56m ago
Historically Intel has engaged in illegal wage suppression. Now we bail them out for their crimes.
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.
headcanon · 1h ago
Similar, My major in university was computer engineering (as opposed to pure CS or EE) because I wasn't sure if I wanted to go into a hardware or software profession. I ended up going with software since all the interesting opportunities were there, whereas most jobs in hardware seemed to be working for stodgy old companies barely making six figures if I was lucky.
packetlost · 1h ago
If Intel were well managed they would purge like 2/3rs of the managers and anyone in the bottom 50th percentile and then pay whatever it takes to get people skilled in their core industry back, training the remaining people as necessary to fill in gaps for the future.
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.
freeopinion · 13m ago
Who gets to determine the bottom 50th percentile?
dboreham · 1h ago
Also moved from the semiconductor industry to software, 30 years ago. Much more money.
Neywiny · 2h ago
This and everything else. We outsourced manufacturing of almost everything then are surprised when the people doing it for decades are better than we were.
marbro · 1h ago
We outsourced manufacturing because it's not very profitable. The Mag 7 make 50x as much money as TSMC. Apple and Microsoft are the most profitable businesses in history.
jandrese · 34m ago
The problem is when importance is not reflected in the quarterly profit margin.
georgeecollins · 38m ago
Intel was very profitable until it was not. They spent over $800B on stock buybacks. That will buy you some fabs, some R&D. Its true they invested in R&D but not well. Maybe the answer was to fund an independent internal competitor to keep the org focused.
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?
jandrese · 30m ago
I still think Intel missed the boat when they had the dominant process in focusing entirely on their own chips and not taking customers for third party fabbing. Samsung and especially TSMC have demonstrated conclusively that the real money is in producing chips for other companies. It might be lower margin, but the volume is undeniable and it keeps your company on its toes with node improvements.
Intel switched to a "service the stockholders before the customers" mode and they have never recovered.
freeopinion · 6m ago
TSMC does not compete with their customers. Intel would. I know that is not a new idea and there are some established mitigations. But it seems it would be better if it wasn't an issue at all.
ilikerashers · 14m ago
The EU outsourced manufacturing without any Mag 7.
I'm sure it'll work out well for us...
dfxm12 · 23m ago
It's such a stunning dereliction the US let things get to this point.
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...
nonethewiser · 16m ago
Is it just me or is the author only making an argument for why Intel is too big to fail? He says hes steelmanning the equity stake but then he doesn't argue why it's necessary. He devotes 2 sentences to CLAIMING its necessary after aruging that Intel is too big to fail.
The article is basically like this:
> Leading edge domestic foundry companies are a national security concern. Therefor Intel is too big to fail.
OK. Many can agree with this. And I think the author makes a very good argument for it. He makes some good points:
- Startup cant replace Intel
- US cant rely on TSMC alone
- Artificial demand could actually improve Intel by solving the chicken and egg problem
But that doesn't answer the question, "why the equity stake?" And for more context, it's replacing what would have been grants with the equity stake. So it's, "Why replace the $XB in grants with an equity stake?"
He does touch on it but it's just a claim thrown in at the end:
>The single most important reason for the U.S. to own part of Intel, however, is the implicit promise that Intel Foundry is not going anywhere. There simply isn’t a credible way to make that promise without having skin in the game, and that is now the case.
OK, maybe. But that now needs to be argued for. The US can give them money as grants. Grants put skin in the game for the US because they require Intel to meet the terms.
JKCalhoun · 56m ago
Perhaps then fabs should be considered important enough for the US then that a new entity, perhaps not unlike NASA, is created to create and run these.
readthenotes1 · 52m ago
NASA seems to outsource a lot. Would you like Boeing to create the fab next door to you? What could go wrong??
rjsw · 49m ago
You would still outsource running the fab to Intel, just have a government body overseeing it.
mvc · 1h ago
If all advanced countries follow this reasoning, where does that leave us?
minkzilla · 1h ago
Robust and redundant manufacturing spread across the world with more opportunity for innovation?
mallets · 53m ago
Trillions of dollars spent just for redundancy? Most wouldn't even succeed in building a working process, forget profitable.
zoeysmithe · 1h ago
There's a real folly in capitalist countries thinking they can be self-sufficient walled castles. Capitalism by its nature will seek out the lowest cost be it in labor or manufacturing. That means often means outsourcing.
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.
franktankbank · 1h ago
Efficiency is in tension with resilience. I think the pursuit of efficiency at the high end results in a less efficient system because of all the second order effects.
bix6 · 53m ago
I like that framing. I also think it’s a disservice to only think in terms of capital efficiency since who really cares how efficient your capital is if you can’t produce food when there’s a shock?
schmidtleonard · 39m ago
The people who own all the capital do and that's part of the problem. Nobody likes seeing red in their brokerage account.
bix6 · 29m ago
O sure there’s no long term forethought and if you manage others’ money you’ll get fired. It’s brutal.
vonneumannstan · 50m ago
>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.
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.
belter · 1h ago
To quote Dave Chappelle: "I want to wear Nike shoes...I don't want to make them!"
jack_h · 1h ago
> There's a real folly in capitalist countries thinking they can be self-sufficient walled castles. Capitalism by its nature will seek out the lowest cost be it in labor or manufacturing. That means often means outsourcing.
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.
NitpickLawyer · 1h ago
> Nationalism/protectionism and capitalism are fundamentally incompatible
Huh? France and Germany are prime counter examples of your statement.
No comments yet
micromacrofoot · 1h ago
That's the premise of neoliberalism, you need globalism or the entire idea of capitalism falls apart and every domestic company becomes a crab in a bucket... trying to recapture that lost value with nationalism won't work within the span of political term limits, they're trying to undo something that's been happening for 50 years... we literally don't even have the underlying infrastructure for re-shoring, basics like getting electricity where it needs to go become a problem
jkestner · 1h ago
That would explain why the nationalist is strongly looking at unlimiting his term, except any plan for re-shoring is stuck in the 80s with him.
wat10000 · 1h ago
Intel was the best until fairly recently. Then they still looked like the best to a non-expert observer, and then still looked at least competitive until even more recently. The modern world changes too fast for our governments to adapt to. Especially when we're talking about state of the art semiconductors and our leader was born before the invention of the transistor.
scarface_74 · 1h ago
Intel hasn’t been “the best” since the world cared more about mobile in 2010. There GPUs have always been also ran. It just wasn’t a big deal until crypto and later machine learning.
Even for integrated graphics, Intel has been behind Apple’s/TSMC ARM based processor before the Mx based Macs.
jrk · 1h ago
The OP is talking about fabrication technology, not end products. Even years into their delays getting to 10nm, Intel had more advanced fabrication technology than TSMC until N7 reached volume in 2018.
JustExAWS · 57m ago
What’s the use of having “better fabs” to make worse products that the market doesn’t need and not be a foundry for other companies that can use it?
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.
qwytw · 53m ago
Well on desktop and server they pretty much had no competition until the late 2010s or so. So they were the best by default.
Loudergood · 22m ago
AMD definitely gave them a scare several times before that.
wat10000 · 37m ago
And it took a long time for mobile CPUs to be considered important. Arguably mobile CPUs still aren't considered more important than desktop, even though they obviously sell more.
qwytw · 31m ago
Mobile CPUs are almost a commodity these days and fairly low margin especially compared to server chips. Most people really don't care what chip does their phone has and its almost always "good enough" relative to the price.
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.
JustExAWS · 26m ago
This is demonstrably not true. TSMC is ahead because of the volume of mobile and that happened on the back of a lot of investment from Apple - who does make high end chips.
Intel focus on low volume high end chips is another reason they are behind.
qwytw · 16m ago
> This is demonstrably not true.
In what way?
TSMC doesen't design or sell the chips. If they have limited capacity they will of course charge more for manufacturing mobile chips if they can sell the capacity to Nvidia/AMD/Apple instead.
ARM chips (and that's pretty much by design based on ARM's business model) are close to being a commodity.
Apple is of course an exception but they are not directly part of the CPU market. And ARM and Qualcomm are barely bothering trying to compete with them because there doesen't seem to be a lot of point. They themselves are pivoting to datacenter because there is just more money to be made there.
> Intel focus on low volume high end chips is another reason they are behind.
I guess that's complicated. It seems like an optimal strategy if you are a chip designer (e.g. Nvidia or AMD vs Qualcomm). Not so much if you are a fabricator. Of course Intel being both makes things a lot harder for them.
dboreham · 1h ago
For me it's debatable that they were "behind" on GPU because I didn't need a bleeding edge gaming GPU. I only needed a GPU fast enough for spreadsheets and code editors, provided at a competitive price and power budget. Intel actually did deliver that.
rjsw · 47m ago
Intel also had adequate software for their GPUs. They didn't mess about using binary blobs for them.
JustExAWS · 25m ago
To a first approximation, no one cares about open source drivers when most PCs are running Windows and servers running Linux don’t care about Intels GPUs
rickdeckard · 4h ago
> "The single most important reason for the U.S. to own part of Intel, however, is the implicit promise that Intel Foundry is not going anywhere."
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...
3D30497420 · 2h ago
> every decision the US takes could be considerate, but as likely also completely random and reversed and bent at any moment in the future.
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?
dpkirchner · 1h ago
Add to this the fact that given the government is now propping up a poor performing company there's no possible reason to try to create a new domestic competitor. If you do and you start becoming successful, the government can just increase their "investment" in your chief competitor and shut you down. It's ludicrous.
rickdeckard · 1h ago
I frankly look forward to see whether the US will actually CARE how Intel will conduct its business, instead of simply trying to just reap benefits from it.
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)
klooney · 8m ago
Best case, we get President Vance before 2028 and things settle down.
Insanity · 1h ago
To be honest, regardless of the government involvement or not, I have little hope for intel. Maybe they can, over time, have an AMD-esque comeback, but given their track record of the past few years I'm not hopeful.
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.
skmurphy · 6m ago
Key graf: "The problem facing the U.S. is not simply the short-term: the real problems will arise in the 2030s and beyond. Semiconductor manufacturing decision-making does not require nimbleness; it requires gravity and the knowledge that abandoning the leading edge entails never regaining it."
nonethewiser · 10m ago
This article says its steel-manning the equity stake but its actually an argument for Intel being "too big to fail" and then conflating that with an equity stake.
I do find his argument for Intel being "too big to fail" for whatever it's worth.
rich_sasha · 1h ago
I am torn on this.
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.
margalabargala · 1h ago
> 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.
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.
monknomo · 27m ago
the president unilaterally extorting 10% ownership out of a company isn't going to build the kind of system that competes with anyone. Big business can't really thrive under this kind of thing any more than corner stores can thrive under a protection racket.
Diog · 1h ago
To be honest, for most Chinese people, the reason we haven't taken action regarding Taiwan is not because of TSMC, but rather our patience with the current will of the Taiwan people. However, this patience has its limits. Even if TSMC has better chips now, China mainland will surpass them next 10 years. You can compare the gap in chip technology between Chinese companies in 2015 and that projected for 2025 to see this trend. As for Intel, we don't really care about it.
nonethewiser · 59m ago
Do you think an invasion of Taiwan brings risk of a new, worse status quo? I think that's primarily why China doesn't invade. If it were possible to just achieve an easy, total victory then there is no reason to wait for Taiwanese people to change their mind about joining China.
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.
qwytw · 57m ago
> companies in 2015 and that projected for 2025 to see this trend
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.
aurareturn · 1h ago
I think western media overstate TSMC's importance in China/Taiwan relationship. China doesn't care. It's a nice bonus. But ultimately, TSMC doesn't matter to China. Taiwan is ideological for China way before TSMC became important.
selimnairb · 43m ago
Foundries aren’t the only special case. The test should be, if we can’t afford for it to fail, it shouldn’t be left to the market. Another example? Farms. Also healthcare (expect to hear more on this front in the next few years as more and more hospitals go under, especially in rural areas).
sailfast · 33m ago
I’m confused. Why is equity required when the current loan guarantees were perfectly adequate? The only answer is that the USG wanted more control and leverage than was required to achieve national security objectives. Kinda negates the whole approach to the article in my opinion.
jimmydoe · 30m ago
So the gist is to make Intel the Huawei but for US&A
xnx · 2h ago
Does the US need a domestic Intel more than domestic ASML (or Zeiss for that matter)?
klooney · 4m ago
US has ASML- lots of the patents are ultimately owned by US entities, a great deal of the research and development is done on US soil, and the Netherlands aren't rocking the boat on sanctions, etc.
jm4 · 1h ago
Doubtful. It's also doubtful this is about national security, protecting strategic manufacturing or anything else to benefit American people. This is a mafia shakedown.
scrlk · 42m ago
The EUV light source in ASML’s lithography tools is designed and manufactured by Cymer, based on research funded by the DoE in the 1990s and conducted at various national labs.
bawana · 1h ago
How is this ‘equity stake’ different than nationalization? (The thing that soviet socialism did to russian property and business a hundred years ago). After all the government prints the money. So instead of just taking control of a company the govt prints the money to buy it. Isnt it the same thing?
And where is the example of a successful govt run business?
Why dont we encourage businesses here w free trade zones?
dfxm12 · 1m ago
10% is nowhere near a controlling stake, let alone "nationalization".
And where is the example of a successful govt run business?
USPS, TVA, Paris Metro...
I know many are irrationally scared of the S and C words, but this ain't it.
kube-system · 19m ago
It is a minority stake so they won't "control" Intel in the way we typically associate with "nationalized" businesses.
> 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". Most 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.
nonethewiser · 1h ago
All of these questions seem more like claims. And I largely agree in spirit. Im not a fan of the government buying stock with the money that would have been given as grants. However,
>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.
webdevver · 1h ago
I wouldn't read too much into it. I think this is just the Trump administration buying the dip. they're gonna invest heavily into Intel to reduce TSMCs political leverage, the stock will go up 1000%, and Trumps friends & co. (& everyone who 'got the signal') get rich off it, US semiconductor industry is revived (maybe?), and everybody(?) wins.
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.
debo_ · 1h ago
As an aside, this guy really feels out of his depth post-pandemic. I get a lot more value out of folks writing more generally about macroeconomics.
evertedsphere · 55m ago
could you expand upon this?
webdevver · 1h ago
for all this talk about intel struggling, they seem to be quite capable to continue producing very competitive CPUs and other IP.
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.)
keepamovin · 1h ago
Standard Silicon is a nice name. Maybe they should use it.
Other possibilities:
- Standard Circuit
- Standard Semiconductor
- Standard Microchip
cubefox · 1h ago
Maybe it's worth noting that the new CEO's explosive statement, Intel would give up development of leading edge nodes (14A and beyond) unless they find a large external customer in advance, hardly got any attention on Hacker News or other websites. But that was almost certainly the reason the US administration got involved. This blog post thankfully makes this point clear.
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.
qwytw · 51m ago
> But that was almost certainly the reason the US administration got involved
Now the US government can coerce Nvidia, Apple or someone to use Intel's fabs with no real political repercussions...
itissid · 37m ago
The book "Apple in China" by Patrick McGee focuses on this point in early 2000 top 5 contract manufacturers were in north america. By around 2010 the top one was foxconn which was larger than the next 4 combined. This is going to play out everywhere and result in extreme circumstances.
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?".
felipeerias · 2h ago
Is this the beginning of the US sovereign fund?
afroboy · 44m ago
US own the dollar why they need a sovereign fund? sovereign fund is profitable when you invest in a foreign currency.
Telemakhos · 2h ago
That's what is being said. The Intel stake is a first step to a US sovereign fund that will include ownership stakes in many corporations.
slt2021 · 1h ago
is merging interests of the state and corporations marks a return to good ole fascism ?
or is it just an alternative way of taxing capital? instead of taxing wealth and capital, just take an equity stake in it ?
nyc_data_geek1 · 1h ago
"Fascism should more properly be called Corporatism because it is the merger of state and corporate power.” — Benito Mussolini
wat10000 · 1h ago
"Corporate" in that quote refers to groups consisting of something like entire industries, including employees and employers, like a guild. It doesn't refer to a business legally recognized by the state as the word is commonly used today.
Der_Einzige · 1h ago
But when you link evidence that hitler had secret meetings with capitalist business leaders to bankroll him, the entire mefo bill nonsense, etc to the "were nazis socialist?" argument you get downvoted.
qwytw · 43m ago
> "were nazis socialist?" argument you get downvoted
Well it's complicated... Is China socialist? What about state capitalism in general?
nemomarx · 1h ago
Nationalized companies don't necessarily mean socialism or fascism but fascists did like giving the state fairly tight ownership and control of companies. It depends on how they handle that - if you see Trump loyalists embedded in lots of boards or top down instructions given to industry that might be a sign.
bilbo0s · 1h ago
More an alternative way of controlling capital.
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?
slt2021 · 1h ago
10% is not a controlling stake, and US already controls Intel via regulation.
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
bilbo0s · 54m ago
Sorry, I believe I've been misapprehended.
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.
qwytw · 45m ago
Don't most sovereign wealth funds invest mainly (or entirely like in Norway's case) into foreign assets.
Holding significant stakes in domestic companies just seems like light state capitalism.
Telemakhos · 35m ago
I'd suspect Trump would model his on Saudi Arabia's PIF rather than Norway's fund. The PIF invests in companies worldwide, including Uber and Blackstone, as well as providing capital for mega-projects like NEOM.
Note that all our issues with china would be solved if we stopped pretending like they're our enemy.
throw2432234 · 1h ago
>ntel making decisions for political rather than commercial considerations
> 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!!
kube-system · 29m ago
> President Donald Trump’s announcement on Friday that the U.S. government will take a 10 percent stake in long-struggling Intel marks a dangerous turn in American industrial policy. Decades of market-oriented principles have been abandoned in favor of unprecedented government ownership of private enterprise.
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.
jmyeet · 1h ago
The short version is: this can work but it won't.
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.
anonymars · 1h ago
This is a bit of a long piece but if you're interested in this subject I think it's a good read
I'm surprised I haven't seen this before. Thanks for mentioning it. It is long and I did skim some sections but I read large chunks. I'd actually be curious to know the author's politics because that is a deeply anti-capitalist essay (which I agree with, for the record).
The Bungie grenade example was funny because I've seen this exact same ignorant data fuckery. Blizzard does this with World of Warcraft now because they're tuning talents that classes have based on how much they're used, which ignores how often people just copy builds and how some abilities are just inherently fun (as the grenades apparently were). The net result is they just keep nerfing anything people like.
When he was talking about Valve and Steam and EA and sports exclusivity, he may as well have just said "enclosures" (in the capitalist) sense because that's exactly what he means.
Every modern corporation is just looking for a formula that they can repeat ad nauseum. He talks about this with media properties and the Marvel and Star Wars slop (my word, not his) that we get as a result. This is fundamentally incompatible with creative projects, be it movies or games.
One of the most destructive ideas to come out of the 20th century is this idea that a good business leader can manage anything. So we get a lot of "leaders" who end up running things they know nothing about and in large companies, "leaders" get shuffled around every 6-12 months on purpose, to avoid them ever failing because they're never anywhere long enough to see the consequences of their actions.
You see that with the VP shuffle at any large tech company.
I also appreciate that he was anti-NFTs as I was for the exact same reasons: it doesn't actually solve any problems or give consumers anything they actually want.
baq · 1h ago
Counterexample: AMD almost died and see where they're now.
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.
bilbo0s · 1h ago
Oh my.
Please no one take this the wrong way, but I hope AMD is not the model of "success" we're going for here.
foobarian · 1h ago
> 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
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?
righthand · 1h ago
> 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 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.
jmyeet · 1h ago
This is a bailout to Intel. It's essentially the US government pfoviding guarantees to Intel and its customers. How would you describe that as anything but a bailout?
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).
righthand · 30m ago
Bailouts are different from the CHIPS act you’ll just have to accept that those other bailout agreements didn’t have a profit-sharing clause attached.
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]
> 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."
ModernMech · 2h ago
I don't understand how they can say Democrats are Communists while they do this. It's going to be interesting hearing everyone who spent decades spilling volumes about the evils of communism and the failure of the USSR quickly pivot to being champions of state capitalism.
3D30497420 · 1h ago
I think you are putting too much faith in the belief that people actually understand or care about what is behind some of these labels. They are ultimately just a way to create an "us" vs "them" dichotomy.
pcthrowaway · 1h ago
You're mixing up communism and nationalization[1]. I suppose those are related concepts, but since communism ostensibly serves the working class, I'd expect to see nationalization under communism/socialism to start with things like health-care, civilian infrastructure, and agriculture, whereas under fascism (which famously also nationalizes), I'd expect the industries which help the state expand (military and military infrastructure) or control its own population (surveillance, telecom, police) to be prioritized in nationalization efforts.
I don't think the person you replied to is mixing them up, but instead, criticizing others who use "communism" as a blanket term for most any government involvement in the market.
spacephysics · 1h ago
I mean both sides are guilty. ‘08 saw us bail out banks and now the likes of Fannie Mae and Freddie Mac are GSE’s.
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.
thinkharderdev · 1h ago
> I mean both sides are guilty. ‘08 saw us bail out banks and now the likes of Fannie Mae and Freddie Mac are GSE’s.
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.
estearum · 1h ago
Whereas with banks, their failure would've thrown the global economy into a deep depression?
riahi · 1h ago
Which party was in power when 2008 happened?
os2warpman · 1h ago
> now the likes of Fannie Mae and Freddie Mac are GSE’s.
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.
nine_zeros · 1h ago
> I don't understand how they can say Democrats are Communists while they do this.
The republican game is to call democrats <insert_any_label_here> and then do the same thing they allege democrats do.
empath75 · 2h ago
I actually think the model here isn't communism, it's fascism/corporatism. They aren't nationalizing directly, they're intimidating private enterprises into compliance and cooperation.
eej71 · 1h ago
One of the key features of fascism is keeping up the illusion of private property and other individual rights. When such abrogation of rights ultimately results in disasters, our intellectuals will lay the blame at the foot of capitalism without having ever really understood what it was and why the current administration is not pro-capitalist and neither is the GOP.
Thanks for the details, I was only aware of the museum bit.
9dev · 1h ago
As a German with extensive exposition to the third Reich I can attest to the fact that the parallels start to become uncanny.
baq · 1h ago
I've been to Berlin this summer and I think every single citizen of any western democracy should see the still standing piece of the Berlin Wall and the museum bit that explains the 50 or so years that led to its construction. Even if only a quarter understood the message, we'd be better off as a civilization.
Alas, I'm afraid some people would take it as an instruction manual instead of a warning.
mc32 · 1h ago
I think that's an incorrect framing. A more proper framing is that some industries are key to ensuring a nation is not dependent on another for key products that ensure a dominant (not supplicant like say Ukraine) position with regard to defence and therefore independence.
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.
slt2021 · 1h ago
this sounds like the situation with the Krupp Corporation
dwarksidle · 2h ago
Everything against US Gov + Intel staek I have seen is written by traditional business minds, likely with skin in this game.
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.
9dev · 1h ago
Icarus is flying high this time of year, it seems. Don't forget that some of these traditional business minds have seen the Soviet's planned economy crumble in real-time not too long ago. They may also have taken note how virtually all human-managed funds tend to do worse over time than market-driven index funds.
Make of that what you will; the arrogance of some people to assume they know better than anyone else sure is stunning.
dwarksidle · 55m ago
> 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.
convolvatron · 11m ago
I think it's time for the people shouting so urgently about the new world order to own up and actually paint a picture for the rest of us here. because from a 'traditionalist' perspective it really looks like things are just failing and being burned down. I don't see a phoenix, maybe you can you can point it out?
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.
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.
I'm sure it'll work out well for us...
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...
The article is basically like this:
> Leading edge domestic foundry companies are a national security concern. Therefor Intel is too big to fail.
OK. Many can agree with this. And I think the author makes a very good argument for it. He makes some good points:
- Startup cant replace Intel - US cant rely on TSMC alone - Artificial demand could actually improve Intel by solving the chicken and egg problem
But that doesn't answer the question, "why the equity stake?" And for more context, it's replacing what would have been grants with the equity stake. So it's, "Why replace the $XB in grants with an equity stake?"
He does touch on it but it's just a claim thrown in at the end:
>The single most important reason for the U.S. to own part of Intel, however, is the implicit promise that Intel Foundry is not going anywhere. There simply isn’t a credible way to make that promise without having skin in the game, and that is now the case.
OK, maybe. But that now needs to be argued for. The US can give them money as grants. Grants put skin in the game for the US because they require Intel to meet the terms.
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.
No comments yet
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.
In what way?
TSMC doesen't design or sell the chips. If they have limited capacity they will of course charge more for manufacturing mobile chips if they can sell the capacity to Nvidia/AMD/Apple instead.
ARM chips (and that's pretty much by design based on ARM's business model) are close to being a commodity.
Apple is of course an exception but they are not directly part of the CPU market. And ARM and Qualcomm are barely bothering trying to compete with them because there doesen't seem to be a lot of point. They themselves are pivoting to datacenter because there is just more money to be made there.
> Intel focus on low volume high end chips is another reason they are behind.
I guess that's complicated. It seems like an optimal strategy if you are a chip designer (e.g. Nvidia or AMD vs Qualcomm). Not so much if you are a fabricator. Of course Intel being both makes things a lot harder for them.
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.
I do find his argument for Intel being "too big to fail" for whatever it's worth.
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.
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?
USPS, TVA, Paris Metro...
I know many are irrationally scared of the S and C words, but this ain't it.
> 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". Most 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.
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
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...
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?".
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...
> 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!!
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.
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...
The Bungie grenade example was funny because I've seen this exact same ignorant data fuckery. Blizzard does this with World of Warcraft now because they're tuning talents that classes have based on how much they're used, which ignores how often people just copy builds and how some abilities are just inherently fun (as the grenades apparently were). The net result is they just keep nerfing anything people like.
When he was talking about Valve and Steam and EA and sports exclusivity, he may as well have just said "enclosures" (in the capitalist) sense because that's exactly what he means.
Every modern corporation is just looking for a formula that they can repeat ad nauseum. He talks about this with media properties and the Marvel and Star Wars slop (my word, not his) that we get as a result. This is fundamentally incompatible with creative projects, be it movies or games.
One of the most destructive ideas to come out of the 20th century is this idea that a good business leader can manage anything. So we get a lot of "leaders" who end up running things they know nothing about and in large companies, "leaders" get shuffled around every 6-12 months on purpose, to avoid them ever failing because they're never anywhere long enough to see the consequences of their actions.
You see that with the VP shuffle at any large tech company.
I also appreciate that he was anti-NFTs as I was for the exact same reasons: it doesn't actually solve any problems or give consumers anything they actually want.
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."
[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.
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.