Full disclosure: I worked for AMD for about a decade.
I agree with the bottom line here (we should spend gov't $$ to make sure significant amounts of chip manufacturing still get made in the US, and Intel has to be a big part of that). However, it misses the real reason for Intel's decline.
For most of it's existence, if Intel had missed a manufacturing node in Moore's Law, it would have been rightly recognized as an existential threat, and it would have become the #1 focus of the CEO and the rest of the company. Intel fell behind Moore's Law for years in its manufacturing, and it never caused them to appropriately panic until that hit the bottom line. This is a problem of an executive suite too focused on this quarter's results, and not focused enough on the engineering that drives those results. Previous generations of Intel executives understood that. It is likely that the current CEO, brought in once the board saw problems in their stock price, realizes it. If they had been run by executives who cared more about the underlying engineering, they would have had a 5-year head start in fixing the situation.
I think this is a result of the problem of financializaton. I don't think that an engineer has to run a company like Intel, Boeing or Apple. But if the growth of steady profits becomes a higher priority than what you actually produce, you are likely to milk the business at the expense of its long term prospects.
In general I don't believe that being an engineer is necessary to run a technology business (some of my best leaders were not), but I have come around to believing that Intel and Boeing are exceptions: the nature of their business requires new massive bets- not quite 'bet the company' but definitely 'bet the next 10 years of company performance' every so often (new fabs and new planes), and that one decision really needs to be made by an experienced engineer, due to the nature of the underlying evaluation. If not, then people who think they can bafflegab mother nature the same way they can auditors will make the decisions.
> For most of it's existence, if Intel had missed a manufacturing node in Moore's Law, it would have been rightly recognized as an existential threat, and it would have become the #1 focus of the CEO and the rest of the company.
Former Intel-er here. You hit it on the nail. Andy Grove used to say "Only paranoid survive" and acted accordingly. But when Paul Otellini became the CEO it was downhill ever since.
Intel with a bunch of Optane related presentations at #FlashMemorySummit
Some the Intel folks I spoke to about this (not pictured) had no clue it was going to be cancelled until they read it on an article from Toms Hardware.
I heard this so many times. These goddamn CEOs are so myopic; all they care is next quarter's earnings. After the fall of every megacap, tech or otherwise (recently GE), someone always blames them for short sightedness. Is that really? Well, many CEOs of many huge corporations just plan for the next quarter, and they seem to be doing just fine.
You could apply this with slightly different specifics to many US national and multinational corporations.
The efficient market rewards inefficient stock buybacks, record debt fueled dividends, years of underinvestment, low wages, and most of all no strings attached bailouts. They may be a loser, but we'll pay for their loss. Socialize the losses/costs and privatize the gains.
I'm usually a big fan of stratechery, but for once I disagree with the explanation of Intel's decline.
I think it's much simpler: being number one in fab technology is mostly driven by volume: whoever has the most volume wins. During the PC era, Intel had the most volume, so they also had the best fabs. It's a winner-take-all, self-reinforcing ecosystem.
But in the last 10 years, mobile has had the highest volume. That's what allows TSMC to have the best fabs, and Intel is struggling. That's all there is to it. Nothing to do with services or software.
This would the correct explanation if Intel would have made no mistakes.
However, it is beyond reasonable doubt that Intel has made some extremely ugly management mistakes during their failed attempts to transition from 14 nm to 10 nm, which have absolutely nothing to do with the competition from TSMC or others.
Maybe Intel would have lost their technological advance regardless how the company had been managed, due to the difference in volume between smartphone chips and PC chips, but now we cannot know which has mattered more, the internal mismanagement or the change of the semiconductor device market favoring their competition.
I wonder if it will ever become public knowledge which were exactly the technology problems of Intel and who are those guilty for the decline at the company, because the failures could not have had any real technical causes but only bad management causes.
During their worst years Intel has been capable even of presenting to the public fake technical presentations about the alleged great characteristics of their future 10 nm CMOS process, which is something that I would never have expected from a company like Intel. The marketing messages from any company are expected to be full of lies, but the technical presentations are expected to match reality.
During many years, unlike TSMC, Intel has behaved as if it were completely unable to predict the precise characteristics of the CMOS process that they will able to manufacture in the following year.
How could this happen is very hard to understand, as the manufacturing processes and the future devices made with them can be simulated long in advance of their implementation, and the models can be tuned continuously while the processes evolve, by fabricating and measuring various test structures. Unlike for Intel, for TSMC the performance predictions for future processes have always been reasonably accurate.
The CISC vs RISC point Ben makes is key here. Intel could have been a big player in mobile: it put too much focus on x86 though when it could have been making (its own or others) Arm based SoCs.
Edit: not that Arm is necessarily RISC - but it certainly takes an approach that is different to x86 and better suited to mobile.
That is one of several reasons proposed in TFA; in particular TFA mentions TSMC's earlier investment in EUV being due to the guaranteed volume of smartphone chips.
Intel is in big trouble and the only card they have left is the nationalism card. And that card is for losers.
We are about to enter a silicon slump with low demand and oversupply; for Intel things will get worse.
What will happen when it is clear to everyone including politicians that all that subsidy money is going into a black hole? And people finally figure out that a rocket that blows up stuff doesn't need a 2nm chip?
They are going to lose interest and those subsidies that is Intel's last hope will end.
"We are about to enter a silicon slump with low demand and oversupply"
What causes you to assume that?
"What will happen [if...] people finally figure out that a rocket that blows up stuff doesn't need a 2nm chip?"
One, they'll learn that we're not doing too hot on custom chip fabs in general? They'll also, if they're really that dense, learn that we need chips for a few more things than to make things go boom. (FWIW, they're not that dense.)
"They are going to lose interest and those subsidies that is Intel's last hope will end."
Even if the rest of your statements were correct (and I don't think they are), that is absolutely not how subsidies work. Local subsidies translate to local jobs translate to votes. Keeping them running is rather important to politicians. So, no, "lose interest" is not exactly the most likely failure mode here.
I've read that the problems with chips for cars are actually old processes (greater than 100nm) that are commodity and so no one really cares to make them and the equipment has one foot in the grave and such, so I don't think anyone cares too much about putting chips into rockets since that stuff was figured out awhile ago.
My perception of national defense types is somewhat influenced by reading their press stuff and somewhat influenced by General Buck Turgidson from Dr Strangelove. He would say, "We must not have a $weapon gap!" (missiles, mineshafts, whatever he perceived to be in the national interest at the moment). And today, what occupies the minds of these types is AI which means latest gen chips and problems with pesky nerds and their ethical considerations. They greatly fear that China has surpassed the US in AI and has us outgunned. To be fair to them, AI could certainly be a potent weapon, but I have no idea how their perceptions of China reflect reality.
> "The most important decision was shifting to extreme ultraviolet lithography at a time when Intel thought it was much too expensive and difficult to implement; TSMC, backed by Apple’s commitment to buy the best chips it could make, committed to EUV in 2014, and delivered the first EUV-derived chips in 2019 for the iPhone. Those EUV machines are made by one company — ASML. They’re worth more than Intel too (and Intel is a customer)."
CNBC toured ASML clean rooms in a very interesting video. IIRC, the only thing keeping ASML from exporting these machines to China is some EU/USA export control rule:
Great piece but it seems that Ben doesn't quite finish joining the dots.
If Intel is to have a successful foundry business at the cutting edge then its customers will be those firms that are designing cutting edge CPUs, SoCs and GPUs.
That means Apple & Qualcomm (possibly OK) but also Nvidia, AMD and other Arm based competitors with Intel's CPUs and GPUs.
Can't see how this will work with Intel in its current form.
> The most important decision was shifting to extreme ultraviolet lithography at a time when Intel thought it was much too expensive and difficult to implement; TSMC, backed by Apple’s commitment to buy the best chips it could make, committed to EUV in 2014, and delivered the first EUV-derived chips in 2019 for the iPhone.
Can somebody here correct me if I am wrong, but my impression was that Intel did commit early to EUV, with initial plans to start high volume manufacturing in line with other fabs (initial schedule was to introduce EUV in 2017 [1], it just got postponed many times), but they just failed in their execution.
I think your citation is 9 years old. What I've always heard is what they called 10 nm was non-EUV. You are correct that what they called 7 nm was going to use EUV, pretty much had to, but 10 nm catastrophically failed and the company responded very poorly to that.
Not that long ago I remember reading, forget at what confidence level, that their old 7 mn was believed to have the potential to leapfrog their 10 nm and save the company, but others said they had some problematic things in common (not counting the very poorly run company!) that made that unlikely. In any event what was 7 nm did not ride to the company's rescue.
Chips are great, but you need discrete components, circuit boards, and other support, and the manufacturing infrastructure for all of that. Do we really have all of that in sufficient quantity domestically any more?
Intel tried very hard to get Apple as a customer for the iPhone. They knew very well of mr. Christensen but they simply could not deliver hinting that Intel's problems are not that of strategy but at a lower more fundamental level of competence and ability to organise.
(The stuff about RISC/CISC is a red herring - it basically doesn't matter on a modern cpu.)
Here is an article about Intel and Christensen with clip of him from 2012 (or earlier) where he mentions his work with Intel.
I think Intel "tried very hard" from the point of view of a small company, but the fraction of Intel's resources put behind it was minuscule and felt very perfunctory.
Right or wrong, they had zero interest in betting the future of the company on low-power chips for mobile, or any other market.
[edit]
I just read the wikipedia summary of the prescription for incumbents in The Innovator's Dillema and the one thing Intel was missing was:
> They allow the disruption organization to utilize all of the company's resources when needed but are careful to make sure the processes and values were not those of the company.
To a certain extent, it feels like buying a cloud offering from AWS vs. Google. Google might have a lot of resources dedicated in absolute terms to the cloud offering, but it feels like an afterthought that might go away at any moment. The AWS offering feels like a real product that Amazon plans on making money from.
In both the cases of Intel and Google, I can't say which is true, but customers can only make their plans based on appearances, not reality.
> This is why Intel’s shift to being not simply an integrated device manufacturer but also a foundry is important: yes, it’s the right thing to do for Intel’s business, but it’s also good for the West if Intel can pull it off.
AMDs spin-off of Global Foundries only gets mentioned once as an aside, yet surely there are multiple important reasons why that story is relevant to Intel.
I am a Libertarian so this may seem like an odd comment: I support some government intervention to design and manufacture of at least low tech chips (adequate for laptops, tractors, industrial uses in general).
I am not a hardware expert, but given that the Open RISC projects seem very worthy of support, both in design efforts and multiple inside the US fab facilities.
TSMC’s new 5nm factory just opened 60 miles south of where I live in Arizona is also the kind of progress I want to see. I am a fan of globalization but we need to balance that with good “Plan B’s” for building what we really need inside the US.
US is not lacking in CPU design. I agree OpenRISC (and RISC-V) is worthy of support, but they benefit China more than US, and it would be poor use of US tax money to benefit China more than US.
I'm a 'government using funding to improve the world' vs 'govt using funding to control people' libertarian.
Scientific r and d falls strongly into the former category.
DEA, FBI, NSA, CIA, TSA, ATF, DoD, state police, county police, municipal police, neighborhood police, and other organizations used to control people. Plus the literally uncountable number of criminal and regulatory laws on the books that keep growing exponentially without congress taking time to go back and review old laws...
May be similar along my lines. I am for doing something for the silicon industry, I am just not into dumping into established giants. I’d love to see us throw money at people with novel ideas, new and interesting designs not though of before. The problem is, that is playing the long game when all we care about is winning the short game.
>"the goal should be to counteract the fundamental forces pushing manufacturing to geopolitically risky regions, and Intel is the only real conduit available to do that."
I wonder if it's fair to assume based on this the US gov will prop up intel as a foundry for as long as necessary, to secure it's own supply and reduce reliance on Taiwan/TSMC.
I wonder to what extent Washington's fuss over Taiwan is simply TSMC lobbying at work. They're an important company that is gonna get their lunch eaten by the mainland. But what can Washington even do about it?
Beyond the "unsinkable aircraft carrier" angle, that is.
"[TSMC is] an important company that is gonna get their lunch eaten by the mainland."
How so? Not for the foreseeable future in bleeding and leading edge nodes, where the PRC is some unknown but very long distance away from making their own EUV machines.
An invasion of Taiwan just means an end to TSMC production there, a point its chairman Mark Liu made a few days ago in a CNN interview. That would have really bad effects on the PRC's narrow economy with its export focus.
The US has been sending carrier groups to support Taiwan long before they were a leading edge semiconductor manufacturer. So it's geopolitics as normal.
As for getting crushed by SMIC, this is only with possible massive government investment from the PRC. Now you see many other governments reacting with subsidies in kind. It will be a totally distorted market in 10 years time.
Chinese semiconductor companies. If this insanity continues (nationalism and sanctions), the massive Chinese market will end up being serviced only by Chinese chip companies. Some of these are investable via the Chinese or Hong Kong stock markets.
[+] [-] rossdavidh|3 years ago|reply
I agree with the bottom line here (we should spend gov't $$ to make sure significant amounts of chip manufacturing still get made in the US, and Intel has to be a big part of that). However, it misses the real reason for Intel's decline.
For most of it's existence, if Intel had missed a manufacturing node in Moore's Law, it would have been rightly recognized as an existential threat, and it would have become the #1 focus of the CEO and the rest of the company. Intel fell behind Moore's Law for years in its manufacturing, and it never caused them to appropriately panic until that hit the bottom line. This is a problem of an executive suite too focused on this quarter's results, and not focused enough on the engineering that drives those results. Previous generations of Intel executives understood that. It is likely that the current CEO, brought in once the board saw problems in their stock price, realizes it. If they had been run by executives who cared more about the underlying engineering, they would have had a 5-year head start in fixing the situation.
[+] [-] georgeecollins|3 years ago|reply
[+] [-] mandevil|3 years ago|reply
[+] [-] lr1970|3 years ago|reply
Former Intel-er here. You hit it on the nail. Andy Grove used to say "Only paranoid survive" and acted accordingly. But when Paul Otellini became the CEO it was downhill ever since.
[+] [-] throwaway4good|3 years ago|reply
https://twitter.com/dylan522p/status/1554889887630761985
Intel with a bunch of Optane related presentations at #FlashMemorySummit
Some the Intel folks I spoke to about this (not pictured) had no clue it was going to be cancelled until they read it on an article from Toms Hardware.
[+] [-] amelius|3 years ago|reply
[+] [-] deehouie|3 years ago|reply
[+] [-] formerkrogemp|3 years ago|reply
The efficient market rewards inefficient stock buybacks, record debt fueled dividends, years of underinvestment, low wages, and most of all no strings attached bailouts. They may be a loser, but we'll pay for their loss. Socialize the losses/costs and privatize the gains.
[+] [-] eru|3 years ago|reply
Why?
And would your rationale apply to other countries as well?
[+] [-] mhh__|3 years ago|reply
[+] [-] alain94040|3 years ago|reply
I think it's much simpler: being number one in fab technology is mostly driven by volume: whoever has the most volume wins. During the PC era, Intel had the most volume, so they also had the best fabs. It's a winner-take-all, self-reinforcing ecosystem.
But in the last 10 years, mobile has had the highest volume. That's what allows TSMC to have the best fabs, and Intel is struggling. That's all there is to it. Nothing to do with services or software.
[+] [-] adrian_b|3 years ago|reply
However, it is beyond reasonable doubt that Intel has made some extremely ugly management mistakes during their failed attempts to transition from 14 nm to 10 nm, which have absolutely nothing to do with the competition from TSMC or others.
Maybe Intel would have lost their technological advance regardless how the company had been managed, due to the difference in volume between smartphone chips and PC chips, but now we cannot know which has mattered more, the internal mismanagement or the change of the semiconductor device market favoring their competition.
I wonder if it will ever become public knowledge which were exactly the technology problems of Intel and who are those guilty for the decline at the company, because the failures could not have had any real technical causes but only bad management causes.
During their worst years Intel has been capable even of presenting to the public fake technical presentations about the alleged great characteristics of their future 10 nm CMOS process, which is something that I would never have expected from a company like Intel. The marketing messages from any company are expected to be full of lies, but the technical presentations are expected to match reality.
During many years, unlike TSMC, Intel has behaved as if it were completely unable to predict the precise characteristics of the CMOS process that they will able to manufacture in the following year.
How could this happen is very hard to understand, as the manufacturing processes and the future devices made with them can be simulated long in advance of their implementation, and the models can be tuned continuously while the processes evolve, by fabricating and measuring various test structures. Unlike for Intel, for TSMC the performance predictions for future processes have always been reasonably accurate.
[+] [-] klelatti|3 years ago|reply
Edit: not that Arm is necessarily RISC - but it certainly takes an approach that is different to x86 and better suited to mobile.
[+] [-] babypuncher|3 years ago|reply
[+] [-] aidenn0|3 years ago|reply
[+] [-] throwaway4good|3 years ago|reply
We are about to enter a silicon slump with low demand and oversupply; for Intel things will get worse.
What will happen when it is clear to everyone including politicians that all that subsidy money is going into a black hole? And people finally figure out that a rocket that blows up stuff doesn't need a 2nm chip?
They are going to lose interest and those subsidies that is Intel's last hope will end.
[+] [-] groby_b|3 years ago|reply
What causes you to assume that?
"What will happen [if...] people finally figure out that a rocket that blows up stuff doesn't need a 2nm chip?"
One, they'll learn that we're not doing too hot on custom chip fabs in general? They'll also, if they're really that dense, learn that we need chips for a few more things than to make things go boom. (FWIW, they're not that dense.)
"They are going to lose interest and those subsidies that is Intel's last hope will end."
Even if the rest of your statements were correct (and I don't think they are), that is absolutely not how subsidies work. Local subsidies translate to local jobs translate to votes. Keeping them running is rather important to politicians. So, no, "lose interest" is not exactly the most likely failure mode here.
[+] [-] hotpotamus|3 years ago|reply
My perception of national defense types is somewhat influenced by reading their press stuff and somewhat influenced by General Buck Turgidson from Dr Strangelove. He would say, "We must not have a $weapon gap!" (missiles, mineshafts, whatever he perceived to be in the national interest at the moment). And today, what occupies the minds of these types is AI which means latest gen chips and problems with pesky nerds and their ethical considerations. They greatly fear that China has surpassed the US in AI and has us outgunned. To be fair to them, AI could certainly be a potent weapon, but I have no idea how their perceptions of China reflect reality.
[+] [-] dash2|3 years ago|reply
No. It's 2022 not 2006. That card will win big, and deserves to.
[+] [-] photochemsyn|3 years ago|reply
CNBC toured ASML clean rooms in a very interesting video. IIRC, the only thing keeping ASML from exporting these machines to China is some EU/USA export control rule:
https://www.youtube.com/watch?v=iSVHp6CAyQ8
[+] [-] klelatti|3 years ago|reply
If Intel is to have a successful foundry business at the cutting edge then its customers will be those firms that are designing cutting edge CPUs, SoCs and GPUs.
That means Apple & Qualcomm (possibly OK) but also Nvidia, AMD and other Arm based competitors with Intel's CPUs and GPUs.
Can't see how this will work with Intel in its current form.
[+] [-] hyperation|3 years ago|reply
[+] [-] adamsvystun|3 years ago|reply
Can somebody here correct me if I am wrong, but my impression was that Intel did commit early to EUV, with initial plans to start high volume manufacturing in line with other fabs (initial schedule was to introduce EUV in 2017 [1], it just got postponed many times), but they just failed in their execution.
[1] https://wccftech.com/idf13-intel-ship-10nm-chips-2015-7nm-ch...
[+] [-] Throwawayaerlei|3 years ago|reply
Not that long ago I remember reading, forget at what confidence level, that their old 7 mn was believed to have the potential to leapfrog their 10 nm and save the company, but others said they had some problematic things in common (not counting the very poorly run company!) that made that unlikely. In any event what was 7 nm did not ride to the company's rescue.
[+] [-] mikewarot|3 years ago|reply
[+] [-] throwaway4good|3 years ago|reply
(The stuff about RISC/CISC is a red herring - it basically doesn't matter on a modern cpu.)
Here is an article about Intel and Christensen with clip of him from 2012 (or earlier) where he mentions his work with Intel.
https://www.edgementoring.org/leadership-blog/clayten-christ...
Christensen Taught Intel CEO How To Think And Why It's Important
[+] [-] aidenn0|3 years ago|reply
Right or wrong, they had zero interest in betting the future of the company on low-power chips for mobile, or any other market.
[edit]
I just read the wikipedia summary of the prescription for incumbents in The Innovator's Dillema and the one thing Intel was missing was:
> They allow the disruption organization to utilize all of the company's resources when needed but are careful to make sure the processes and values were not those of the company.
To a certain extent, it feels like buying a cloud offering from AWS vs. Google. Google might have a lot of resources dedicated in absolute terms to the cloud offering, but it feels like an afterthought that might go away at any moment. The AWS offering feels like a real product that Amazon plans on making money from.
In both the cases of Intel and Google, I can't say which is true, but customers can only make their plans based on appearances, not reality.
[+] [-] zbird|3 years ago|reply
It's good for the US, not "the West".
[+] [-] MauranKilom|3 years ago|reply
[+] [-] robocat|3 years ago|reply
[+] [-] unknown|3 years ago|reply
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[+] [-] mark_l_watson|3 years ago|reply
I am not a hardware expert, but given that the Open RISC projects seem very worthy of support, both in design efforts and multiple inside the US fab facilities.
TSMC’s new 5nm factory just opened 60 miles south of where I live in Arizona is also the kind of progress I want to see. I am a fan of globalization but we need to balance that with good “Plan B’s” for building what we really need inside the US.
[+] [-] sanxiyn|3 years ago|reply
[+] [-] edmcnulty101|3 years ago|reply
Scientific r and d falls strongly into the former category.
DEA, FBI, NSA, CIA, TSA, ATF, DoD, state police, county police, municipal police, neighborhood police, and other organizations used to control people. Plus the literally uncountable number of criminal and regulatory laws on the books that keep growing exponentially without congress taking time to go back and review old laws...
[+] [-] tcmart14|3 years ago|reply
[+] [-] KaoruAoiShiho|3 years ago|reply
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[+] [-] lotsofpulp|3 years ago|reply
[+] [-] kipchak|3 years ago|reply
I wonder if it's fair to assume based on this the US gov will prop up intel as a foundry for as long as necessary, to secure it's own supply and reduce reliance on Taiwan/TSMC.
[+] [-] pphysch|3 years ago|reply
Beyond the "unsinkable aircraft carrier" angle, that is.
[+] [-] Throwawayaerlei|3 years ago|reply
How so? Not for the foreseeable future in bleeding and leading edge nodes, where the PRC is some unknown but very long distance away from making their own EUV machines.
An invasion of Taiwan just means an end to TSMC production there, a point its chairman Mark Liu made a few days ago in a CNN interview. That would have really bad effects on the PRC's narrow economy with its export focus.
[+] [-] trynumber9|3 years ago|reply
As for getting crushed by SMIC, this is only with possible massive government investment from the PRC. Now you see many other governments reacting with subsidies in kind. It will be a totally distorted market in 10 years time.
[+] [-] keepquestioning|3 years ago|reply
[+] [-] throwaway4good|3 years ago|reply
[+] [-] throwaway4good|3 years ago|reply
[+] [-] kache_|3 years ago|reply
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