Intel’s New IDM 2.0 Strategy

i think that would be a huge strategic error. Most of those "the rest of the industries" are in turn going to get access to and reap the benefits of the bleeding edge as soon as they can, so building out non-bleeding edge specifically for them is a losing game.

The announcement itself seems to be a kitchen sink. They are going to do everything in a new and cool way! Kind of obvious that Pat can't break the death grip of the manufacturing people - after all it is that vertical integration that has brought all those record revenues in the recent years. Of course it has also caused Intel to fall that far behind.

There are a few contract fabs in the US but none of them are anywhere near the volume Intel will have to offer as 14nm lines become available for other customers.

Anyway, I don't understand your proposal. Intel is doing what it can. Other US semiconductor companies are doing what they can. Unless you want the government to pressure Intel to sell some of their 14nm fabs to companies who have an interest in contract manufacturing I suspect this is just the way things will go.

https://www.forbes.com/sites/tiriasresearch/2021/03/23/arizo...

Not sure if the author is simply reciting received wisdom of dubious accuracy. Perhaps some of those things are far more important than others--e.g. pre-existing talent and tax incentives.

Or maybe our assumptions are wrong. Last month I made a similar point as yours regarding water and nuclear power plants in Nevada, to which someone replied noting the Palo Verde Nuclear Generating Station in Arizona, the largest power plant in the United States, which sources its water from sewage. See https://news.ycombinator.com/item?id=26176034 and https://en.wikipedia.org/wiki/Palo_Verde_Nuclear_Generating_... In addition to providing an example of water utilization, I imagine the cheap power produced by Palo Verde probably also figures into siting preferences.

Companies like Nikon and ASML, who make lithography machines and so on, are not really interesting in the garage fab space but that has nothing to do with Intel.

They're not interested in competing on other people's terms in commoditized markets. They sell luxury goods.

Apple are a high margin business. I highly doubt they want to harm their gross margin, but its possible. Apple however have not been that successful co-designing.... well, anything. They are highly opinionated that they are correct and this has typically lead to them blazing new trails, but has also lead to mis-steps. For bespoke systems, that would rely on building what the customer asks for. Apple's generally isn't great with working with outside suppliers, generally trying to bring the work inside. Finally this would require apple to tie their hands (in the same way microsoft has) with compatibility to provide the long term support that the vendors require.

Apple would never become the suppliers the cloud providers want. The only way they would be chosen is if the product is significantly better then what otherwise exists. I can easily see Apple leapfrogging incumbent server vendors for performance or such for a short term, but I expect the others will catch up very quickly. Cloud hardware is already well integrated by companies motivated to eek out every little bit of performance (see facebook and the OCP). Despite being significantly more different from an engineering perspective, I actually think manufacturing cars is more similar from a business perspective for Apple.

Progress in chip manufacturing doesn't happen exclusively at the node size of the cutting edge. As the manufacturing technology matures, I'm sure we'll see advances across all the major foundries, even if they aren't all competing to be the first to a new node. And the fact that all of these foundries remain in business is a strong indicator that perhaps the most expensive, most cutting edge manufacturing process is not optimal for every single chip manufactured.

It's certainly valuable to understand the specific nature of their competition, but such conversation tautologically defines TSMC as not-monopoly.

Ninja-edit: And even if you want to restrict the definition of competition in chip manufacturing to only those foundries with cutting edge nodes, then Samsung's existence is sufficient argument against the claim of monopoly on that front.

For the chip design part, Microsoft to some degree is already doing this. Microsoft has worked with AMD and Qualcomm to design custom chips for things like the XBox and Surface devices, and word on the street is that Microsoft is moving into designing their own ARM chips top-to-bottom similar to Apple [1]. I think moving into custom chip design is no brainer for all of the tech players with a market cap > $1 trillion, and as far as I'm aware, most of them are already doing it.

The second part is the much trickier part. Actually getting into the fab business at a cutting edge process node is extremely difficult, because the fab business is both extremely capital intensive AND takes an enormous amount of time to build up. If Microsoft or any other tech player wanted to muscle their way into the cutting edge fab business, the requirement isn't a one-time $20 billion investment; it's $20 billion a year every year for at least a decade just to catch up. The catching up part is insanely difficult too; for starters, the EUV photolithography machines you need to even begin building a fab are made by only like two companies in the world, and both companies are backordered for years because of TSMC, Samsung, Intel, and others. Then, once you have caught up, you have to continue pouring money into the business forever in order to keep up. TSMC and Samsung and (up until recently) Intel are able to do this because of the sheer volume of manufacturing they do; smaller fabs that don't have the volume just aren't able to keep up because they don't have the revenue. The fab business is a business where economies of scale are really serious and really large, and I don't think Microsoft alone is at a scale large enough to for these economies of scale to start to take effect. Even established chip players like NVIDIA and AMD don't even consider themselves large enough for these economies of scale to apply today.

So the question for Microsoft (and really any fabless chip company) really basically boils down to: do they commit to $20 billion a year every year indefinitely until the end of time to build and run their own in-house cutting edge fab business, or do they just pay TSMC each year to manufacture for them, and thereby offload the risk and cost of the fab business? The overwhelming answer in the industry is: just pay TSMC. That's what Apple, Google, Amazon, NVIDIA, AMD, Qualcomm, etc. all do.

[1] https://www.theverge.com/2020/12/18/22189450/microsoft-arm-p...