Intel CEO Pat Gelsinger's Dream Job Takes a Nightmarish Turn
wsj.com
wsj.com
The issue is the latest earnings report: quarterly net losses, operational losses, 15% cut in staff, diminishing CapEx (aka: less investment into future factories)... and perhaps most important/indicative of the situation... Intel is cancelling its Q4 Dividend.
IE: Intel is no longer a reliable dividend stock with reliable profits. Investors are now concerned about what Intel... as a company... is today. There's fundamental top-down strategic issues with the company that remain unresolved as of this week.
https://x.com/PGelsinger/status/1820129317122080977
>@PGelsinger >“Let your eyes look straight ahead; fix your gaze directly before you. Give careful thought to the paths for your feet and be steadfast in all your ways” Proverbs 4:25-26
NVidia market cap: 2.64T
Antitrust issues aside, NVidia could acquire Intel for about 1/30th of their stock. That would result in having an end-to-end platform play like AMD/ATI, about 5x the number of employees, a tremendous number of technologies (compilers, numerical libraries, etc.), massive diversification, and actually rather better fab access in both directions.
Thoughts?
If investors think it's a good idea, market cap goes up by more than 24B. If not, by less.
I am looking for honest thoughts. I have not been spending any time on wallstreetbets, and I had hoped for a good discussion of pros and cons. I have no clue if it's a good idea or bad.
AOL / Time Warner comes to mind.
Generally M&A’s argument is that it’s more capitally efficient to acquire. There’s certainly a a case to be made for that here, but having seen a few engineering teams post M&A it could actually be a poison pill for NVIDIA.
I’d love to hear from other more informed people what I’m missing here.
NVidia's focused R&D efforts to improve Intel platforms.
The Intel platforms are still very, very good, and very, very hard to replicate. It took many decades of concerted optimization to get here. AMD is a little bit ahead right now, but it took many decades of R&D to get there.
Other efforts to do so -- even when x86 was much simpler -- went nowhere. Remember WinChip, MediaGX, Geode, C3, C7, Nano, 5x86, 6x86, and that whole debacle of Intel-competing products?
Even if it was a good idea, there's no way that it would past antitrust review in Europe and the USA.
On the other hand this would be a great time for such an acquisition, before the bubble bursts.
I just looked it up, and I see I was backpacking the world at that time so it didn't really register. But I see it went very very wrong when the dotcom bubble burst.
In Holland we had a similar thing happen (albeit at a much smaller scale) to the company World Online. They did an IPO and their stock tumbled into nothing. The CEO sold all her shares just before the IPO and was later challenged in court (though was acquitted I believe)
It's a good point indeed. I forgot about all those (mainly due to my different focus in those days).
* AOL was very, very overvalued.
* They bought a company with real worth.
* When the .com bubble popped, they were left with Time Warner.
It'd be a dead company without it. On the other hand, it did very badly by Time Warner and its investors.
There are two possibilities here:
1. AI is gold, and NVidia is leading AI.
2. AI is a bubble, and NVidia is overvalued by a factor of 10-100x.
In the case of #2, buying Intel converts funny money into real value, gives Intel engineering capability it so obviously now lacks to continue to push x86 forward, and gives NVidia engineers many, many decades of x86 R&D. In that sense, it can be thought of as a hedge on AI not succeeding (or someone overtaking NVidia in AI).
In the case of #1, it either gives NVidia huge marketing and distribution channels, an end-to-end platform play, and a bunch of supporting IP, while chaining it to an obsolete corporation with 5x the employees. It also allows NVidia to do some antitrusty things by connecting with the dominant CPU platform (e.g. making iGPU chips, and various sorts of hybrids where Intel + Nvidia work best together).
I mean, AI is a nice development. But the hype started by ChatGPT doesn't really carry over to all aspects of the industry as much as it's said to. It's really good at some things, and really sucks at some others even though it pretends to do them. It's "Gold" for the things it's good at. It's a bubble waiting to burst for the others.
PS: I wouldn't consider intel obsolete. Imagine they stopped making their CPUs and chipsets tomorrow. Society would be really really screwed. Sure there's AMD but they can't handle all that. They're managing things more traditionally, sure. But they're also in a much more settled market.
I'll also mention:
- ChatGPT was a lot smarter for the types of things I'd like to use it for before the "safety" work. The efforts to make it never say anything offensive also made it a lot dumber. I saw a paper to that effect too. Perhaps some of that was a result of optimizations to shrink the model and make it more efficient (but then I'd expect GPT-4 to be smarter).
- GPT3, which was an autocomplete, could do some things well the modern chatbot-ified models can't.
- I have a lot of practice making the models smarter by having them check their own work, vote, etc.
I have no idea how high the ceiling is. I might be a few inches away, or it might be the sky.
That's a good time to hedge.
Probably "legacy" was a better word than "obsolete." My language was sloppy.
FWIW, I was pointing out aspects of such an acquisition, and looking for honest thoughts. I have no idea if it's a good idea or bad idea. I'm really quite divided.
On the other hand they'd purchase the most common desktop ISA and a lot of IP. It would make so much sense.
But like the OP said, antitrust is surely why they're not even trying. They already got slammed with ARM.
>Intel also expects to benefit from a U.S. Treasury Department Investment Tax Credit (ITC) of up to 25% on more than $100 billion in qualified investments and eligibility for federal loans up to $11 billion.
>Intel’s investments are expected to create more than 10,000 company jobs and nearly 20,000 construction jobs, and to support more than 50,000 indirect jobs with suppliers and supporting industries.
Yeah that didn't happen.