Former Intel CEO says splitting Intel isn't good for the U.S.
tomshardware.com
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Intel as it currently exists may be destined to failure, but I don't see how splitting the company could do anything but seal its fate, if not hasten it. American MBAs have been hostile to vertical integration for over 50 years now, but TSMC is one of the few companies they can point to today as being dominate without embracing vertical integration. Most other dominant global industrial players, especially ones that aren't pure IP plays, are vertically integrated. Companies like SpaceX and Tesla that bucked the American trend and embraced vertical integration have done well precisely for that reason, whereas the story of those, like Boeing and countless others, that eschewed vertical integration continue to deteriorate.
Now, in the grand scheme of things vertical integration may not be economically ideal in terms of overall social wealth maximization, but to pretend Intel can remain competitive at the leading edge by eschewing vertical integration seems implausible. Far more plausible is that disassembling Intel is a well proven path for shareholders to profit on the decline with minimal risk. But given the political environment they can't sell it as promoting efficiency like they used to. They have to sell it as if they're attempting to do the very opposite of what they intend and has happened countless times; namely, managed offshoring of labor and capital intensive industry. But maybe I'm being too cynical? What's the steel man argument that is sincere about preserving Intel's market leadership rather than a managed decline?
I think you are misusing the term "vertical integration". Intel is vertically integrated already, as it is an OSAT, Foundry, and Chip Designer.
TSMC is only a foundry.
Furthermore, the major difference between the Taiwanese ecosystem and American ecosystem is state support and opposition to antitrust.
The Taiwanese foundry ecosystem is split between TSMC and UMC, and both receive tens of billions of dollars a year in subsidized loans, land, and power from the Taiwanese government, as well as a blind eye to their overwork culture.
The US on the other hand never subsidized the foundry industry until the CHIPS Act was signed, and M&A has become much harder nowadays due to ideological differences, meaning that American companies cannot leverage the economies of scale the same way TSMC, UMC, Samsung, and other foreign chip fabrication players can.
Oh. Okay. So why don't we split up Intel and then make this exact investment in the spun off divisions?
This would doom American leading edge fabrication and Intel as a whole.
Intel split apart will not survive. The fabs do not have customers with volume required to survive. They need Intel Design to be using them. With the Arrow Lake launch we're seeing that Intel Design, even with the latest TSMC node is behind AMD in performance. Raptor Lake, for all it's unfortunate voltage spike woes, was able to be very close to AMD when it came to performance in spite of being several nodes behind. This spoke to how well optimized Intel's designs were as an IDM for their own fabs. It's also why in spite of 18A being a very promising node has failed to pull many clients away from the TSMC ecosystem. Small advantages were built up over years which turned into larger ones.
Crises at Boeing and Intel Are a National Emergency
That's is. You can't save the corporate, you can only save intelligence of those working there, allow the corporation to fail and new small enterprises will born, some will became medium and some large again.
Which, yeah, I don’t think that’s much of a revelation to anyone discussing Intel’s future. There’s no argument put forward that it’s not still the best path for Intel.
Maybe it's the "grizzly thinks latching trashcans are a sign of hedonistic excess and should be shed" kind of bias. Less clear to me as an ex-ceo. Equity ownership could bend the needle that way for sure.
Ah well, I doubt either of us know the man.
"Barrett also said Washington must do its job to stay ahead of the semiconductor race. The U.S. has invested more in the semiconductor industry in the past year than in the last 28 years combined, but he says it should do even more, especially in academic research."
Makes one question whether he still owns substantial stake in the outcome.
That said, at certain point, even US government won't be able to bail out everyone and everyone is holding out their hands lately.
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