US Intel
stratechery.com
stratechery.com
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.
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.
Gets you the entire datacenter market maybe. End user (PCs, cellphones etc) stuff is much more concerned about perf/$ (up front cost) than perf/watt (long term cost), and the embedded market (electronics, appliances etc) mostly care about 'good enough' as cheaply as possible - performance isn't a concern at all for many use cases.
And the corporate market mostly cares about (perceived) reliability/liability concerns over everything else - see how hard it's been for AMD cpus to penetrate despite being measurably better in every category compared to Intel at various points in time.
I'm sure it'll work out well for us...
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.
Current American culture can be pretty ugly.
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.
Their benefits are almost purely from the strength of the working class, hence workers having it better there.
In France, the percentage of employees covered by a collective bargaining agreement, which is very high (around 95-98%)
In Germany, about 50% of workers are directly covered by collective bargaining agreements (CBAs)
In 2024, the union membership rate in the United States was 9.9%, representing 14.3 million workers, while 16.0 million workers were represented by a union under a collective agreement, accounting for 11.1% of the workforce.
---
If American workers want a better life they need CBA's and unions, not protectionist tariffs and buying chunks of random tech companies.
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 sucks for a while; the system is strong and adapts.
I appreciate fabs are multi-year, massive capital investments, but TSMC already has one up and running in Arizona. There are others (including owned by Intel) all around the world. They won’t go poof when INTC is no more.
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
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.
This isn't SW. Those ratios don't exist in the HW world.
(And to be frank, it's a myth in SW too).
But the real trick is filtering precisely the 50% you want.
It was also the Korean automaker’s best July sales month since launching its first vehicle in 1986.
The growth was mainly driven by electrified vehicles, including EVs and hybrids (HEVs).
Contrast this with biotech venture capital which has been doing well for decades, often investing more capital in a year than software VCs. The difference is that all the research, clinical trial, and manufacturing expertise is already here and concentrated in a few localities like South San Francisco, San Diego, and Boston.
I think that's why most people just aren't that upset about tariffs. It would be nice to be able to participate in our own economy other than by grifting off real estate or software.
To fund a similar sized hardware start-up you need a full lab andddd already the proposition is dead.
And engineering teams usually scale up with revenue as well.
I feel like your numbers are the myth that gets told not what actually often happens
Exactly. Margins are dropping rapidly: https://ethanding.substack.com/p/openai-burns-the-boats
- The chatbot people have a personal attachment to
- The processing tool.
In the second, you only care about the result. Something like Claude Code can call any other provider if that's cheaper and visa-verse. Once I have the result, my dependency / lock-in is no more than a brand of toilet paper. The providers will have to do the 'capitalism thing' and compete.
It's almost like WeWork's, valuated at IT levels by being in the style, only for investors to eventually figure out the marginal production costs are not reducible to near 0, and you can't just bully out competition / network-effect to get a monopoly.
And this applies to any company that wraps and re-sells AI.
Something the tech-VC world is so unfamiliar with, it's scrambling to present the truth of what is 'econ-101' for the rest of the world.
Agriculture is much slower, every iteration may be is a year, or (in tropical climates) half a year. Microelectronics is comparably slow, and even more unforgiving about making mistakes. Building robots does not scale ls easily as producing chips, let alone software.
These areas need a different model of investment, with a longer horizon, slower growth, less influence of fads, better understanding of fundamentals. In some areas, DARPA provided such investment, with a good rate of success.
What VC capital is not interested in is regular fuel, which can burn steadily and expand gradually, without a shock wave. Such companies can be quite important. Say, GitHub was such a company for many years, before it took a large VC investment and got acquired MS. Investing in such companies requires much more diligence and foresight, maybe too much predictive power to work at mass scale.
VCs' math only works because a single 1000x hit easily pays for a hundred of duds. If ROI per hit is 2-3x, and research required is 10x more deep, the prospects likely start to seem too bleak for folks with billions seeking return.
I especially dislike the way VC funded startups use VC dollars to effectively be a “loss leaders” for years to choke out the rest of the market.
Who wants to risk their own capital or privately pooled funds against THAT?
Show them your finances and collateral to demonstrate that you'll be able to pay off the loan.
>I especially dislike the way VC funded startups use VC dollars to effectively be a “loss leaders” for years to choke out the rest of the market.
It's a fair point, but it's a point which does not apply to the industries we are discussing, which do not receive VC investment.
I actually really like your point about Masayoshi Son-style investments which are just an attempt to entrench a monopoly. I'm no socialist, but if socialists called for identifying and taxing such investments, I wouldn't object. The trick is to distinguish between the WeWorks of the world, and the Boom Supersonic type companies which genuinely need gobs of capital for breakthrough innovation.
I somewhat dislike antitrust because it requires judgement calls on the part of regulators. I prefer simple, elegant rules. Just like in software development. Law should ideally be elegant, just like code.
Just heard of Palmer Luckey. Hmm! Money? No big staff, not much equipment, essentially just one person?? $1B+, quickly? Example: Taylor Swift. Did she ever hear of Linux???
Leaving behind only those completely focused on returns.
When turning the spotlight to capital that is seeking returns, it is true that these areas may be mediocre places to deploy fresh capital, but it doesn't mean that these players aren't competing, and they will probably be cranking out sheet metal and port cargo logistics optimization well after 90% of the AI startups fold.
The caveat is of course Private Equity, which is about 10 trillion in assets. They can derive high returns from these areas, but it requires leverage.
In the US there have been a few, i.e., apparently less than 20, universities with an applied math program up to date in and teaching optimization.
Sooooo, anyone at all seriously interested, long, for decades, would, could, should visit some of those math programs, meet some of the profs, get recommendations for their former students, call them, chat, and offer a job better than their current lawn mowing, fast food restaurant kitchen cleaning, or car washing. Instead of just the US, might also consider Waterloo in Canada. Actually the Chair of my Ph.D. orals committee specialized in optimization in logistics. After sending 1000+ beautifully written resume copies and hearing back nothing, can begin to conclude that optimization is not a hot field and for highly dedicated optimizers who want to sleep on a cot in a single room, forgo bathing, most days eat bread, other days peanut butter, have no children, wife, or family contact, don't own a car, and must get any needed medical care from some of the last resort special clinics. Ah, real optimization!
PE is arguably much worse than VC. VC's business model is well understood and by taking VC funding, you are committing to their expected returns.
PE is, usually, unsolicited and is designed to exploit what appears to be a "lazy" balance sheet, but which is actually a stable business producing output and providing a reasonable ROI.
PE has very few redeeming features.
Labor costs, permits, fees, etc., means that buying used just doesn’t make sense unless it’s almost free.
Whereas developing countries were willing to pay a lot more, sometimes as much as 50 cents on the dollar compared to brand new equipment and they would send a team to rip it out too.
I’ve heard that applied to almost everything too heavy to move by forklift during the 80s, 90s, and 2000s.
Think of PE as the decomposers of capitalism, and VC as its seeds. Most people don't like to think of it that way because they don't like to be reminded that death is a part of life. But if you view capitalism as a living ecosystem and your role within capitalism as someone to accelerate growth and then accelerate death so that new growth can take its place, it all makes sense. And you can probably profit pretty handsomely from it, because most people don't view capitalism like that and instead seek stability in the dying parts.
It is still unsettling seeing Uber turning a profit, but even with that they're not turning a net profit over the lifetime of the company yet and won't be for a few years. Hopefully no-one pops up to compete with them now the sector has profits in it.
That said, allowing VC into 401ks and such I would agree is an abominable idea, because this stuff isn't marked properly until it is in distress. Actually, that area could use better regulation. Volatility laundering is already a systemic risk. Many of these vehicles have creative ways to not mark to their market value, which makes pension fund managers and leered participants happy because it greatly improves the perceived risk metrics and performance, at the equal expense of cloaked fragility.
But perhaps just let them have a thunderdome, and if they want to breach the walls and enter areas like retirement funds where society agrees standard are higher, there is a strong set of filters/regulations that must be adhered to.
They don't know anything else.
https://www.currentmarketvaluation.com/models/s&p500-mean-re...
This YCW18 ag company was acquired less than 3 years in by John Deere for $250M: https://techcrunch.com/2021/08/05/john-deere-buys-autonomous...
I feel like anything relevantly practical is denied investment.
But when it comes to anything flashy and hip, a train of dump trucks filled with cash couldn’t deliver money as quick as the VC dollars that flow into to startups with no business model and no hope of being profitable…
Yeah, I get that startups should invest profits and not actually make profits for a while… But when they’re on their 4th round of funding with thousands of employees… shouldn’t they at least try to be a bit more financially responsible?
If you have money, the returns you'll get elsewhere are much less attractive, and can only be justified if they're very safe investments.
(Also, in neither country is the majority of its GDP comprised of websites.)
Is that the particular one you're referring to?
https://www.ifw-kiel.de/topics/war-against-ukraine/ukraine-s...
Keep in mind that Ukraine is literally on the opposite side of the world from us. What's Brazil doing for Ukraine? What's Australia doing?
As an American, I consistently argue that the US should not ally with Europe here on HN. But even I don't argue in favor of actively working to harm Europe. I just think we should cut Europe loose, because nothing we do for Europe will ever be enough, and Europe is a wealthy region that's plenty capable of providing for itself.
And before you say anything about tariffs (which are paid by US companies btw), read this article: https://archive.is/MxUAa See also https://archive.is/WQQ45
Around $1.5B (AUD) so far, Bushmasters, 50 M1A1s, M113s, training, etc.
We didn't sign the Budapest Memorandum, neither are we part of NATO, but we do our part, as we did in Afghanistan, Iraq (after the lies about WMD), in the Red Sea and other international events.
Oh and on the articles you quoted, some of the biggest fines were from the UK, which is not part of the EU.
As for tariffs, the US upended 80 years of work on international trade, with Trump applying tariffs without any underlying criteria except his complete misunderstanding of the difference between a trade deficit and bad trade.
The US has maintained its currency's dominance for all of the post WW2 era, which has allowed you to borrow and spend in a currency that everyone else has to support to be able to buy things like oil.
As an American, you should realize that in the last 6 months, the US has decided to abdicate its leadership, and as oil becomes less important to world trade, the USD will start to lose its dominance over trade, which means that your debts will have to be paid back in other currencies while the tariffs do nothing but damage the US consumers and economy in general.
Very dumb on your part.
As a fraction of GDP, Australia is an order of magnitude below the US. See map at the top here: https://www.ifw-kiel.de/topics/war-against-ukraine/ukraine-s...
We literally gave almost 10x as much as you on a per-GDP basis, yet we're still the bad guy. This is why I'm an isolationist.
Did you know that "Kevin", a common name in the US, is one of Europe's favorite insults?
>We didn't sign the Budapest Memorandum
The Budapest Memorandum is frequently misrepresented online. There's no promise to defend Ukraine in the text. Read it here: https://treaties.un.org/doc/Publication/UNTS/Volume%203007/P...
All the US promised in the Memorandum was to seek UN Security Council assistance if Ukraine was victimized. We went far beyond that.
Think about it: why would Ukraine be so desperate for NATO membership, if the "defense promise" in the Memorandum was already broken? Because there was no meaningful defense promise in the Memorandum! That is simply a malicious lie about the US that's very widespread online. Again, this is why I'm an isolationist. I give up. Our "allies" will hate us no matter what we do. I've figured it out. I want to be Switzerland. We'll worry about our continent, and you worry about yours.
And then looking at per capita the US sits at number 16.
The US is being targeted specifically because we've given so much. No one is bothering Japan, or Argentina, or Saudi Arabia. It's because the US has been generous (in absolute terms) that we get so much flak.
Imagine if we sent thoughts and prayers the way Kazakhstan does. That way we would get less hate. When's the last time you heard Kazakhstan criticized for lack of Ukraine support?
>And then looking at per capita the US sits at number 16.
I don't think that is accurate: https://old.reddit.com/r/europe/comments/1hd7aud/military_ai...
As I said... nothing we do for Europe will ever be enough. Better to cut them loose.
Was the US doing about as much as Japan the argument you wanted to make?
https://www.ifw-kiel.de/topics/war-against-ukraine/ukraine-s...
Or are just here to be a contrarian?
Maybe the US have an incentive in seeing the American built world order continue?
But hey, turn inward and let China and India win.
But don’t get mad when tariff situation with Europe etc. Is equalized over time and the American big tech is targeted to lessen the dependency.
ctrl-f "per capita", nothing comes up.
I do notice that Japan is #19 in terms of % of GDP however...
I actually think your confusion here explains a lot. You don't know the difference between "per capita" and "GDP". That shows you don't speak English well. That's probably why you don't know much about the US.
The fundamental issue is that you think you know a lot, but you actually know little. You're mostly just reading what is written about the US in your native language. Probably there is lots of misinformation.
>Was the US doing about as much as Japan the argument you wanted to make?
Why is the US being harassed and not Japan?
>Or are just here to be a contrarian?
The absurdity of Europeans who complain endlessly about the US, while we've historically pursued a relatively generous foreign policy towards you, gets under my skin.
>Maybe the US have an incentive in seeing the American built world order continue?
I've very consistently stated in this thread, and on Hacker News more generally, that the US should abandon the so-called "American-built world order". It causes us no end of grief, as you are illustrating at this very moment with your comments.
>But hey, turn inward and let China and India win.
The US economy was doing amazing back when we were more isolationist. Switzerland does amazing despite rejecting memberships in multinational organizations like the EU and NATO. India is very explicit in its policy of "multi-alignment", i.e. avoiding big firm coalitions like EU/NATO.
You Europeans are so invested in the idea that America needs to protect Europe for America to succeed. As far as I can tell, this idea is total nonsense. Barely a shred of evidence is offered in favor of it.
China and India aren't exactly looking to form alternatives to NATO either. Why would a big country agree to defend a small country? It doesn't usually make sense from a national interest perspective.
>But don’t get mad when tariff situation with Europe etc. Is equalized over time and the American big tech is targeted to lessen the dependency.
You guys have been raiding big tech bank accounts for years now. You shouldn't be surprised by US retaliation. What goes around comes around. We can tell you're not actually our friends.
Sorry, the massive difference of "per capita" and "% of GDP". Which would be aligned assuming equal GDP.
Given GDP differences between the donor countries the differences aren't meaningful. But sorry, I should have specified as "% of GDP" where the US is a joke comparatively.
What is even more funny is that I have lived a year in the US, I have traveled all over the US. I have college credits in American history. You know the tiny High School course "AP US History"? Have you heard of it?
Which is also why I was not surprised when Trump won in 2016. I had seen the culture. I had seen the close mindedness.
> The US economy was doing amazing back when we were more isolationist.
You mean the roaring 20s right before the great depression? Because that is the last time the US was isolationist.
Seems like you are dreaming about something you don't have the slightest clue about.
Your response is very typical for the absolute craziness that has infected the US psyche. Donald Trump is not a one off, he is what Americans want.
You were the one who started with dickish behavior. Don't dish it out if you can't take it.
>Given GDP differences between the donor countries the differences aren't meaningful. But sorry, I should have specified as "% of GDP" where the US is a joke comparatively.
Actually it does make a difference here. See the link I provided: https://old.reddit.com/r/europe/comments/1hd7aud/military_ai... Considering per capita, 8 months ago the US was more generous than almost all of Europe. Per capita is arguably the correct metric, since part of why US GDP is greater is because Americans work longer hours and take less vacation.
In any case, even if we consider the metric less favorable to the US (% of GDP), the US gives more as a fraction of GDP than almost every country outside Europe. If the US is a joke, than Spain, Ireland, France, and Italy are even funnier. We're very generous in every sense considering this isn't our war.
But since you call US aid a joke, I hope you won't miss it when it's gone. And I appreciate you confirming the points I've made, with your remark: Helping Ukraine gets us nothing but grief.
>You mean the roaring 20s right before the great depression? Because that is the last time the US was isolationist.
"Frustrated by French meddling in U.S. politics, Washington warned the nation to avoid permanent alliances with foreign nations and to rely instead on temporary alliances for emergencies... Washington’s remarks have served as an inspiration for American isolationism, and his advice against joining a permanent alliance was heeded for more than a century and a half."
https://history.state.gov/milestones/1784-1800/washington-fa...
The US economy mostly did great during that century and a half. Furthermore, the Great Depression was not simply caused by "isolationism". This is more intellectual sloppiness on your part.
I advocate a Swiss approach to foreign policy. That doesn't mean disengaging from other nations. It means not promising to help them with their problems.
Your continent, your problem. This is the approach that most of the world adopts towards Ukraine. The US was foolish to get involved. And we've been punished severely for it, by people like you. No more.
It's slightly weird to me how foreigners seem to look on the Trump era as personifying the US to a greater degree than e.g. the Biden or Obama eras. Trump is not especially popular right now: https://www.economist.com/interactive/trump-approval-tracker
I don't believe collective punishment or collective guilt was ever the point of democracy, sorry.
What's the point of moral reasoning, if people can blame others for events they didn't cause, simply by saying the word "democracy"?
We're meant to believe that the 49%-to-48% election of Trump is some deep window into the eternal American psyche, but Orban's fifteen-year drive into corrupt, racist autocracy, endorsed by the voters at every turn, is just some sort of very temporary oopsie that says nothing at all about Europe.
When Meloni uses her pulpit as a popular Italian prime minister to attack gay families, you don't see anyone claiming this reflects the bullying nature of the Italian people, but that's par for the course for coverage of Americans and Trump. Swathes of Poland declaring themselves "gay free zones" is an aberration from European values, whereas anything that happens in deepest Alabama is the truest reflection of the American spirit.
It's mere hypocrisy.
The far-right party is most popular by far: https://www.politico.eu/europe-poll-of-polls/france/
The majority of second-round polling has the far right winning the next presidency in France, potentially even by a landslide: https://en.wikipedia.org/wiki/Opinion_polling_for_the_2027_F...
For that reason, it's rather ironic to me when I see Europeans rally around Macron. France is poised to rug-pull Europe. Sorry guys.
BTW, guess which party is most popular in the UK? It's not particularly close: https://www.politico.eu/europe-poll-of-polls/united-kingdom/
At least AfD is merely a very close #2 in Germany: https://www.politico.eu/europe-poll-of-polls/germany/
Europe is sleepwalking.
Le Pen's far-right National Rally (RN) has had ties with the Kremlin for a long time. That alone should have discredited this party a long time ago, but no, it is ranking as high as ever, even after russia's overt invasion of Ukraine in 2022.
Mélenchon's far-left "France Insoumise" party ranks very high too, and is similarly pro-russian, anti-EU, anti-NATO.
In the town where I live, more than half the votes have gone to the RN these past elections. I often feel like a Cassandra.
Because you do know that Labour in the UK won a landslide victory a year ago and the last date for holding a new general election is in 2029.
The Scandinavian experience is that these parties crash as soon as they get to real power and have to compromise. Suddenly they had to be responsible.
If we do see these Trumpian parties win the majority in these elections in more rather than one-offs then we have a problem. But you're just fearmongering because you can't accept how completely wacko Trump is and need to blame it on "everyone does it!!!".
So what happened in Hungary, or Italy, or other examples mentioned by troad?
Are you aware that RN, at this very moment, has by far the most seats of any party in the French parliament? Those far-right sentiments didn't magically disappear on election day.
>The Scandinavian experience is that these parties crash as soon as they get to real power and have to compromise. Suddenly they had to be responsible.
>If we do see these Trumpian parties win the majority in these elections in more rather than one-offs then we have a problem.
The "majority" comparison is meaningless in this context because the US only has support for two parties. (Imagine Germany had a contest between AfD and Die Linke only. That's akin to the situation in the US right now.) "Governing coalitions" aren't really formed here, so the notion of "they get to real power and have to compromise" doesn't exist in the same way.
So: Even assuming we grant your argument, Trump's power in the US has more to do with quirks of our political system than something fundamental about American culture.
>you can't accept how completely wacko Trump is
I never said he wasn't completely wacko. I simply said he doesn't personify the US any more than Biden does.
And the Social Democrats has been the largest party in Sweden since the early 1900s. Given that the left, with all parties combined, haven't held a majority since 2006 while managing to rule with a minority government from 2014 to 2022.
You make a lot of noise for understanding quite little.
Yes. The US has a broken political system, and you the American people haven't done jack shit to fix it.
> So: Even assuming we grant your argument, Trump's power in the US has more to do with quirks of our political system than something fundamental about American culture.
Trumps power in the US is entirely because he is what the American psyche wants or tolerates.
You keep attempting to dodge the outcome and blame it on everyone else. But you need to own it.
Trump is personifying America, which is quite evident given how he has won twice. The American people wants him.
Yes, Orban says nothing about Europe. It says plenty about Hungary though. Europe not being a country, and the EU being very heavily decentralised, that makes sense.
Hungary is literally in Europe. If Orban says nothing about Europe, then nothing can ever say anything about Europe.
Your country is choosing to stay in a union with Orban's. If EU membership is meaningless, as you imply, it should be easy for your country to quit in order to make a point about Hungary.
so are the Vatican and Andorra and Belarus, so all of Europe is theocratic and/or a kleptocracy?
> Your country is choosing to stay in a union with Orban's
Because the benefits far outweigh the association with that pigshit, who will also die some day. Also, the EU can and does exert influence over countries, so some of Orban's excesses can be curbed.
All of the places we're discussing are part of Europe, so insofar as any place can be said to "say something about" Europe, each says something about it.
>Because the benefits far outweigh the association with that pigshit, who will also die some day. Also, the EU can and does exert influence over countries, so some of Orban's excesses can be curbed.
One could make similar arguments for staying in the US. Trump is 79; Orban is 62.
Understand why your argument is a very poor one? If not, I have 46 more of these examples.
That's easy to explain. Trump is so much out there in being aggressively obnoxious, criminal, racist and senile. His platform was a list of nonsense combined blatant diminishing of rights and social progress. The fact that a majority of voting Americans chose him is irredeemable.
Biden, Bush, Obama were normal candidates with pros and cons, where depending on your views, you could pick one or the other, and you could understand others who voted otherwise.
Trump? I cannot understand anyone who voted for him. They were either extremely narrowly self-centred and thought they could make a buck at everyone else's expense, extremely misinformed and/or dumb, or just hate specific groups of people they know will get hurt. There's nothing redeemable in any of those. He and his voters are the personification of the "fuck you, I've got mine mindset".
Do I get to blame you if RN wins the presidency? Same country, after all.
"by far" only if you get stuck on political party; considering there has been a united left coalition for multiple years and rounds of elections, that seems purposefully omissive. United left and RN are pretty close, polls and election results wise, with the centre-right and traditional right trailing closely behind. Neither of them have anything resembling a majority though, as is reflected in the current parliament, where each block has a bit less than 30% each.
And yes, I can understand them. RN's program contains points which cater to large amounts of French people, especially in rural disadvantaged areas. They're unrealistic or just fluff, mind you, but still sound good. RN is led by moderately charismatic people who have a good media presence - the party's head is Bardella, a young guy with a TikTok following who talks a decent talk. He's a nepo baby (son in law of Marine Le Pen), and mostly a grifter, but he can link a couple of phrases together and sound semi-convincing. Also, while Le Pen is a convicted criminal, it's "just" for stealing government and EU money, which a lot of people don't actually mind, and Bardella isn't.
Comparing to a delusional and senile old man who is literally convicted of rape, and there is plenty of credible evidence, out in the open, is also a pedophile. With a shit program with little concrete other than fucking up groups of people. After seeing his "work" his first term.
Yeah, I can understand, and probably have a discussion with an RN voter. (Those of the "black/brown people bad" variety mostly vote even further to the right, like Zemmour, those are the people I don't understand and wouldn't be able to talk with). A Trump voter? Something is seriously wrong with you to either like that, or pick your potential personal benefit over everything else.
I think your double standard is pretty clear at this point. I won't be offering further replies to you in this subthread after this one.
>Comparing to a delusional and senile old man who is literally convicted of rape, and there is plenty of credible evidence, out in the open, is also a pedophile. With a shit program with little concrete other than fucking up groups of people. After seeing his "work" his first term.
IMO, the fundamental reason people in the US vote for Trump is because they don't trust the establishment/media. So yeah, if you uncritically believe everything that's reported about Trump in left-leaning ("mainstream") US media, of course you won't understand why people vote for him.
I'm no Trump voter, but I think conservatives have good reasons to distrust the establishment/media: https://slatestarcodex.com/2017/05/01/neutral-vs-conservativ...
What double standard?? I'm merely pointing out that people distrustful of the government/EU are fine with Le Pen stealing from them. It's not an opinion I share, but I can understand it. I can't understand those people being fine with Putin bankrolling Le Pen though.
And still a million times better than Trump who not only stole from a cancer charity, but whose corruption is directly in the open and undeniable.
> IMO, the fundamental reason people in the US vote for Trump is because they don't trust the establishment/media
Regardless of that, they can see and hear with their own eyes and ears that he cannot string two coherent sentences together, and is obscenely disturbing as a human being.
It's normal for countries to prioritize their own self-interest. The unusual thing is the degree to which the US attempted to take responsibility for world affairs for as long as it did, to the point where other countries took the US for granted. Now other countries interpret America's failure to take responsibility for their problems as aggression. See here: https://news.ycombinator.com/item?id=45035076
I'm not talking about countries, I'm talking about Trump voters. An "America first" approach is totally fine, nobody outside of the US cares about.
An "America first" approach by a convicted criminal that is obviously senile, that results in arbitrary tariffs, threats of invasion of various allies, and a million other absurd consequences, is a problem for everyone. It's a problem for US partners, allies, and also the US for it's short and medium term future. Nobody will trust the US as a future trade and military partner.
In any case, as I said, I'm talking about Trump voters. The "extremely narrowly self-centred" ones are of the Andreessen types, the ones who think they can make a little bit more money if Trump is in power, even if objectively he's a terrible candidate on literally every level (criminal, rapist, pedophile, senile, can't string more than half a sentence, mocks disabled people, lies, doesn't comprehend realtively basic things, promises to deport millions of people while that being physically impossible, makes up stuff on the fly, wants to curb rights for women, LGBTQ folks, etc)
The number of countries producing leading edge semiconductors is actually small. The number of companies doing this work is very small, too. Although much of the economy needs chips to operate, those leading chips are concentrated in the production of a very small number of companies.
...
adblockers?
It's made me one of the only leaders in my Software Org that actually knows what happens below the level of the instruction set. I can talk about the power and heat implications of algorithmic decisions. But mostly nobody cares, theres always enough money to buy more servers.
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.
Not in the "lots of people would lose jobs" or "ripple effects would cause economic disruption" but in the true national security sense. What allied semiconductor manufacturers have significant cutting edge fabs in Europe?
Secondarily, a TSMC fab on US soil seems like a better investment. In the catastrophic event that Taiwan were invaded — it’s still people, facilities and equipment that remain here.
This trope keeps getting repeated on HN.
No, the point of the top level comment and article is that no US based company will replace Intel's fabs, nor will they form a "better" Intel. This stuff is intensely capital intensive, and nothing short of a government mandate will make any other company spend so much money on such a big risk.
Trust me - if they could have, they would have. Intel's fabs have pretty much been up for sale since Pat was ousted.
The only companies that know how to use the people and the equipment are not US based. TSMC already had an opportunity to buy much of Intel's fabs, and they concluded that shifting their process to match TSMCs would be cost prohibitive.
You’re arguing about logistics under the current economic rules while simultaneously defending a change of rules.
When you put that on the table, then there’s a lot more ways to overcome the obstacles of today that aren’t being discussed.
If a company’s management becomes a risk to national interests, then giving them more money with no added oversight is not really solving anything.
Where I disagree is that if Intel fails, something better (US based) will replace them. It won't.
In the scenario where Intel fails (which would primarily be centered around defaulting on the 50 billion of debt that they built up and can barely service), the US gov could offer strong tax incentives to players who want to form up a new national fab company. Give it favored status essentially (again, if the US is already crossing fairly extreme lines of having US state owned corporations, this doesn't seem so extreme in comparison).
You already have Private Equity interests that are starting to consume Intel. Ex: some of the new fabs are funded by Brookstone, and they have sold off a portion of the profit from the venture, and then collateralized the transaction with the hard assets and put Private Equity at the top of the bankruptcy cap stack.
I think that if the US gave some incentives, the pieces would fall into place extremely quickly. PE would do the actual capital funding in a heartbeat if they had sweetheart tax incentives, and Japan/SK/TSMC would also get involved. Presumably - given the style of the current admin - the "deal" would be "you get favored status by taking part in this project. We will give strong tax benefits to also drive profit. If you turn it down, expect to see tariffs and calls go unanswered while your competition has a direct line."
How about paying more then?
Show me the incentive and I'll show you the outcome.
When I interviewed at intel the position they were offering was to be the "owner" of a tool and I'd be on call.... Yeah no thanks, I get a PhD just to be owned by some company?
Not all SW jobs are web related.
It's not just the pay, a fab operates 24x7x365 and how management turns that into work practices and life for employees.
I once interviewed at a fab that offered 'better work life balance'...and what they meant was you weren't allowed to access any email or information off site so they couldn't bug you as much. In reality, it just meant you had to actually go in to the plant if anythign went wrong.
The issue seems to be one of negotiation power as the determinate of wages taken to an extreme - leading to companies taking a monopoly position, paying poorly, then falling to foreign competition due to lack of talent.
Defense venture capital funding is literally in the billions and has resilient even in a broader VC pullback: https://www.spglobal.com/market-intelligence/en/news-insight...
It would be interesting to see the graph before 2019. For a decade, all of the investment money, talent following behind it, piled into Uber, etc.
> has resilient even in a broader VC pullback
Yes, people are starting to catch on now. Even so, investment is at best a leading indicator. In terms of existing on-the-ground domestic infrastructure, we're sorely lagging in real-world capabilities, but the better part of the last fifteen years was spent creating a vast Grubhub-type delivery infrastructure across the US while the amount of resources dedicated to peer or near-peer conflict logistics and long term agricultural production were relatively ignored.
I started in hardware and pivoted to software for the same reason: It's easier to find higher paying jobs.
It's been strange to see the gap persist at companies that cling to salary data for compensation decisions. Incredible to see companies complain about not being able to find good hardware talent but then also refuse to pay hardware hires at the same level as software hires.
I’ve never understood why that’s the case; they are also high leverage jobs where a few can do extraordinary work and be rewarded thus. Look at Nvidia. Their employees are well compensated and they stay and the company does fantastically.
Who pays more than Intel?
In this context, semiconductor jobs is referring to people actually involved with developing the fab - so Nvidia/Apple/AMD don't count.
I loved, still love, the actual technology of semiconductor fabrication, but you’d have to pay me 8x what I was making for me to go back to the business of semiconductor fabrication.
The cog-in-a-machine corporate culture is not fun. Tech culture is much healthier.
There's no upside to big electronics companies here.
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.
That’s the entire point. Intel is behind because their vertical market strategy of using their own fabs only for their own chips doesn’t give them enough volume compared to TSMC who has volume because they are a foundry.
> ARM chips (and that's pretty much by design based on ARM's business model) are close to being a commodity.
ARM doesn’t manufacture chips. The entire argument is that it’s a strategic interest for Intel to manufacture chips in the US. ARM is irrelevant to this conversation.
> 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.
Apple, Nvidia and to a lesser extent all of the companies that are designing chips and using TSMC as a foundry are more relevant than x86 chips.
Between phones, tablets, watches, and Macs, Apple, etc alone sells more devices with Arm chips than PCs and servers sold by Intel.
They have enough scale to fund leading edge processing.
Qualcomm is a bigger seller of processors than anyone since every mobile cellular chip that I’m aware of except for the very few designed by Apple for the low end 16e is sold by Qualcomm.
> 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.
That’s exactly the issue. Intel the chip designer would be better off if they used TSMC and Intel the fabricator would have a lot more funding if other chip designers trusted them enough to use them as a foundry.
Every company that both tries to be vertically integrated and a “platform” fails at one or the other.
Google - The Google Pixel is an also ran hobby project. But they are relatively successful with their products across iOS and Android
Apple - a great vertically integrated product. But no one uses Apple Music on Android unless they are an iPhone family with the one off Android user. iTunes has sucked from day one on Windows and Safari for Windows was rapidly abandoned.
Microsoft - the Surface laptops have gained some traction. But sales are miniscule in the grand scheme of things.
But you notice in the case of Google and Microsoft, they aren’t crazy enough to manufacture their hardware.
> Qualcomm is a bigger seller of processors
Yes, even for their highest end mobile chip (Snapdragon 8 Elite) the estimated OEM price seems to be under <$200.
A midrange AMD EPYC 9004 chip is $4000-6000. Presumably the gross margin is also higher. So hardly a fair comparison. Of course Intel seems to be propping up it's server marketshare by dropping its margins, so I wouldn't be surprised if they are lower than Qualcomm's.
> But you notice in the case of Google
They design their own mobile SoCs though which seems like a fairly serious effort for a hobby project (although being an off the shelf design like almost all ARM chips besides Apple's maybe not)
Not sure on volume, but Samsung and Mediatek are major players too. I dont think Google has used anything from Qualcomm since Pixel 5 (2020).
IIRC intel makes 2-3x in client sales what it does in datacenter.
Like I did (at the time) high-end gaming on it, back when gaming used to sometimes tax your CPU and not only your GPU, and in that entire time I didn't ever feel like I would have benefitted at all from an upgrade, it was so far ahead of the curve. And that was AMD's budget chip line! They simply didn't deliberately cripple it nearly as much as Intel did their Celerons.
(Though I blame developers being lazy with optimisation as well as games also being released on console for this.)
Intel was very competitive in laptops until Apple started coming out with the M-chips. Now, AMD is doing pretty good. Has Microsoft released their Snapdragon surfaces? Haven’t heard much on that front.
In case the first backup fails.
What are the chances that both a primary system and its backup would fail at the same time?
And for what?
It really didn’t work out, despite sometimes giving the appearance of a plausible alternative to the capitalist world.
You can go for full efficiency if you want, but then like the US auto manufacturers learned during Covid, you don’t have any way to handle disruptions to your business
If what you said were true, it would be cheaper for there to be only one flavor of soda (as Bernie Sanders might have put it) rather than dozens.
Competition is better for consumers than monopoly, and that applies even when the consumers are nations.
Thus to sustain those industries (semiconductor fabrication in this case) industrial policy (subsidies, tariffs, government investment, “Buy American” rules, … ) is essential.
But the justification I replied to was that the nation must inherently suffer material inefficiencies for a nation to do this, due to how economies work, which is not the case (or at least, no real justification was offered other than the heuristic that larger firms are somehow inherently more efficient, which if anything is opposite to my experience in a very large org).
A nation might well implement an industrial policy so as to pessimize its local industries that survive, but that is not required to happen either.
22nm is already overkill for a lot of applications. But, like, if your country gets embargoed, you should be able to make computer chips for cars and farming equipment. Top end GPUs? Not necessary. Some basic RISC-V cpu for compute appliances? That should be a capability that everybody has.
This part of why I have been advocating for years that the open source/free software folks should be focusing on optimization and stability/security as long term it will probably be much more useful that adding features that can be dumped on top.
This is how places like the US despite having 4% of the population have about a quarter of the material and energy consumption. Not to single them out, I am in Australia, it is a similar ratio.
I am not defending this situation, just highlighting its role.
"No wars have been more ruthless and ravaging than “just” wars, fought in “defense” of religion, honor, or principle. If war must be, give me rather a war to capture an enemy’s wealth and territory, based on honest greed, in which I shall be careful not to destroy what I want to possess. " - Alan Watts
Like, it might but if resources are equally distributed then raiding your neighbors for more is one of the best ways to get more of them.
Does no one study history? War wasn't invented in the 20th century.
Chimps in the damn jungle go to war with each other.
The problem with bleeding-edge fab is it's a (fast) moving target. It's not a solved problem. And customers can't simply migrate their designs to a different fab, as the designs are increasingly specific to a process.
I do think we need more fabs but not this kind. Very low cost fabs with standardized PDK and open(ish) tools, should be as simple as ordering a PCB. Not going to happen anytime soon though, needs old fabs to stop production and the bleeding-edge to hit a hard wall. Can't compete with fully depreciated legacy fabs/nodes.
If I am a capable person working on delivering node improvements dealing with smaller and smaller challenges as the physics issues become quantum - I will eventually start to ask myself: why am I working on the hardest physics problems in the private sector for 150k/yr, when I can transition to Facebook or Jane Street, work equally (if not less) as hard and make 500k/yr?
The US has plenty of smart people. I'd argue more that the wealth inequality gap makes it _incredibly_ difficult to justify working for less, even in a field you love, when you can make top 1-4% of income doing something else.
What you’re describing is in the R&D area and also not physically dependent on being colocated in a fab. So we should have an easier time finding that talent, although we’re probably underpaying them now, as you point out.
These are all downstream of R&D. If your fab cannot shrink it's node size, then you won't get the most profitable orders.
Personally I think the other half of the problem, Big Tech paying so much might be solving itself right now, excepting really only the very very top.
When Silicon Valley was cheap enough to live in that people could casually start a company in their garage... Then people didn't have to relentlessly optimize for short term comp.
Today you have to work at FANG to afford a garage in the Bay area.
If the government has to provide the funds, so be it, make those jobs valuable enough and the skills will be there.
Also skills from one industry do not transfer that easily to the other
There are loads of ways you can effectively steer an economy to stimulate growth while also meeting geopolitical needs through effective and liberal application of the national purse. DOGE seems to have different ideas about the value of such programs.
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...
That's more the stock market than the US government though. You could argue the US government tries to play a long game, and often the way the US plays that game is to let the free market decide (hands off, small government). It's definitely a valid strategy and has worked extremely well in a number of other industries, but for this specific niche, less so, and even then you could argue it's down to Intel's mismanagement than anything the government could or should have done.
I can't make the argument that the government is "hands off, small government" because I simply don't see the evidence of that. To the contrary, I have seen things like TARP, stimulus checks, oh, and the government buying 10% of Intel.
This looks like an incredibly corrupt action.
Just as an example, the calculus for "where should I build a factory" comes down to "which politicians give the biggest tax incentives" and not any market dynamics.
I don’t think propping up Intel is going to work though, they’re a sinking ship and their management seems too risk averse and incompetent. It might be better for the US, long term, to let them collapse and sell off strategic parts to different domestic players (NVIDIA, AMD, micron, TI, etc) and use tariffs or other trade policy to force some amount of leading edge semi fabrication to use domestic manufacturing.
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.
If I was explaining it I would say "a huge equity stake gives you a lot of votes and influence over the company's strategic direction", including what the returns to shareholders should look like.
Think of railways in countries where the government has say, a 50% stake.
It's not the same as taking part in decisionmaking? Intel could just say 'no' to grants. They don't have to accept the terms.
I'm not arguing they are exactly the same... I just think the author shouldn't state the hypothesis at the end of the article without examining it.
Frankly I think it's a good summary of why Intel may be too big to fail. It's just framed wrong.
While other hardware companies got lean operationally and employee wise Intel did not. The ex-Intel employees all paint somewhat the same picture of bureaucracy, layers of (poorly managed) dependencies and reliance on paradigms that worked during late 90s / early 2000s.
If you followed sources like semiaccurate the situation at Intel is not surprising either, they've been reporting on issues there since their inception.
What's annoying about this is that it's the same people who drove the outsourcing and decline of American industry who are using the same framework they've been using to drive that stunning dereliction to argue that this is the wrong approach.
Over a decade ago Intel wasn't driving itself into the dirt. Their failure was just beginning approximately 1 decade ago, starting with their failure at EUV leaving them trapped on 14nm.
> Intel is already the best microprocessor manufacturing company in the world
Intel was not driving themselves into the dirt if they are the best in their field. Instead, I'd suggest looking at when the process nodes were achieved:
| | Someone Else | Intel | Lead |
|------+----------------+-------+------|
| 32nm | 2011 (Samsung) | 2009 | 2 |
| 22nm | 2013 (IBM) | 2011 | 2 |
| 14nm | 2015 (Samsung) | 2014 | 1 |
| 10nm | 2017 (Samsung) | 2018 | -1 |
| 7nm | 2018 (TSMC) | 2021 | -3 |
Most new drugs come from biotechs nowadays (not all of them, not GLP-1’s). But many do. If that innovation is happening in China and not the US today then it will create an issue in several years. We will not control our supply chain for a critical set of goods.
There is strategic importance in maintaining home-grown capability.
(it's also the same reason France keeps propping up many other industries, and sells weapons/jet fighters to other countries...)
There were a few of us warning about this well before it all happened in 2013 and 2014. Predicted the death of Intel, and surge of AMD and TSMC before majority of people even heard of TSMC.
I also feel a little sad about TSMC, now that they have invested a lot in US but US is actively and strategically trying to pop up Intel to compete. But TSMC is at least 2 cycle ahead, meaning 5 - 6 years time. Unless TSMC make any mistakes even in the best case scenario I dont see Intel catching up within that time frame. Especially now they have little to no cash cow. Server, GPU, Consumer CPU are all under threats.
This realization means that no matter what, Americans need to make certain basic necessities, and chips are one of them. I have friends at Intel that have been there for 20 years and they basically say it's dead man walking. They have chip equipment that they paid billions for that is sitting idle because they don't have the demand, but they can't turn them off otherwise it will be destroyed. However, these machines cost hundreds of millions to keep on. Plus they are already out of date compared to TSMC. The entire thing is a disaster, but Americans need an American source of chips so they have no choice but to double and triple down on a bad investment and hope that something happens that will let them become competitive again.
America abandoned free enterprise in favor of managed monopolies. It happened via a wave of financialization, globalization, government bailouts, mergers and consolidation that all granted immediate financial benefits to shareholders, at the cost of long term competitiveness.
That's it that's the whole story in a nutshell, look at Boeing, Intel and others, you'll see it again and again.
This is not the right way and US economics are looking more like Mussolini's every day.
Force these incumbents to compete. With fragments of each other, or with new American companies. Perhaps shelter them from some foreign competition if you really must.
That would once again unlock the unparalleled power of the 350 million enterprising souls spread between the two coasts. Which is what got America to #1 in the first place.
Give those souls something to do again that isn't meth or opiates.
Managed monopolies are not the way.
Government makes policy.
Government decides when and where to apply tariffs.
If government applies a tariff on imports from any country that has cheap labor, businesses will stop offshoring to that country because it will no longer be cheaper.
Or at least, that's what businesses do in a free market economy. In the free market where many firms compete for your dollar, they can and will compete on price when they have to.
But in a "managed monopolies" economy like 2025 America, they may just raise prices instead because they have at most 2-3 competitors, and all it takes is a few games of golf, a wink and a nod to keep prices high.
We used to call that a cartel, prosecute the shit out of those companies, and defend the free market.
America's government stopped doing that. Now our enforcement is Luigi. When and where will the next Luigi strike? How many Luigis do you want to see? I would rather have government resume serving the People, it will work better, like it did with Standard Oil and AT&T.
Patriotism is not required. Policy that puts the people first plus competent law enforcement against corporate crime is all that we need.
The two are kind of antithetical.
I think your comment is low quality. Like I made an effort here to write at length about how government and economics work in the hopes that someone would learn from it, and you strawmanned one idea and called it "wild." This is not the Hacker News way and it is not commenting in good faith.
Free markets only exist in unnaturally heavily regulated circumstances. If you let the markets to be on their own devices then you get monopoly. Regulation is ironically what makes free markets possible.
It's basically exactly the same as democracy vs feudalism.
That’s Intel management’s FUD building a moat against such startups with the government’s help.
Several billions of dollars is not a scary level of funding these days for such startups to happen. Plus CHIPS pile of hundreds of billions. Plus Nvidia, Google, Amazon, Apple and others can always form a consortium to build a foundry. A lot of options, yet all of them are being killed by the Intel management skillfully working the bronze ear. That is how a tech race is lost - by letting government instead of the market to pick winner.
The dependence on oil from the Middle East is comparatively a bigger problem for the West (though not for the US with its shale oil reserves).
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)
... this ain't that, though. It's a one-off, not a reliable broadly-applicable policy, and it's not clear what kind of strategy it represents in the bigger picture. I also doubt the ownership structure is as hands-off as I'd prefer, though I admit I've not looked into the details (if there even are details yet—we've had a lot of reporting on things as if they've happened, that then sometimes go on to never actually happen, lately)
[EDIT] I further think it would be better than the status quo to acknowledge that we have an economy dominated by Zaibatsu now, and to use the government to leverage them for public benefit the way the "Asian Tigers" do/have, though I don't think this is that happening, either. I think we're currently picking the worst of three options, of "intentionally use them to their fullest; break them up; do nothing" (we've been on the "do nothing" track so far, having abandoned "break them up" in the '70s).
Because people making these decisions aren't chronically online....
What makes you say that?
At minimum he's made a never Trump - maga pivot for political expediency but it also seems like his positions are tied to whatever Peter thiel wants
Even setting aside most of the culture-war stuff, which is so white-hot right now that it clouds matters, I think almost any other politician other than Trump, AOC, MTG, and probably a couple more I'm forgetting, would be more likely to do that last thing.
Trump's main issue is that he gets all excited and makes rash decisions based on the last person he talked to, compounded by the fact that he chooses who to talk to overwhelmingly based on chump change "campaign contributions" (bribes), family nepotism, or just his existing network of sycophants.
I'm saying all this neutrally toward ideology and left/right. Frankly I think life was fine domestically under both G. W. Bush and Obama, because both of them weren't impulsive and easily swayed to erratic decisions.
Second, there is an AI race going on. US intelligence is taking it very seriously and views supremacy of our AI as very important. Recently, the US was pushing NVDA to start using Intel's foundry. I assume it's for national security reasons.
Finally, a couple of details from the Intel deal that were not widely discussed is that the US is taking a passive seat[1]
The government’s investment in Intel will be a passive ownership, with no Board representation or other governance or information rights. The government also agrees to vote with the Company’s Board of Directors on matters requiring shareholder approval, with limited exceptions.
There are also warrants being given whose status is based on Intel's foundry. That suggests the foundry was the interest all along.
[1]: https://www.intc.com/news-events/press-releases/detail/1748/...
The real reason is simple, if you've been following IFS: Intel's foundry has no large customers. The free market has spoken and almost every single customer prefers TSMC or Samsung silicon. America was boxed-out of serious world-class chip manufacturing ever since Intel swerved on EULV. If it was for natsec reasons then I doubt the fed would waste their time taking a passive seat when they could claim Intel as eminent domain.
It's not about national security whatsoever; this is part of a last-ditch effort to force Apple and Nvidia to buy American silicon.
I just don't think we're ever going to see eye-to-eye if this is your belief. In realpolitiks terms, Intel hasn't been a player on the AI board since Gaudi. And even that was a total flop.
If securing AI compute was the goal, buying Intel is about as large of a mistake as you can possibly make. Even Samsung has more skin in the game at this point. The only logical explanation, given Intel's history, is that they're desperate for customers and need help from the fed. If this is our plan to win the "AI cold war" then we've already lost.
So my point is that I think US Defense is motivated by national security interests but that doesn't mean this plan is going to work well or that we haven't already lost the AI war. It's probably too little too late. I am just pointing out over and over that I don't think grandstanding is the motive. I am sure that will happen but I think at some point it hit US Defense that relying on Taiwan put's us in a precarious situation.
What TSMC traditionally does is keep trailing edge fabs online that are fully depreciated and use those to produce chips that don’t need to be leading edge. It wouldn’t make sense to create a new fab for trailing edge chips.
Car manufacturers aren’t going to all of the sudden start using 2mm expensive chips for their cars.
Even for TVs, the BOM for the “smarts” need to be under $10.
Their lack of planning doesn't constitute an emergency on the public's part
It might have helped if they actually distributed the authorized funds. CHIPS act was passed just over 3 years ago now, and Intel never received their grant money (which has now turned into the cash for equity deal of dubious legality).
Building fabs takes lots of money and time. Intel also doesn't have customers except themselves and have fallen far behind in the fab business and has a decade+ or mistakes to make up for.
What we have here is picking a winner and potentially insider trading/market manipulation with Trump shitting on Intel leading up the "deal".
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.
And, to the point of the article, SMIC is already doing 5nm manufacturing.
Political systems are more complex than dictator/freedom, there are lots of stakeholders. The USA stakeholders tend to be short-term focused financial engineers, this is separate from whether we have checks and balances or what color tie the President wears.
The comments you made about political systems indicate you don't really grasp my point.
- Governments are formed of people. People make mistakes.
- Power tends to corrupt, and the likelihood of corruption scales with the quantity of power and the quantity of people passing through the role (that is, one person may truly have best interests at heart, but will their successor? Or their successor?)
The result of the above is that when assessing long term stability of systems, problems that can happen inevitably will. If a system allows massive sweeping changes, then they will happen, and eventually an incorrect one will be made.
For example, let's take the scenario above, where Chinese companies were ordered to begin using Chinese GPUs. Did that work out? Yes. Could it have gone poorly? Yes.
Will every similar decision go as well? No. Thus, a situation where the "you must use Chinese GPUs" dictation is possible, is less stable than one where it is not.
You brought up a comparison to the US, because the US and China always get compared I guess? The US does this sort of thing more weakly, so gains less instability from this particular source of instability. Whether it's currently more unstable in other ways is left as an exercise for the reader.
You're commenting from the post-reagan consensus, which inevitably leads to Intel's current situation. But it doesn't have to be like that, America had a different consensus from 1930-1970.
(BTW, deepseek was trained on nvidia.)
Xi doesn't personally set every industrial policy in China, its a ton of people all over the country. Culture.
What I'm saying reduces down to, "the scale of effect that humans are able to have on a system, will eventually lead to problems of that scale on a system".
If you can dictate that all industries within a country must do some thing, that will eventually cause problems with all industries within the country.
Culture doesn't really have anything to do with it. Whether the person making that dictation is Xi or Trump or some random bureaucrat doesn't really have anything to do with it.
There are thousands of bureaucratic orgs and corporations making their own calls, deepseek and qwen were both trained on nvidia hardware, while several chip startups and SMIC ramp up.
The nature of those calls is influenced by culture. If you have a culture of MBAs, you get Intel's actions over the last 15 years.
The US can do that too, it's not the ownership structure that is stopping them.
In fact, the US used to do a lot of that before the 70s.
I think many people really underestimate this part. If you watch Back to the Future, they sort of deride Japanese goods as cheap knock offs. Later Japanese became an innovation powerhouse. Same thing happened with China. Previously derided for low quality knock-offs is now known for innovation.
No one seems to have the state-run enterprise explanation for Japan but everyone does with China. Because of Chinese Law. While state help is necessary for companies to succeed that alone is not enough.
In the long term small improvements can enable innovation. But if you get stuck on coasting on laurels for a long time it leads to decline in innovation and especially motivation. And when I mean not only in releasing new products but also in manufacturing and other related areas.
If something happened to Xi and the party elected a hard nosed communist, China would unravel itself.
I don’t foresee the Party choosing someone more hardline than Xi, though. China has always been authoritarian, but collective ownership was new and an unmitigated disaster. They are too smart to go back that direction, although if they did, I could see that happening.
When I picked up my DJI drone many years ago the amount of polish was top notch - hardware worked flawlessly, software was fast and without any glitch. I was looking for any signs like 'designed in Germany' or similar but nope, all Chinese.
People think about 3rd world countries and somehow end up thinking about the very definition of permanent incompetence - russia and its satellites. Like they still put chips from stolen wash machines into their ballistic missiles. When China is in comparison more like a humiliated, smart, deeply focused, hard working, ignoring some pesky human rights group of people who grokked well they don't need to bow to any foreign powers anymore if they focus and work hard on specific goals.
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.
Even recently, we've seen that all intel can do is increase cores and increase power consumption, and they still can't compete. This is itanium all over again, because that is how intel functions.
Intel's current chips are "fine" and competitive with AMD chips. If anything, Intel is trying out more things than AMD is.
Intel may be trying out more things than AMD, but perhaps they shouldn't? Maybe they shouldn't be trying to chase ARM envy with mixed-performance cores and disabling MT and the like and just stick to making reliable CPUs.
Honestly, the only thing of Intel's that I'm interested in are their video cards; and that's not because they're good, but because Intel hasn't (yet) all but abandoned their video card business for "AI accelerators"... so there's room for them to become good.
Also worth to remember cases of Rolls-Royce, Ericsson, and some other unfortunate Western companies, important for many humans, but once became unable to stay economically viable. (BTW it make me laugh, when I got info, Bentley now under WAG, when RR under BMW, as technically, they many decades was one entity)
WAG case is different from Intel case (and other I mention), but there are also many similarities, because of which I think, Intel case may be special for US, but is not too special for West.
And I think, such cases are bad, they are great shame, but also they are signs, we must do something, to make Western produced semiconductors more competitive.
and letting Federal Government in on this is sure to make this happen - just like everything else being ran by the Federal Government
Well, I don't like when something ran by Federal Government, but I have similar example: when somebody ill by flu, I don't like to use antibiotics, but sometimes must use antibiotics as fast measures to save life.
That is. Previous pro-semiconductor measures was not fast enough, and Intel was in real trouble and need to use something fast, and now we have bought time to do right but slow things.
If Intel goes under, Taiwan becomes the battleground for WW3.
But core industries are just head of iceberg, you may not hear, typically 90% of iceberg are deep under water surface, very much like core vs non-core.
Any way, if large entity from core industry goes under, this could lead to killing domino effect for many "underwater" entities.
That is really big problem, which president Trump tried to avoid, when bought share of Intel.
And no, I disagree about battleground for now. What really important, really good strategists know, wars win by economy, not by military, as military could not withstand if they have not enough money for weapons and equipment.
So, basically, now US is stronger than China, so Chinese tops decide to not begin war which will not be profitable, while US is strong.
When and if China will feel competitive to US economically, they will be much more confident to begin war, so now the best what could do US tops to avoid war - to make China weaker and US stronger ECONOMICALLY.
Unfortunately, now China already could make space scale rockets, so competition moved to other space - to computers and semiconductors (and possible branch to nano-industry or bio-nano, or something similar).
The government intervention of RR was nothing to do with the cars.
The original Rolls-Royce company, which included the car division, was nationalized by the British government in 1971 due to financial issues with its aerospace business.
The car division was separated in 1973.
The parent company, Rolls-Royce plc (nothing to do with cars), was sold to the public in a share offering in 1987, meaning it was no longer government-owned.
In 1998, BMW purchased Rolls-Royce Motor Cars.
Well, it is because you do not understand economy of business. Unfortunately, main goal of any business is to be viable, not mean profitable, just be good enough to pay expenses need to run things defined as goals.
By definition, ALL old automotive companies started as hybrids - car division to make profits and motors division to make use of outstanding knowledge gathered when making consumer cars (as highest technology of that time). There are nearly no exceptions - Daimler began as Daimler plus Maybach; BMW began as motorized vehicles garages production plus motors business; Renault began as aviation motors business, made automobiles to make additional cash.
When Rolls-Royce divided to aerospace motors and cars, it was already semi-dead business, because their aerospace behavior was non-viable without donations from car division.
To be exact, I don't mean, aerospace impossible to be viable, just RR was.
And returning to our ontopic, Intel was caught in same hole - they lost their superiority and cannot survive without external help, absolutely as RR business.
So, when first Bentley separated from RR, Bentley become rival of RR, and now Bentley and RR divide same market. And this is very bad for their economy, very much like Volkswagen Golf GTI eat market from SEAT performance models, but VW already killed SEAT to avoid unnecessary internal rivalry, and RR-Bentley cannot do this, because they are now different business entities and their coordinated moves prohibited by regulations.
My personal bias is that in the long term, keeping the different divisions as one whole makes both sides less fragile in the long run.
The other problem I think you’re getting at that being on the cutting edge of a market that is extremely capital intensive is a tough sell to the banks & financiers. I feel like every industry outside of finance is increasingly squeezed out like humanity can survive on securities arbitrage alone.
As I know, in ~1990th HBR written article about constantly under-loaded semiconductor fabs and concluded, it is unprofitable to tightly couple them to R&D.
Counter-argument was, that Intel used ties to fabs, to achieve extreme level of scalability, to fill market demand fastest, so marketing won.
What really happen, appeared few new specialized classes of semiconductors - signal, accelerators, high-power (high-current), and low-power (energy effective), and independent fabs made universal pipeline, to fill all market demand, but Intel stuck on desktop CPUs and failed all other classes (as example, Intel was unsuccessful in try to got niche on smartphones SoCs - still have not made cellular modem and nearly failed on GPUs).
To be more exact, Nvidia in reality is most software company from hardware companies, and AMD with their GPU division constantly competes to Nvidia literally head-to-head.
And what was gamechanger - when AMD struck to limits of reliable transistors on one die, they decided to switch to chiplets - they made 2.5D multiple-die design with silicon interimposer, while Intel used their manufacturing superiority to make huge dies with all included.
- Once appeared, with chiplets, AMD could achieve much better performance on weaker but much cheaper technology and won.
So my point - Intel suffered from too tightly couples with fabs, so once they have to adapt their designs and marketing to semiconductors, when AMD successfully avoided this trap. BTW, for this exist much better example - similar problem once killed Atari and Commodore.
Semiconductor fabs usually not make ultraclean materials themselves, but bought from many smaller specialized entities. As example exist few companies, producing ultraclean silicone as crystal cylinders. When fab bought such crystal they could slice from it few wafers and made test runs with their product line designs. For example, they could try i7-7700, i7-7700hq and i7-7700k. If they seen good output with 7700k, it is best possible, as these chips have very similar die size, but 7700k is most expensive; if they seen moderate output with 7700k, but good output with 7700, it's also ok, for them also good demand; but if only 7700hq have good output, things are not good, because notebook chip is not so easy to sell, so have to do some marketing (usually these seen as some exceptionally high prices for some chips, because of low silicone output).
Unfortunately, semiconductors have limits on how large could be one die. Companies like Cerebras use some tricks, usually they just disable parts of die with jumpers, as I know, same tricks used Nvidia before 30th series, but approx same time appeared whole industry movement for chiplets standards, and looks like Nvidia used 2.5D technology to avoid trap with too large die.
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.
The scenario where Taiwan peacefully reunifies is where they decide they want to be part of China of their own interest.
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.
The reason China doesn't want to is because they want a peaceful reunification. They want to wait when it's so obvious that Taiwan would lose and lose quickly that Taiwan simply gives itself up.
I agree they prefer a peaceful resolution but that would be in the form of Taiwan wanting to become part of China and deciding to reunify. It makes no sense to surrender without being forced to.
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.
China is patient. They seem to be taking a long term, intentional approach. Their goals are long term. In other words, they’ve been planting trees for decades and those trees are now beginning to provide shade. Americans, in the other hand are more concerned with their own self interest and the next financial quarter.
Without going into the lack of military capabilities to mount the largest amphibious invasion post-WW2 up until recently (debatable), I think you’d be hard pressed to find a group of people in the world that would be excited at the idea of being put under foreign occupation (not dissimilar to the “excitement” the Taiwanese had to be occupied by the Republic of China after WW2).
Regardless, TSMC wouldn’t survive annexation Taiwan being annexed by China in any capacity
Without the right people at the company, you can dump almost infinite money at a problem and still not solve it.
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...
That's a hard thing to sell in any environment.
If that data is correct, how did the US "extort" ownership?
Look, I'm as terrified of Trump's overreach as the next guy. I could easily see him extorting partial ownership of companies. But I don't see this as being that.
Can you make a convincing argument otherwise?
I don't think it's fair to characterize this as some kind of standard stock sale, as the terms were never set out as such from the start. (And to be fair, there are lots of valid criticisms of CHIPS)
Instead, funding was voted for by Congress... and then a third party came in, threatened to kill it on a dubious legal basis, and extracted protection money (well, shares). That's textbook extortion.
If Intel is going to cease semiconductor development, then why should they get the rest of the taxpayer money? Even under Biden and Pat Gelsinger, the government was signaling to Intel that they may not get the full money if they don't make progress.
https://www.intc.com/news-events/press-releases/detail/1748/...
Normally when we pay businesses to do things we don't demand equity stakes in the businesses afterwards.
Notably, the biggest shareholders in Intel appear to be retirement funds of Americans - so Trump has just pilfered some money from the retirement accounts of Americans.
https://www.intc.com/news-events/press-releases/detail/1748/...
Also, socialism means whatever the ruling class says it means. For example in China they've redefined socialism to just mean nationalism, which is the opposite of the original intent. Read about "Xi Jingping Thought" and "Socialism with Chinese Characteristics". It seems when ideas like socialism become popular, they are co-opted and stripped of meaning.
But during the CHIPS act debate, he was against the Act unless the US gets a piece of the company.
In general, this is in line with his views.
In some investors view they were not.
> "The deal certainly has the appearance of the government clawing back the remaining portion of the previous grant, as the government is getting equity not previously contemplated for dollars already committed," Morgan Stanley analysts "The trade-off, in our view, is that the company will have the flexibility to optimize its own business model without commitment to public service objectives, which may or may not include foundry services at 14A as articulated on the last earnings call
https://www.investopedia.com/intel-stock-keeps-getting-a-boo...
Not sure how many times people will keep repeating this mistake assuming they won’t be hit up for protection money again later…
I do find his argument for Intel being "too big to fail" compelling, for whatever it's worth. But it was kind of surprising to only see 1 sentence at the end claiming the equity stake is necessary. I thought we were actually going to get an analysis on the deal and the dynamic it would create.
Most systems don't need start of the art processors. Get some minimal fabs set up for RISC V chips. If we removed the profit motive, how much does this cost ?
Alternatively... Even a refurbished GameCube can probably run a basic rest API server.
If anything we have enough EWaste that we can probably just recycle what we have. At least for most applications.
Unfortunately that seems far away.
Not like everyone can personally design a chip anyway, but if a small city has at least one fab it can be something in an emergency situation.
Recycling is probably a better solution here thought.
There are smaller fabs already
Other possibilities:
- Standard Circuit
- Standard Semiconductor
- Standard Microchip
Arguing against things being "left to the market" in the abstract is not sufficient to address the particular incentives that are producing undesirable outcomes, and does not offer any viable mechanism for shifting those incentives.
Specific proposals that attempt to operationalize what you're arguing here always seem to gravitate toward giving monopolistic power to a specific institution that invariably demonstrates that its own incentive structures are riskier than those in the broader market, and its failure modalities far more destructive.
Is the risk of a hospital closing for purely financial reasons more or less acceptable than the risk of a state-run hospital being inefficient but guaranteed to exist? For critical infrastructure, I think that's a conversation worth having, and it's one that hand-waving about an all-encompassing 'market' obscures; dismissing a legitimate critique by framing the market as an all-encompassing force is just a rhetorical move.
Your comment seems to suggest that any attempt to change the market results in unfavorable results, but this doesn't hold up to scrutiny. I think you replied with a valid philosophical point, but you leaned too much on using it to challenge that anything could be done (when you yourself presented the idea that a mechanism was needed).
There is no such unmanipulated free market anywhere:
Perfect Competition: In reality, we have monopolies, oligopolies, and immense barriers to entry.
Perfect Rationality: Behavioral economics has thoroughly demonstrated that people do not act like perfectly rational, self-interested computers.
Perfect Information: There is almost always a significant knowledge gap between a seller and a buyer.
Since no truly free market exists, every economy is already a managed one. The real debate isn't whether we should intervene, but how we intervene and whose interests those interventions serve. I read selimnairb's point as that, for essential services, the rules should serve the public interest of stability and access, not just the private interest of profit.
We can examine the risks case-by-case. Here, the government is investing in a foundry. We could view the leverage this gains the US government as increasing the risk for political engineering above the previous risk of financial engineering. In financial engineering, Intel might prioritize its obligation to shareholders. In political engineering (if Intel were nationalized), Intel might keep an inefficient fab open to save jobs or just to win votes.
In the category of financial engineering as a risk, you might lump activity like stock buybacks put above R&D as exemplar of Intel. In fact, a criticism of CHIPS and this new government intervention often centers around the idea that Intel's leadership should not be rewarded.
Finally, a related case on the topic of Intel and national security: China's state-directed economy prioritizes national goals over private profit. After entering "the market," part of its core strategy has been to compel service to national interests rather than shareholders, and it seems that strategy has arguably driven its recent economic rise.
Now I’m European so this seems obvious to me, coming from a culture of high government intervention but I might be very wrong!
We have already seen some pretty blatant insider trading moves from current government, so I wouldn't rule that one out. But its probably way more petty - chips and manufactured war with China is all the rage in media, we all still remember covid situation, so its an easy area to get some political points, while spending other's money.
Most European government interventions, like French literally taking ownership of their common car manufacturers aren't considered any sort of success story to emulate after.
To be honest, every foundry is in easy reach of something that can take it out. If there's a conflict that results in missiles hitting Korean factories, someone will be drone-bombing the power interconnects or driving trucks into water purifiers or whatever and taking out foundries in Texas.
It doesn't take much to ruin semiconductor foundry throughput. Wafers spend weeks or even months progressing from stage to stage. If you can cause a power failure, for example, you can scrap the whole content of the line and there will be no output until the pipeline refills: https://www.forbes.com/sites/tomcoughlin/2019/07/05/nand-fab...
Perhaps process robustness is better now, but in the constant scrambling state of semiconductor manufacturing, I doubt it is better enough to be able to shrug off concerted, deliberate attacks rather than just accidents, fuckups and bad luck.
I don't say this to argue with the author or try to refute anything they are saying, but this bit toward the end is a very interesting position that I think displays the level of anti-regulation, anti-taxation, anti-government propaganda we are bombarded with by corporations.
People just kind of assume that the government can't function or work with private enterprise in any way when it does that all the time.
China is the elephant in the room of a counterexample. Who built the largest high speed rail network in the world and who owns them? Or how about the US military industrial complex? Or how about SpaceX? What about the time when the US government ordered factories to build Jeeps in WW2?
I don't really agree with...well...anything that the current administration is doing, but owning part of Intel isn't really horrendous. The horrendous part is that it came out of nowhere with apparently no congressional appropriation of funds/approval of such an endeavor.
> 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.
Just a hunch and I am really going out on a limb here but I could see China wait another year or two and then step in and force a peace settlement in Ukraine. This would really show the world who the new super power is, as the US and Western powers have struggled with this conflict, a patient China could step in and reach a peace deal as they hold significant leverage over Russia.
I also don't think Americans realize how quickly we will slide from relevance once our grip on the world slacks. We could have built this world into something amazing but instead we just got fat.
In the last election, Latinos voted 50-50 for Trump. That should have been a massive warning sign.
I like liberals, but they're way too passive. They really need to play the Prisoner's Dilemma in high school until they learn what to do when someone refuses to cooperate.
This is also the same trap that China is barrelling into right now and they will absolutely find themselves in the same position eventually.
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.)
Nationalizing companies - and that is essentially what we’re starting with Intel - worked out horribly for the Brits last century.
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?".
Huawei started with much worse product and foundation than intel, but the state sponsorship kept it going, plus they have ultra hard working people and occasionally some shameless thieves, which made them where they are.
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 place of the capital.
I think, long term, the US wants the same sort of environment over here.
Honestly this is pure horseshoe theory where Bernie Sanders and Trump hold the same views.
Holding significant stakes in domestic companies just seems like light state capitalism.
https://en.wikipedia.org/wiki/Public_Investment_Fund#List_of...
A 10% stake does what? Nothing. The U.S. doesn’t even get decision making capabilities.
OTOH, the CHIPS Act created an incredible amount of semiconductor manufacturing capacity from a wide variety of manufacturers including both TSMC and Intel.
So the real question is what does getting a 10% stake do, that the CHIPS act which Trump is trying to retroactively destroy, isn’t doing much better?
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.
Did US govt. actually had an ownership stake in GM? Please provide some links to this effect.
https://www.politico.com/story/2009/05/obama-reluctant-share...
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.
That was why they passed the chips act to direct this money to Intel. It has nothing to do with Trump forcing them to dilute shareholder value in order to get money that they had already been allotted by congress.
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.
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.
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.
The republican game is to call democrats <insert_any_label_here> and then do the same thing they allege democrats do.
There is no one in the Trump administrator that has the balls to tell Donald Trump he is and idiot and doesn't know what he is talking about. Intel will bend over backwards and fail because of this mentality. Donald Trump knows better than all the engineers at Intel according to his followers. Just like when stated he knows more about dish washers than anyone else in the world.
Intel will need to hide the actual course their are taking to actual product a viable solution. This scenario seems to mirror the development of the MP43/MP44. Government was against it because the administration was too dumb to understand it. Government will also like short versus long term gains because the short gains allow for quick propaganda usage.
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.
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.
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."
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.
But indeed I feel like at some level there's been a pendulum swing from, let's say "stories" to "data" - indeed he touches on sabermetrics/McNamara. I like how he torches this: data is important but it's not enough (the map is not the territory) -- I started wondering about this a lot for example with Windows. "Oh, we removed this feature because telemetry showed it wasn't used." Well, why? Because it wasn't useful? Because it wasn't discoverable? Because it wasn't intuitive?
And that assumes the numbers are even any good: I remember from one of Sinofsky's Windows engineering blog posts, in which he talked about some feature and the percent of sessions in which it was used. And I thought, well, hold up. I hibernate and rarely restart, whereas many less sophisticated users shut down their computer entirely. So does that mean they effectively are counting those non-power users a lot more than me because they have more sessions?
And then there are other second order effects. If you lose your power users, do they then stop recommending your product, and what then? I see your net promoter score and raise you Goodhart's law (once a measure becomes a target it ceases to become a useful measure)
"Doc Burford contends that the true danger facing teams today isn’t competition, disruption, or lack of capital—it’s leadership devoid of expertise, decision-making dominated by superficial metrics, and a culture that values appearances more than actual value creation. Sustainable success comes from building things people want, not engineering facades to appease investors or the market. Relying solely on executive titles or data without understanding the craft or customer rapidly leads to collapse."
Have to agree and think this encapsulates alot of what we have been living through in the US over last few decades.
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?
You might be tempted to think of academics as if they're operating independently, almost as if they're in an Ivory Tower where they bless us with missives occasionally as they make deep, apolitical discoveries. But that's just not the case.
There is an entire ecosystem of think tanks and funding to push the neoliberalism agenda. This is entirely self-interested. And it's not necessarily that funding is buying particular opinions. It's that anyone who contradicts this narrative simply gets self-selected out of the academic grants pipeline.
I stend to refer to this as the Tyranny of Austrian Economists [1].
There is an entire industry built to convince people that capitalism is good and collectivism of any kind is bad. It also misattributes the wealth of the developed world to capitalism when it's really about exploitation (eg slavery), colonialism and imperialism.
It's really no different to all the industry funded tobacco research that "proved" how safe smoking was.
Africa isn't poor. The people might generally be poor but Africa is not. It's simply been looted by the West. You don't commit resources to an imperial project that is poor.
If command economies are so unsuccessful why do they need to be isolated and starved (eg Cuba)? Won't they just fail on their own? The whole point is to punish any contradiction to capitalist dogma and to engineer their failure to prove that point.
[1]: https://en.wikipedia.org/wiki/Neoliberalism#Austrian_School
First, as you say, because of communication bottlenecks. 300 small bakeries (number made up) keep a better eye on how much bread is needed in Manhattan than a technocrat in DC, or even Albany. As you say, we now have the communication technology to overcome that.
But second, there is the command problem. You may be able to get the data there, but who's going to make the decisions? They were made by 300 (or however many) bakery owners; now they're going to be made by one or a few people. They may have the data, but do they know what to do with it? Do they know enough about bakeries and bread? Do they have the mental capacity to replace 300 people?
This gets worse as you get bigger scale. What if you're not just trying to do the bakeries of Manhattan? What if you're trying to do all the food supply in Manhattan? All of retail in Manhattan? All of retail in the whole country?
The other problem with a commander is that they can decide that they want something, whether or not the data supports it. And their subordinates may decide that they'll get better promotions (or at least keep their jobs) if they 1) do what the commander says and 2) tell the commander what he wants to hear.
Better ability to communicate the data does not fix the second problem at all.
Blaming real-world problems on nominalized abstractions is quite unhelpful, especially when those abstractions are all-encompassing ones like "capitalism" or "financialization" which mostly represent patterns of behavior that have always been present.
Identifying specific shifts in incentives or intentions that resulted in different motivations or intentions becoming dominant is difficult, but there's really little point in engaging these conversations without at least making an attempt to do so.
> 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.
"Corporatism" is collectivism, and much of the critique of these kinds of interventions stems from the correct recognition that political incentives (a) are deeply entwined with commercial ones, not a counterbalance to them, and (b) often have even worse failure modalities than prevailing economic incentives.
And where is the example of a successful govt run business?
Why dont we encourage businesses here w free trade zones?
>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.
> 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.
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.
It offers good service to everyone in the US - even people living in the middle of nowhere - with fairly good delivery speeds and strong reliability. I can't remember the last time I had a package or mailpiece get lost, and I think I've had a package get damaged exactly once in my entire life.
If you look at the list of largest companies by revenue [1], 4 of the top 6 are state-owned. (I'm not saying I support this move by Trump - and natural resources are probably different than technology, etc.. But just to answer the question).
[1] https://en.wikipedia.org/wiki/List_of_largest_companies_by_r...
> 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!!
Please don't use Hacker News for political or ideological battle. It tramples curiosity.