I’ll be honest: there is a very good chance this won’t work .... At the same time, 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.
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.
If I may add my view as a formerly high-achieving semiconductor worker that Intel would benefit greatly from having right now, a lot of us pivoted to software and machine learning to earn more money. My first 2 years as a software engineer earned me more RSUs than a decade in semiconductors. Semiconductors is not prestigious work in the U.S., despite the strategic importance. By contrast, it is highly respected and relatively well remunerated in the countries doing well in it.
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
We have developed an economy oriented around selling one another websites, and we are only belatedly noticing that none of our enemies seem to have followed.
It’s ridiculous. It’s so easy to find VC funding for software but heaven forbid you try and make agricultural innovations. Biotech is slightly better but still a struggle. Hardware only counts right now if it’s defense tech but even then people would rather have another SaaS.
I'd say that VC funding may be an inappropriate tool for that. VCs want you to either grow fast, or fail fast. Not necessarily to bring profit fast, but to visibly capture the market (see Uber). Move fast, break things, rework things every week, trigger that wave of sign-ups.
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.
Yeah seeing the innovations DJI is making in agriculture makes me wonder why VCs do not want to fund other startups like it. I know the margins are worse and it takes way more capital to fund hardware companies, but that has to be better than funding another chat-gpt wrapper. I guess that is why I am not a VC though lol.
How is boston dynamics doing? They do very cool stuff but it feels like they struggle commercializing their technology. I remember they were once bought by google I think? And then spat out...
The infrastructure to rapidly iterate and manufacture just isn’t here anymore, so everything costs significantly more to the point where we’re noncompetitive. Even VCs with no experience see the top line numbers for hardware startups and nope out.
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.
Yeah that makes a lot of sense. Way easier to iterate when you have access to a machine shop vs having to upload a CAD file and have a part shipped from another country.
only in software there's a clear, tried and tested multiple times path for 1000x ROI for an investor. thermodynamics themselves limit ROI for anything physical.
The countries producing semiconductors and manufacturing other goods are also producing SaaS services. It's not unique to the United States.
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.
Let’s not forget here that Chinese companies operate some of—if not the—most popular social networks in the world. WeChat and TikTok/Douyin are enormous.
(Also, in neither country is the majority of its GDP comprised of websites.)
Yes but the Chinese state is much more willing to direct capital to where it thinks it should go. The argument w.r.t. geopolitics is usually that the US is late to doing this and now lacks production capacity which is useful for competing.
Amen, software sucked all the talent out of the hardware room. When you write the pros and cons of software vs hardware, pretty much the only positive on the hardware side is a subjective "it's more fun".
The gap between hardware and software salaries has been strangely stubborn.
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.
Similar, My major in university was computer engineering (as opposed to pure CS or EE) because I wasn't sure if I wanted to go into a hardware or software profession. I ended up going with software since all the interesting opportunities were there, whereas most jobs in hardware seemed to be working for stodgy old companies barely making six figures if I was lucky.
Honestly, I don’t think US wages make sense any longer. We have extraordinarily profitable semi companies that don’t pay more than a third of what non profitable startups are paying software engineers.
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.
Greed. You’re describing greed. The folks at the top of the pile in the US seemingly all have hoarding disorder. Very little of what they do appears rational… unless you concede their actions are meant to harm the general wellbeing of the US. population, while themselves being nicely insulated from all that.
Amen brother! And the work-life conditions are also much better in software. I remember in grad school an executive from a big semiconductor company (I think it was ON semi) was complaining to the EE department that most students are now pursuing EE as a CS degree and very few went into hardware so they claimed the talent pool was small.
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?
same - left the industry after 2 years. Made more as a startup founder while working better hours.
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.
If Intel were well managed they would purge like 2/3rs of the managers and anyone in the bottom 50th percentile and then pay whatever it takes to get people skilled in their core industry back, training the remaining people as necessary to fill in gaps for the future.
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.
So current management, who had proven incapable of running a business, will be trusted to ignore past political games and just retain talent? That's certainly a take
> 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.
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.
This and everything else. We outsourced manufacturing of almost everything then are surprised when the people doing it for decades are better than we were.
We outsourced manufacturing because it's not very profitable. The Mag 7 make 50x as much money as TSMC. Apple and Microsoft are the most profitable businesses in history.
Chips are one of those things where being the best is simultaneously very important and not at all important. Making a 10% better chip gets you the entire market. But it makes practically no difference if your cellphone or laptop or server or whatever has a 10% worse chip.
Intel was very profitable until it was not. They spent over $800B on stock buybacks. That will buy you some fabs, some R&D. Its true they invested in R&D but not well. Maybe the answer was to fund an independent internal competitor to keep the org focused.
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?
I still think Intel missed the boat when they had the dominant process in focusing entirely on their own chips and not taking customers for third party fabbing. Samsung and especially TSMC have demonstrated conclusively that the real money is in producing chips for other companies. It might be lower margin, but the volume is undeniable and it keeps your company on its toes with node improvements.
Intel switched to a "service the stockholders before the customers" mode and they have never recovered.
TSMC does not compete with their customers. Intel would. I know that is not a new idea and there are some established mitigations. But it seems it would be better if it wasn't an issue at all.
No, we outsourced it for the same reason we outsource anything else: because someone else, somewhere else, is doing it for cheaper. It has nothing to do with the profitability of the manufacturing company and everything to do with the costs of the products and services to their customers
> systemically putting short term gains ahead of long term research
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.
It is clear that the government and wall street are generally of one mind on this. One recent specific way the government contributed to this is via the Tax Cuts and Jobs Act (TCJA) of 2017, which increased tax burden of R&D. They've also cut a lot of their own research funding (NIH, NSF).
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.
Now that we have lawmakers openly declaring they would pick capitalism over democracy if forced to choose, I have little hope that the government will be receptive to changing anything structural.
I would argue that federal and state governments play even shorter games than investors in the stock market. They're constantly putting their thumbs on whichever scales are politically expedient to claim they did something every 2/4/6 years when it's time for reelection.
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.
> over a decade ago but no one thought to find TSMC on a map and ask whether Intel was driving itself into the dirt?
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.
Perhaps then fabs should be considered important enough for the US then that a new entity, perhaps not unlike NASA, is created to create and run these.
This won’t solve the biggest challenge/problem, which is lack of talent for staffing the fab. In Arizona they had to import a bunch of temp workers from Taiwan just to train the locals. We don’t have the skills. If you want to involve the government, maybe we should be training units of the military to make their own chips.
How many workers do we need? TSMC has 80k workers all in. 15-24 there is about 3 million US NEETs. I think that we could have a 10 year plan to get 80k people with EE/CE/NanoTech Eng/ChemEng/etc degrees. Make college free, or hell even a stipend for people to pursue "Critical Careers", heavily fund Phds in the same areas for US Citizens, and we will see workers with the skills.
This is the wrong way to look at it. The people in the US that you would want working in semiconductors aren't NEETs. They are at Facebook/Google/Jane Street/Citadel/McKinsey.
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.
Is that true? I thought a lot of semi-conductor work is borderline blue-collar factory work and physical labor.
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.
The cost of assets (especially housing, schooling, and health care) is a huge problem, and your example is a poignant one. More funding could sway a few people in that pipeline to go towards semi-conductors, but the majority of workers aren't Jane Street quality, they are technicians and engineers doing lots of highly skilled "grunt" work.
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.
Look at the insane salaries/equity going to AI researchers. Those at the cutting edge of semi manufacturing/design are likely completely capable of reproducing the skills sets of those people- how do they not cut and run?
If the government has to provide the funds, so be it, make those jobs valuable enough and the skills will be there.
Is it just me or is the author only making an argument for why Intel is too big to fail? He says hes steelmanning the equity stake but then he doesn't argue why it's necessary. He devotes 2 sentences to CLAIMING its necessary after aruging that Intel is too big to fail.
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.
Yeah he could have explained that more, maybe he's assuming familiarity with other public-private ventures around the world?
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.
Maybe the problem for Intel is complacency exactly because there is this expectation of a bailout when things don't go to plan.
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.
I think it depends on what the goal is. Like, lots of countries (and probably a few US state) could, I bet, do their own foundries for, like, 22nm. Process node names are bullshit of course, but we’re talking about stuff that Intel was doing in 2012, Global Foundries in 2015.
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.
Sounds like a huge infusion of cash to highly skilled workers, and supporting the building of skills that can be transferred between companies sounds like a good thing.
This is too glib: If you imagine a world where every critical industry is replicated in every large nation, often inefficiently or inadequately, that’s a world where the average person is much, much poorer.
There's a real folly in capitalist countries thinking they can be self-sufficient walled castles. Capitalism by its nature will seek out the lowest cost be it in labor or manufacturing. That means often means outsourcing.
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.
>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.
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.
What happens if there’s a global pandemic next month and every industry experiences massive labor and supply chain disruption?
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.
Efficiency is in tension with resilience. I think the pursuit of efficiency at the high end results in a less efficient system because of all the second order effects.
I like that framing. I also think it’s a disservice to only think in terms of capital efficiency since who really cares how efficient your capital is if you can’t produce food when there’s a shock?
'and I'm happy to make money off the jokes about/normalize the little girl that has to work in a sweet shop in a tropical climate doing it for basically nothing'.
> There's a real folly in capitalist countries thinking they can be self-sufficient walled castles. Capitalism by its nature will seek out the lowest cost be it in labor or manufacturing. That means often means outsourcing.
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.
They both have strong labor unions and/or collective bargaining agreements the USA does not have. That is to say socialist-coded policy is what is helping here, not capitalist ones.
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.
That's the premise of neoliberalism, you need globalism or the entire idea of capitalism falls apart and every domestic company becomes a crab in a bucket... trying to recapture that lost value with nationalism won't work within the span of political term limits, they're trying to undo something that's been happening for 50 years... we literally don't even have the underlying infrastructure for re-shoring, basics like getting electricity where it needs to go become a problem
Intel was the best until fairly recently. Then they still looked like the best to a non-expert observer, and then still looked at least competitive until even more recently. The modern world changes too fast for our governments to adapt to. Especially when we're talking about state of the art semiconductors and our leader was born before the invention of the transistor.
Intel hasn’t been “the best” since the world cared more about mobile in 2010. There GPUs have always been also ran. It just wasn’t a big deal until crypto and later machine learning.
Even for integrated graphics, Intel has been behind Apple’s/TSMC ARM based processor before the Mx based Macs.
The OP is talking about fabrication technology, not end products. Even years into their delays getting to 10nm, Intel had more advanced fabrication technology than TSMC until N7 reached volume in 2018.
What’s the use of having “better fabs” to make worse products that the market doesn’t need and not be a foundry for other companies that can use it?
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.
I had a Duron chip that, for like two full years in the early '00s, would've required an Intel chip about double the price to beat it. That was wild. I assume the Celeron line in particular only hung on through that period via contract-inertia and brand recognition, because it was a total joke next to Duron, on a bang-for-your-buck basis.
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.
And it took a long time for mobile CPUs to be considered important. Arguably mobile CPUs still aren't considered more important than desktop, even though they obviously sell more.
Mobile CPUs are almost a commodity these days and fairly low margin especially compared to server chips. Most people really don't care what chip does their phone has and its almost always "good enough" relative to the price.
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.
This is demonstrably not true. TSMC is ahead because of the volume of mobile and that happened on the back of a lot of investment from Apple - who does make high end chips.
Intel focus on low volume high end chips is another reason they are behind.
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.
> 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
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.
My only point was that mobile chips are pretty much a commodity these days and not a particularly lucrative market if you want to maximize margins and growth. The fact that there are way more ARM chips sold in a year than x86 servers doesen't prove much.
> 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)
For me it's debatable that they were "behind" on GPU because I didn't need a bleeding edge gaming GPU. I only needed a GPU fast enough for spreadsheets and code editors, provided at a competitive price and power budget. Intel actually did deliver that.
To a first approximation, no one cares about open source drivers when most PCs are running Windows and servers running Linux don’t care about Intels GPUs
I think that the difficulty for Intel is that they don't seem to attract the best talent anymore like they did 20 years ago. A big part of the job of running a leading edge fab is solving a lot of very tricky technical problems, and a lot less of those people work at Intel than used to. There are feedback loops in these things. The top people want to work with other top people. To some degree you can try to find those people and just offer them tons of money, which is what seemingly happened with Jim Keller (on the logic rather than the fab side, but still), but then he went and quit shortly thereafter.
Without the right people at the company, you can dump almost infinite money at a problem and still not solve it.
> "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."
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...
> every decision the US takes could be considerate, but as likely also completely random and reversed and bent at any moment in the future.
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?
Add to this the fact that given the government is now propping up a poor performing company there's no possible reason to try to create a new domestic competitor. If you do and you start becoming successful, the government can just increase their "investment" in your chief competitor and shut you down. It's ludicrous.
The point of the article was that there's never going to be a new domestic competitor. It would take hundreds of billions in investment to get off the ground and build a fab from scratch, and they'd be in an even worse position than Intel is currently. No external customer would want to risk using them, and they don't have the internal demand of x86 to keep going on their own.
I frankly look forward to see whether the US will actually CARE how Intel will conduct its business, instead of simply trying to just reap benefits from it.
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)
I actually think that if we're going to tax-privilege capital gains to a huge degree over wages, it's entirely appropriate for the government to claim some small chunk of non-voting, least-privileged (both to avoid conflicts of interest and fucking up the regular equities & debt markets) shares of every corporation over some size, probably with some other implementation details in there (graduated percentage as company revenue size grows or whatever, that kind of thing). I also think we should consider going back to things like having some parts of the defense industry outright government-operated, like we used to do, which these days might include a chip foundry or two. Not saying we should definitely do it, but I think it should be seriously considered.
... 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).
I'm not so sure that things would settle down if trump was out of the picture. Trump is obviously an active force, but even if he is gone, the forces that led to his rise will still exist. In other words, even without trump there is a strong anti-elite, anti-expert, nationalist/isolationist movement in the US. Waiting for trump to die or go away is foolish.
The other day when the US's stake in Intel was announced, people assumed it was a political stunt. I suspected it was because of national security interests. The CHIPS act probably didn't get the result US Defense wanted quickly enough. Some details that were glossed over include that there was a chip shortage a few years ago as a result of COVID and TSMC supply chain disruptions that led to a shortage in electronics and automobiles even. This started to look like a national security interest back then.
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.
> The CHIPS act probably didn't get the result US Defense wanted quickly enough.
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).
I always hear about Taiwan and TSMC for Nvidia, but what I never heard until recently is that all these forbidden and banned chips are still assembled into GPUs in China. I am not sure how the US beleives any of this will do much good when the the chips are still sent to China to be completed into GPUs and other AI devices.
The issue is that Intel manufacturing chips in the US wouldn’t have solved the chip problems with cars for instance.
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.
14nm is mature and would suit this purpose fine, and they have existing capacity. The business, tools, and everything else around would need to get built out.
Yes. But Intel doesn’t have any customers and do they even have 14nm fabs online and how long will take to move customers to it in the case of a disruption?
> Recently, the US was pushing NVDA to start using Intel's foundry. I assume it's for national security reasons.
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'm not sure they need to claim Intel as eminent domain and that type of move is beyond what I know about but I suppose they could've done that previously but opted instead for market based solutions like with the CHIPS Act. That is really what led to the equity stake. The purpose of the CHIPS Act had more to do with the AI Cold War and securing the supply chain than it did trying to save one particular business. So I believe national security is the major concern and not saving one particular business.
> The purpose of the CHIPS Act had more to do with the AI Cold War and securing the supply chain than it did trying to save one particular business
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.
I think it's simpler than that. I think US intelligence is looking to make sure a secure supply chain exists for AI and really that just means NVDA's chips. I have never stated at any point this plan would work well. This is all stated in the reasoning for the CHIPS Act. That may mean pressuring people to use the foundry but I don't actually think the concern was chiefly to win back jobs. The funding from the CHIPS Act was actually withheld since Intel wasn't making satisfactory progress. Also the warrants I mentioned are executable only if Intel drops it's stake in the foundry. I believe this was added since there was talk of Intel spinning that out. So the government seems very interested in the viability of the foundry and less so in jobs.
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.
The chip shortage only came about because everyone cancelled their chip orders and then had to re-queue in a different order and they found themselves at the back of the line.
Their lack of planning doesn't constitute an emergency on the public's part
To be honest, regardless of the government involvement or not, I have little hope for intel. Maybe they can, over time, have an AMD-esque comeback, but given their track record of the past few years I'm not hopeful.
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.
And Core was a lucky happenstance for Intel as they were not innovating at all and fell behind, thank goodness their isreal lab was doing something other than P4 work.
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.
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.
> 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.
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.
I didn’t even know BYD existed until I was visiting Australia, riding in my cousin’s Tesla, and he pointed to the dealership. I’d never seen one because they don’t sell in the US due to tariffs and the general economic environment. I found it striking that I’d been completely sheltered from this company and its products without even realizing it.
> 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.
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.
The US government can, for example, discourage using Chinese chips using various policy levers without taking direct corporate ownership. That sort of thing is not that unusual.
To be honest, for most Chinese people, the reason we haven't taken action regarding Taiwan is not because of TSMC, but rather our patience with the current will of the Taiwan people. However, this patience has its limits. Even if TSMC has better chips now, China mainland will surpass them next 10 years. You can compare the gap in chip technology between Chinese companies in 2015 and that projected for 2025 to see this trend. As for Intel, we don't really care about it.
China mainland surpassing Taiwan in chip manufacturing seems like it would be very bad for Taiwan. At that point the Chinese have little incentive to “be gentle” with an invasion of the island. It’s in Taiwan’s interest to ensure both China and the US have a dependency on its manufacturing sector.
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.
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.
> companies in 2015 and that projected for 2025 to see this trend
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.
I think western media overstate TSMC's importance in China/Taiwan relationship. China doesn't care. It's a nice bonus. But ultimately, TSMC doesn't matter to China. Taiwan is ideological for China way before TSMC became important.
the president unilaterally extorting 10% ownership out of a company isn't going to build the kind of system that competes with anyone. Big business can't really thrive under this kind of thing any more than corner stores can thrive under a protection racket.
Didn't the US pay $9.8 billion? Intel's market cap is $106 billion, so $9.8 billion for 10% is buying at a slight discount.
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.
What was the legal basis for this "purchase"? Because as I understand it, Trump came in, saw a law he didn't like (CHIPS), and unilaterally "altered the deal"
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.
Foundries aren’t the only special case. The test should be, if we can’t afford for it to fail, it shouldn’t be left to the market. Another example? Farms. Also healthcare (expect to hear more on this front in the next few years as more and more hospitals go under, especially in rural areas).
Well, "the market" is just a descriptive model that represents the aggregated pattern of economic activity within society -- there is no "outside" of the market, and everyone, including political states, are just market participants.
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.
Key graf: "The problem facing the U.S. is not simply the short-term: the real problems will arise in the 2030s and beyond. Semiconductor manufacturing decision-making does not require nimbleness; it requires gravity and the knowledge that abandoning the leading edge entails never regaining it."
I’m confused. Why is equity required when the current loan guarantees were perfectly adequate? The only answer is that the USG wanted more control and leverage than was required to achieve national security objectives. Kinda negates the whole approach to the article in my opinion.
Don't underestimate the pettiness of the current administration. They didn't like the old deal because they didn't make it. It is really as simple as that.
Were the current loan (and grant) guarantees perfectly adequate? Citation needed.
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
Fair enough. In reality though they have absolutely committed to “public service objectives” which is a weird way to say “doing whatever the administration asks otherwise they rapidly liquidate their stake”
Not sure how many times people will keep repeating this mistake assuming they won’t be hit up for protection money again later…
This article says its steel-manning the equity stake but its actually an argument for Intel being "too big to fail" and then conflating that with an equity stake.
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.
The EUV light source in ASML’s lithography tools is designed and manufactured by Cymer, based on research funded by the DoE in the 1990s and conducted at various national labs.
Doubtful. It's also doubtful this is about national security, protecting strategic manufacturing or anything else to benefit American people. This is a mafia shakedown.
US has ASML- lots of the patents are ultimately owned by US entities, a great deal of the research and development is done on US soil, and the Netherlands aren't rocking the boat on sanctions, etc.
Maybe it's worth noting that the new CEO's explosive statement, Intel would give up development of leading edge nodes (14A and beyond) unless they find a large external customer in advance, hardly got any attention on Hacker News or other websites. But that was almost certainly the reason the US administration got involved. This blog post thankfully makes this point clear.
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.
for all this talk about intel struggling, they seem to be quite capable to continue producing very competitive CPUs and other IP.
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.)
There is a lot of doom and gloom regarding Intel, but there are also signs of life. Intel is starting to show off products made on 18a and is slated to ship at least one product on that process this calendar year. Meanwhile TSMC has been stuck on 3nm for quite some time and it appears that there will not be a product with TSMC 2nm this year. If both of these prove true, Intel will have roughly caught up in terms of process. There is a lot more work to be done, but do not underestimate how quickly Intel's fortune can change if they manage to start hitting their mark and TSMC falters even slightly.
"Corporate" in that quote refers to groups consisting of something like entire industries, including employees and employers, like a guild. It doesn't refer to a business legally recognized by the state as the word is commonly used today.
But when you link evidence that hitler had secret meetings with capitalist business leaders to bankroll him, the entire mefo bill nonsense, etc to the "were nazis socialist?" argument you get downvoted.
Nationalized companies don't necessarily mean socialism or fascism but fascists did like giving the state fairly tight ownership and control of companies. It depends on how they handle that - if you see Trump loyalists embedded in lots of boards or top down instructions given to industry that might be a sign.
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?
10% is not a controlling stake, and US already controls Intel via regulation.
Most importantly, Intel's market cap is minuscule $100 bln, it doesnt allow control over meaningful amount of capital
Socialism with Chinese characteristics - it reduces private wealth and curbs control of oligarchs like Jack Ma. I feel like US is the opposite, where oligarchs directly control the government already
I didn't mean the intent is to control Intel's capital.
I meant controlling capital flows. In this particular case, controlling the flow of capital in a strategic sector out to TSMC et al. The idea is that regulation, state backed companies, etc etc all concert to oblige the market to keep those capital flows inside of your jurisdiction.
China does the same. It's extraordinarily difficult to exfiltrate capital from China. One of the only ways to do it is to turn the capital into products and exfiltrate those products out of China in place of the capital.
I think, long term, the US wants the same sort of environment over here.
I'd suspect Trump would model his on Saudi Arabia's PIF rather than Norway's fund. The PIF invests in companies worldwide, including Uber and Blackstone, as well as providing capital for mega-projects like NEOM.
The book "Apple in China" by Patrick McGee focuses on this point in early 2000 top 5 contract manufacturers were in north america. By around 2010 the top one was foxconn which was larger than the next 4 combined. This is going to play out everywhere and result in extreme circumstances.
I think the issue is not just that that its capitalism causing wage issues, its the fact that people think they can control the painless socioeconomic transition that comes with incomes increasing with matching productivity gains, or worst halt and try and reverse it. One or more things will eventually cause a pop/crash/revolution:
- Endless high returns on capital: Wealth accumumlation for < top 50% of the people causes high enough inflation as these highly capitalized groups look to buy every single asset (think blank street day care and paying 200$ 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?".
> President Donald Trump’s announcement on Friday that the U.S. government will take a 10 percent stake in long-struggling Intel marks a dangerous turn in American industrial policy. Decades of market-oriented principles have been abandoned in favor of unprecedented government ownership of private enterprise.
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.
How is this ‘equity stake’ different than nationalization? (The thing that soviet socialism did to russian property and business a hundred years ago). After all the government prints the money. So instead of just taking control of a company the govt prints the money to buy it. Isnt it the same thing?
And where is the example of a successful govt run business?
Why dont we encourage businesses here w free trade zones?
All of these questions seem more like claims. And I largely agree in spirit. Im not a fan of the government buying stock with the money that would have been given as grants. However,
>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.
It is a minority stake so they won't "control" Intel in the way we typically associate with "nationalized" businesses.
> 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.
The USPS is a really good example. Most of its modern problems are exclusively the result of politicians sabotaging it - given the constraints it operates under it's wildly successful. Even some foreigners I know have a positive view of the USPS because of their interactions with it (shipping goods to the US).
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.
> And where is the example of a successful govt run business?
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).
I wouldn't read too much into it. I think this is just the Trump administration buying the dip. they're gonna invest heavily into Intel to reduce TSMCs political leverage, the stock will go up 1000%, and Trumps friends & co. (& everyone who 'got the signal') get rich off it, US semiconductor industry is revived (maybe?), and everybody(?) wins.
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.
They are a threat to American supremacy, and almost all Americans - republicans and democrats - think that supremacy is good for them. It's nearly impossible to convince them otherwise, USA#1.
Intel is dead to me for capitulating to narcissistic, authoritarian, inhuman, apathetical Donald Trump.
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.
Counterexample: AMD almost died and see where they're now.
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.
> 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.
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.
I'm surprised I haven't seen this before. Thanks for mentioning it. It is long and I did skim some sections but I read large chunks. I'd actually be curious to know the author's politics because that is a deeply anti-capitalist essay (which I agree with, for the record).
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.
Yeah, one of the paradoxes I found was on the one hand talking about being responsible for projects making large sums of money, but, well...it doesn't seem like he's seen much of it.
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)
> 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
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?
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.
You don't really micromanage things, just like managers in a company shouldn't micromanage things. You don't make decisions on how much bread should be made by each of the 300 bakeries; you decide that making bread itself is important so you give subsidies. You decide that making bread locally is important so subsidies are only available to locally made and not imported bread. You decide that whole wheat bread is more important than white bread so you give subsidies only to whole wheat bread.
What is "conventional wisdom"? It's propaganda, basically.
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.
> 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 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.
This is a bailout to Intel. It's essentially the US government pfoviding guarantees to Intel and its customers. How would you describe that as anything but a bailout?
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).
> 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."
I don't understand how they can say Democrats are Communists while they do this. It's going to be interesting hearing everyone who spent decades spilling volumes about the evils of communism and the failure of the USSR quickly pivot to being champions of state capitalism.
I think you are putting too much faith in the belief that people actually understand or care about what is behind some of these labels. They are ultimately just a way to create an "us" vs "them" dichotomy.
You're mixing up communism and nationalization[1]. I suppose those are related concepts, but since communism ostensibly serves the working class, I'd expect to see nationalization under communism/socialism to start with things like health-care, civilian infrastructure, and agriculture, whereas under fascism (which famously also nationalizes), I'd expect the industries which help the state expand (military and military infrastructure) or control its own population (surveillance, telecom, police) to be prioritized in nationalization efforts.
I don't think the person you replied to is mixing them up, but instead, criticizing others who use "communism" as a blanket term for most any government involvement in the market.
I mean both sides are guilty. ‘08 saw us bail out banks and now the likes of Fannie Mae and Freddie Mac are GSE’s.
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.
> I mean both sides are guilty. ‘08 saw us bail out banks and now the likes of Fannie Mae and Freddie Mac are GSE’s.
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.
> now the likes of Fannie Mae and Freddie Mac are GSE’s.
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.
I actually think the model here isn't communism, it's fascism/corporatism. They aren't nationalizing directly, they're intimidating private enterprises into compliance and cooperation.
One of the key features of fascism is keeping up the illusion of private property and other individual rights. When such abrogation of rights ultimately results in disasters, our intellectuals will lay the blame at the foot of capitalism without having ever really understood what it was and why the current administration is not pro-capitalist and neither is the GOP.
I've been to Berlin this summer and I think every single citizen of any western democracy should see the still standing piece of the Berlin Wall and the museum bit that explains the 50 or so years that led to its construction. Even if only a quarter understood the message, we'd be better off as a civilization.
Alas, I'm afraid some people would take it as an instruction manual instead of a warning.
I think that's an incorrect framing. A more proper framing is that some industries are key to ensuring a nation is not dependent on another for key products that ensure a dominant (not supplicant like say Ukraine) position with regard to defence and therefore independence.
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.
> A more proper framing is that some industries are key to ensuring a nation is not dependent on another for key products that ensure a dominant (not supplicant like say Ukraine) position with regard to defence and therefore independence.
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.
>ntel making decisions for political rather than commercial considerations
> 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!!
Everything against US Gov + Intel staek I have seen is written by traditional business minds, likely with skin in this game.
They all ignore how 'market principles' have decimated the majority to ramble support for a scheme they almost certainly benefit greatly from.
To me, it's all nothing more than emergent anxiety of their biology. The world be changin' (due to many reasons but mostly generational churn) and who will they be relative to that new world? No different than a religious person shrieking about the decline in adherence to religious principles.
Biological VHS tape re-counting a fuzzy recollection of lived experience, these words. Nothing more.
Icarus is flying high this time of year, it seems. Don't forget that some of these traditional business minds have seen the Soviet's planned economy crumble in real-time not too long ago. They may also have taken note how virtually all human-managed funds tend to do worse over time than market-driven index funds.
Make of that what you will; the arrogance of some people to assume they know better than anyone else sure is stunning.
> Make of that what you will; the arrogance of some people to assume they know better than anyone else sure is stunning.
So you make this comment right after making a really reductive, ignorant comment on the Soviet planned economy collapse?
Yeah I'm 49. I was there. Watched Soviet Union fall on live TV. Berlin wall too. After years of intentional outside effort to force it to fall.
Market-driven has worked because media told everyone it has to work, and no other nations were strong enough to exert outside influence until modern China came along.
Tell everyone the Soviet economy must work without outside influence to collapse it, does it still collapse?
I was old enough to live through the fall. What your reductive ignorance excludes is years of intentional effort by the US and allies to collapse the Soviet Union, while they censored their own media to sell capitalism and markets, while also behaving as awful as Soviets and China around the world with their military.
> Make of that what you will; the arrogance of some people to assume they know better than anyone else sure is stunning.
Oh, we agree on this. You of course no better because it worked for you. Survivorship and selection bias. Still at the end of the day, one of billions with no real obligation on the rest of us to provide you healthcare or give a shit if you end up in the ditch, broke. I for one appreciate the America not making me give a shit you exist.
--
Michael E——
On Tue, Aug 26, 2025 at 17:17 Michael E—— <m@——.xyz> wrote:
Without outside influence to collapse the Soviet union and Soviets maintaining control of their media telling their people their system must survive, does it still collapse?
Rhetorical question, idgaf you even exist, ignorant ass.
On Tue, Aug 26, 2025 at 18:31 Michael E—— <m@——.xyz> wrote:
Won't know/show up if you end up broke in an alley eating ass to survive.
That kind of not care.
Thoughts and prayers but you're one of billions of meat suits, statistically irrelevant.
-m
Sent
On Tue, Aug 26, 2025 at 19:22 Michael E—— <m@——.xyz> wrote:
I think it's time for the people shouting so urgently about the new world order to own up and actually paint a picture for the rest of us here. because from a 'traditionalist' perspective it really looks like things are just failing and being burned down. I don't see a phoenix, maybe you can you can point it out?
I’ll be honest: there is a very good chance this won’t work .... At the same time, 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.
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.
If I may add my view as a formerly high-achieving semiconductor worker that Intel would benefit greatly from having right now, a lot of us pivoted to software and machine learning to earn more money. My first 2 years as a software engineer earned me more RSUs than a decade in semiconductors. Semiconductors is not prestigious work in the U.S., despite the strategic importance. By contrast, it is highly respected and relatively well remunerated in the countries doing well in it.
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
We have developed an economy oriented around selling one another websites, and we are only belatedly noticing that none of our enemies seem to have followed.
It’s ridiculous. It’s so easy to find VC funding for software but heaven forbid you try and make agricultural innovations. Biotech is slightly better but still a struggle. Hardware only counts right now if it’s defense tech but even then people would rather have another SaaS.
I'd say that VC funding may be an inappropriate tool for that. VCs want you to either grow fast, or fail fast. Not necessarily to bring profit fast, but to visibly capture the market (see Uber). Move fast, break things, rework things every week, trigger that wave of sign-ups.
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.
Yeah seeing the innovations DJI is making in agriculture makes me wonder why VCs do not want to fund other startups like it. I know the margins are worse and it takes way more capital to fund hardware companies, but that has to be better than funding another chat-gpt wrapper. I guess that is why I am not a VC though lol.
They're just hard. What is the US robotics startup that you would use as an example of success? iRobot? It barely broke even.
How is boston dynamics doing? They do very cool stuff but it feels like they struggle commercializing their technology. I remember they were once bought by google I think? And then spat out...
South Korea got to it: https://www.hyundai.com/worldwide/en/brand-journal/mobility-...
Anduril?
To fund a software start-up you need 5 people and 5 laptops to get to tens of millions of value.
To fund a similar sized hardware start-up you need a full lab andddd already the proposition is dead.
The infrastructure to rapidly iterate and manufacture just isn’t here anymore, so everything costs significantly more to the point where we’re noncompetitive. Even VCs with no experience see the top line numbers for hardware startups and nope out.
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.
Yeah that makes a lot of sense. Way easier to iterate when you have access to a machine shop vs having to upload a CAD file and have a part shipped from another country.
A16Z gets a lot of guff for their bad politics, but their "American dynamism" portfolio, if a little defense heavy, seems great
You forgot the most important thing about A16Z portfolios: they look great at the beginning of a bubble, and then... https://www.wsj.com/articles/andreessen-horowitz-went-all-in...
only in software there's a clear, tried and tested multiple times path for 1000x ROI for an investor. thermodynamics themselves limit ROI for anything physical.
The countries producing semiconductors and manufacturing other goods are also producing SaaS services. It's not unique to the United States.
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.
Let’s not forget here that Chinese companies operate some of—if not the—most popular social networks in the world. WeChat and TikTok/Douyin are enormous.
(Also, in neither country is the majority of its GDP comprised of websites.)
Yes but the Chinese state is much more willing to direct capital to where it thinks it should go. The argument w.r.t. geopolitics is usually that the US is late to doing this and now lacks production capacity which is useful for competing.
I think this is an "and," not a "but." Your statement and mine aren't in conflict.
We have a massive and diversified economy - I suspect you are overgeneralizing from things adjacent to your niche in it.
What 'enemies'?
How about those folks actively engaging in behavior that damages the US?
Geopolitical rivals then if you prefer that.
haven't been reading history much, have you?
Amen, software sucked all the talent out of the hardware room. When you write the pros and cons of software vs hardware, pretty much the only positive on the hardware side is a subjective "it's more fun".
The gap between hardware and software salaries has been strangely stubborn.
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.
Similar, My major in university was computer engineering (as opposed to pure CS or EE) because I wasn't sure if I wanted to go into a hardware or software profession. I ended up going with software since all the interesting opportunities were there, whereas most jobs in hardware seemed to be working for stodgy old companies barely making six figures if I was lucky.
Historically Intel has engaged in illegal wage suppression. Now we bail them out for their crimes.
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.
Honestly, I don’t think US wages make sense any longer. We have extraordinarily profitable semi companies that don’t pay more than a third of what non profitable startups are paying software engineers.
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.
Greed. You’re describing greed. The folks at the top of the pile in the US seemingly all have hoarding disorder. Very little of what they do appears rational… unless you concede their actions are meant to harm the general wellbeing of the US. population, while themselves being nicely insulated from all that.
Amen brother! And the work-life conditions are also much better in software. I remember in grad school an executive from a big semiconductor company (I think it was ON semi) was complaining to the EE department that most students are now pursuing EE as a CS degree and very few went into hardware so they claimed the talent pool was small.
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?
same - left the industry after 2 years. Made more as a startup founder while working better hours.
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.
Also moved from the semiconductor industry to software, 30 years ago. Much more money.
If Intel were well managed they would purge like 2/3rs of the managers and anyone in the bottom 50th percentile and then pay whatever it takes to get people skilled in their core industry back, training the remaining people as necessary to fill in gaps for the future.
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.
Who gets to determine the bottom 50th percentile?
it doesn't really matter as long as you retain the top 10% who do 90% of the work.
I think you glossed over the question
Generally, the answer is management via performance reviews.
So current management, who had proven incapable of running a business, will be trusted to ignore past political games and just retain talent? That's certainly a take
Billions for fast food delivery apps, not a dime for defense or sustainable agriculture.
> Billions for fast food delivery apps, not a dime for defense or sustainable agriculture
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...
> 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.
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.
This and everything else. We outsourced manufacturing of almost everything then are surprised when the people doing it for decades are better than we were.
We outsourced manufacturing because it's not very profitable. The Mag 7 make 50x as much money as TSMC. Apple and Microsoft are the most profitable businesses in history.
The problem is when importance is not reflected in the quarterly profit margin.
Chips are one of those things where being the best is simultaneously very important and not at all important. Making a 10% better chip gets you the entire market. But it makes practically no difference if your cellphone or laptop or server or whatever has a 10% worse chip.
The true place where the government should steer the ship of the market.
Intel was very profitable until it was not. They spent over $800B on stock buybacks. That will buy you some fabs, some R&D. Its true they invested in R&D but not well. Maybe the answer was to fund an independent internal competitor to keep the org focused.
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?
I still think Intel missed the boat when they had the dominant process in focusing entirely on their own chips and not taking customers for third party fabbing. Samsung and especially TSMC have demonstrated conclusively that the real money is in producing chips for other companies. It might be lower margin, but the volume is undeniable and it keeps your company on its toes with node improvements.
Intel switched to a "service the stockholders before the customers" mode and they have never recovered.
TSMC does not compete with their customers. Intel would. I know that is not a new idea and there are some established mitigations. But it seems it would be better if it wasn't an issue at all.
No, we outsourced it for the same reason we outsource anything else: because someone else, somewhere else, is doing it for cheaper. It has nothing to do with the profitability of the manufacturing company and everything to do with the costs of the products and services to their customers
The EU outsourced manufacturing without any Mag 7.
I'm sure it'll work out well for us...
It's such a stunning dereliction the US let things get to this point.
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...
> systemically putting short term gains ahead of long term research
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.
It is clear that the government and wall street are generally of one mind on this. One recent specific way the government contributed to this is via the Tax Cuts and Jobs Act (TCJA) of 2017, which increased tax burden of R&D. They've also cut a lot of their own research funding (NIH, NSF).
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.
The only people arguing against big government are republicans when democrats are in power, otherwise everyone is happy to expand spending.
Now that we have lawmakers openly declaring they would pick capitalism over democracy if forced to choose, I have little hope that the government will be receptive to changing anything structural.
I would argue that federal and state governments play even shorter games than investors in the stock market. They're constantly putting their thumbs on whichever scales are politically expedient to claim they did something every 2/4/6 years when it's time for reelection.
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.
> over a decade ago but no one thought to find TSMC on a map and ask whether Intel was driving itself into the dirt?
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.
Perhaps then fabs should be considered important enough for the US then that a new entity, perhaps not unlike NASA, is created to create and run these.
The US already has DARPA that does semiconductor research, particularly where it intersects the military.
NASA seems to outsource a lot. Would you like Boeing to create the fab next door to you? What could go wrong??
You would still outsource running the fab to Intel, just have a government body overseeing it.
This won’t solve the biggest challenge/problem, which is lack of talent for staffing the fab. In Arizona they had to import a bunch of temp workers from Taiwan just to train the locals. We don’t have the skills. If you want to involve the government, maybe we should be training units of the military to make their own chips.
How many workers do we need? TSMC has 80k workers all in. 15-24 there is about 3 million US NEETs. I think that we could have a 10 year plan to get 80k people with EE/CE/NanoTech Eng/ChemEng/etc degrees. Make college free, or hell even a stipend for people to pursue "Critical Careers", heavily fund Phds in the same areas for US Citizens, and we will see workers with the skills.
This is the wrong way to look at it. The people in the US that you would want working in semiconductors aren't NEETs. They are at Facebook/Google/Jane Street/Citadel/McKinsey.
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.
Is that true? I thought a lot of semi-conductor work is borderline blue-collar factory work and physical labor.
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.
The cost of assets (especially housing, schooling, and health care) is a huge problem, and your example is a poignant one. More funding could sway a few people in that pipeline to go towards semi-conductors, but the majority of workers aren't Jane Street quality, they are technicians and engineers doing lots of highly skilled "grunt" work.
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.
Look at the insane salaries/equity going to AI researchers. Those at the cutting edge of semi manufacturing/design are likely completely capable of reproducing the skills sets of those people- how do they not cut and run?
If the government has to provide the funds, so be it, make those jobs valuable enough and the skills will be there.
Is it just me or is the author only making an argument for why Intel is too big to fail? He says hes steelmanning the equity stake but then he doesn't argue why it's necessary. He devotes 2 sentences to CLAIMING its necessary after aruging that Intel is too big to fail.
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.
Yeah he could have explained that more, maybe he's assuming familiarity with other public-private ventures around the world?
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.
Maybe the problem for Intel is complacency exactly because there is this expectation of a bailout when things don't go to plan.
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.
If all advanced countries follow this reasoning, where does that leave us?
Robust and redundant manufacturing spread across the world with more opportunity for innovation?
Trillions of dollars spent just for redundancy? Most wouldn't even succeed in building a working process, forget profitable.
I think it depends on what the goal is. Like, lots of countries (and probably a few US state) could, I bet, do their own foundries for, like, 22nm. Process node names are bullshit of course, but we’re talking about stuff that Intel was doing in 2012, Global Foundries in 2015.
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.
Sounds like a huge infusion of cash to highly skilled workers, and supporting the building of skills that can be transferred between companies sounds like a good thing.
Starfleet code requires a second backup?
In case the first backup fails.
What are the chances that both a primary system and its backup would fail at the same time?
This is too glib: If you imagine a world where every critical industry is replicated in every large nation, often inefficiently or inadequately, that’s a world where the average person is much, much poorer.
And for what?
There's a real folly in capitalist countries thinking they can be self-sufficient walled castles. Capitalism by its nature will seek out the lowest cost be it in labor or manufacturing. That means often means outsourcing.
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.
>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.
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.
What happens if there’s a global pandemic next month and every industry experiences massive labor and supply chain disruption?
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.
Efficiency is in tension with resilience. I think the pursuit of efficiency at the high end results in a less efficient system because of all the second order effects.
I like that framing. I also think it’s a disservice to only think in terms of capital efficiency since who really cares how efficient your capital is if you can’t produce food when there’s a shock?
The people who own all the capital do and that's part of the problem. Nobody likes seeing red in their brokerage account.
O sure there’s no long term forethought and if you manage others’ money you’ll get fired. It’s brutal.
To quote Dave Chappelle: "I want to wear Nike shoes...I don't want to make them!"
'and I'm happy to make money off the jokes about/normalize the little girl that has to work in a sweet shop in a tropical climate doing it for basically nothing'.
Current American culture can be pretty ugly.
> There's a real folly in capitalist countries thinking they can be self-sufficient walled castles. Capitalism by its nature will seek out the lowest cost be it in labor or manufacturing. That means often means outsourcing.
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.
> Nationalism/protectionism and capitalism are fundamentally incompatible
Huh? France and Germany are prime counter examples of your statement.
They both have strong labor unions and/or collective bargaining agreements the USA does not have. That is to say socialist-coded policy is what is helping here, not capitalist ones.
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.
That's the premise of neoliberalism, you need globalism or the entire idea of capitalism falls apart and every domestic company becomes a crab in a bucket... trying to recapture that lost value with nationalism won't work within the span of political term limits, they're trying to undo something that's been happening for 50 years... we literally don't even have the underlying infrastructure for re-shoring, basics like getting electricity where it needs to go become a problem
That would explain why the nationalist is strongly looking at unlimiting his term, except any plan for re-shoring is stuck in the 80s with him.
Intel was the best until fairly recently. Then they still looked like the best to a non-expert observer, and then still looked at least competitive until even more recently. The modern world changes too fast for our governments to adapt to. Especially when we're talking about state of the art semiconductors and our leader was born before the invention of the transistor.
Intel hasn’t been “the best” since the world cared more about mobile in 2010. There GPUs have always been also ran. It just wasn’t a big deal until crypto and later machine learning.
Even for integrated graphics, Intel has been behind Apple’s/TSMC ARM based processor before the Mx based Macs.
The OP is talking about fabrication technology, not end products. Even years into their delays getting to 10nm, Intel had more advanced fabrication technology than TSMC until N7 reached volume in 2018.
What’s the use of having “better fabs” to make worse products that the market doesn’t need and not be a foundry for other companies that can use it?
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.
Well on desktop and server they pretty much had no competition until the late 2010s or so. So they were the best by default.
AMD definitely gave them a scare several times before that.
I had a Duron chip that, for like two full years in the early '00s, would've required an Intel chip about double the price to beat it. That was wild. I assume the Celeron line in particular only hung on through that period via contract-inertia and brand recognition, because it was a total joke next to Duron, on a bang-for-your-buck basis.
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.
And it took a long time for mobile CPUs to be considered important. Arguably mobile CPUs still aren't considered more important than desktop, even though they obviously sell more.
Mobile CPUs are almost a commodity these days and fairly low margin especially compared to server chips. Most people really don't care what chip does their phone has and its almost always "good enough" relative to the price.
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.
This is demonstrably not true. TSMC is ahead because of the volume of mobile and that happened on the back of a lot of investment from Apple - who does make high end chips.
Intel focus on low volume high end chips is another reason they are behind.
> This is demonstrably not true.
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.
> 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
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.
My only point was that mobile chips are pretty much a commodity these days and not a particularly lucrative market if you want to maximize margins and growth. The fact that there are way more ARM chips sold in a year than x86 servers doesen't prove much.
> 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)
> 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
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).
For me it's debatable that they were "behind" on GPU because I didn't need a bleeding edge gaming GPU. I only needed a GPU fast enough for spreadsheets and code editors, provided at a competitive price and power budget. Intel actually did deliver that.
Intel also had adequate software for their GPUs. They didn't mess about using binary blobs for them.
To a first approximation, no one cares about open source drivers when most PCs are running Windows and servers running Linux don’t care about Intels GPUs
I think that the difficulty for Intel is that they don't seem to attract the best talent anymore like they did 20 years ago. A big part of the job of running a leading edge fab is solving a lot of very tricky technical problems, and a lot less of those people work at Intel than used to. There are feedback loops in these things. The top people want to work with other top people. To some degree you can try to find those people and just offer them tons of money, which is what seemingly happened with Jim Keller (on the logic rather than the fab side, but still), but then he went and quit shortly thereafter.
Without the right people at the company, you can dump almost infinite money at a problem and still not solve it.
> "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."
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...
> every decision the US takes could be considerate, but as likely also completely random and reversed and bent at any moment in the future.
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?
Add to this the fact that given the government is now propping up a poor performing company there's no possible reason to try to create a new domestic competitor. If you do and you start becoming successful, the government can just increase their "investment" in your chief competitor and shut you down. It's ludicrous.
The point of the article was that there's never going to be a new domestic competitor. It would take hundreds of billions in investment to get off the ground and build a fab from scratch, and they'd be in an even worse position than Intel is currently. No external customer would want to risk using them, and they don't have the internal demand of x86 to keep going on their own.
I frankly look forward to see whether the US will actually CARE how Intel will conduct its business, instead of simply trying to just reap benefits from it.
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)
I actually think that if we're going to tax-privilege capital gains to a huge degree over wages, it's entirely appropriate for the government to claim some small chunk of non-voting, least-privileged (both to avoid conflicts of interest and fucking up the regular equities & debt markets) shares of every corporation over some size, probably with some other implementation details in there (graduated percentage as company revenue size grows or whatever, that kind of thing). I also think we should consider going back to things like having some parts of the defense industry outright government-operated, like we used to do, which these days might include a chip foundry or two. Not saying we should definitely do it, but I think it should be seriously considered.
... 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).
Best case, we get President Vance before 2028 and things settle down.
Well given Vance's connection to Peter Thiel I don't think it would be less destructive
It would be less mercurial, I think, although Vance is such a a political chameleon I don't totally know what he would do if he got his brass ring.
I'm not so sure that things would settle down if trump was out of the picture. Trump is obviously an active force, but even if he is gone, the forces that led to his rise will still exist. In other words, even without trump there is a strong anti-elite, anti-expert, nationalist/isolationist movement in the US. Waiting for trump to die or go away is foolish.
The other day when the US's stake in Intel was announced, people assumed it was a political stunt. I suspected it was because of national security interests. The CHIPS act probably didn't get the result US Defense wanted quickly enough. Some details that were glossed over include that there was a chip shortage a few years ago as a result of COVID and TSMC supply chain disruptions that led to a shortage in electronics and automobiles even. This started to look like a national security interest back then.
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 CHIPS act probably didn't get the result US Defense wanted quickly enough.
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).
I always hear about Taiwan and TSMC for Nvidia, but what I never heard until recently is that all these forbidden and banned chips are still assembled into GPUs in China. I am not sure how the US beleives any of this will do much good when the the chips are still sent to China to be completed into GPUs and other AI devices.
The issue is that Intel manufacturing chips in the US wouldn’t have solved the chip problems with cars for instance.
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.
14nm is mature and would suit this purpose fine, and they have existing capacity. The business, tools, and everything else around would need to get built out.
Yes. But Intel doesn’t have any customers and do they even have 14nm fabs online and how long will take to move customers to it in the case of a disruption?
> Recently, the US was pushing NVDA to start using Intel's foundry. I assume it's for national security reasons.
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'm not sure they need to claim Intel as eminent domain and that type of move is beyond what I know about but I suppose they could've done that previously but opted instead for market based solutions like with the CHIPS Act. That is really what led to the equity stake. The purpose of the CHIPS Act had more to do with the AI Cold War and securing the supply chain than it did trying to save one particular business. So I believe national security is the major concern and not saving one particular business.
> The purpose of the CHIPS Act had more to do with the AI Cold War and securing the supply chain than it did trying to save one particular business
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.
I think it's simpler than that. I think US intelligence is looking to make sure a secure supply chain exists for AI and really that just means NVDA's chips. I have never stated at any point this plan would work well. This is all stated in the reasoning for the CHIPS Act. That may mean pressuring people to use the foundry but I don't actually think the concern was chiefly to win back jobs. The funding from the CHIPS Act was actually withheld since Intel wasn't making satisfactory progress. Also the warrants I mentioned are executable only if Intel drops it's stake in the foundry. I believe this was added since there was talk of Intel spinning that out. So the government seems very interested in the viability of the foundry and less so in jobs.
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.
But NVidia chips are now part of national security, I suppose.
And to China with a 10-15% tax
The chip shortage only came about because everyone cancelled their chip orders and then had to re-queue in a different order and they found themselves at the back of the line.
Their lack of planning doesn't constitute an emergency on the public's part
To be honest, regardless of the government involvement or not, I have little hope for intel. Maybe they can, over time, have an AMD-esque comeback, but given their track record of the past few years I'm not hopeful.
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.
And Core was a lucky happenstance for Intel as they were not innovating at all and fell behind, thank goodness their isreal lab was doing something other than P4 work.
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.
I am torn on this.
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.
> 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.
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.
I didn’t even know BYD existed until I was visiting Australia, riding in my cousin’s Tesla, and he pointed to the dealership. I’d never seen one because they don’t sell in the US due to tariffs and the general economic environment. I found it striking that I’d been completely sheltered from this company and its products without even realizing it.
> 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.
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.
> Or, Nvidia is concerned because China can mandate that the whole country pivots to using Chinese GPUs
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.
The thing the US should fear the most, ironically, is China moving further and further away from communism.
If something happened to Xi and the party elected a hard nosed communist, China would unravel itself.
The US government can, for example, discourage using Chinese chips using various policy levers without taking direct corporate ownership. That sort of thing is not that unusual.
To be honest, for most Chinese people, the reason we haven't taken action regarding Taiwan is not because of TSMC, but rather our patience with the current will of the Taiwan people. However, this patience has its limits. Even if TSMC has better chips now, China mainland will surpass them next 10 years. You can compare the gap in chip technology between Chinese companies in 2015 and that projected for 2025 to see this trend. As for Intel, we don't really care about it.
China mainland surpassing Taiwan in chip manufacturing seems like it would be very bad for Taiwan. At that point the Chinese have little incentive to “be gentle” with an invasion of the island. It’s in Taiwan’s interest to ensure both China and the US have a dependency on its manufacturing sector.
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.
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 path from 'opinion of most Chinese people' to [action taken by the Chinese military] is even more tenuous than the corresponding path in the US.
> companies in 2015 and that projected for 2025 to see this trend
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.
I think western media overstate TSMC's importance in China/Taiwan relationship. China doesn't care. It's a nice bonus. But ultimately, TSMC doesn't matter to China. Taiwan is ideological for China way before TSMC became important.
the president unilaterally extorting 10% ownership out of a company isn't going to build the kind of system that competes with anyone. Big business can't really thrive under this kind of thing any more than corner stores can thrive under a protection racket.
Didn't the US pay $9.8 billion? Intel's market cap is $106 billion, so $9.8 billion for 10% is buying at a slight discount.
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?
It was a grant (free money). Then the terms were (mostly) unilaterally changed to be an equity investment. Right?
All in so far it is $11.1 billion
What was the legal basis for this "purchase"? Because as I understand it, Trump came in, saw a law he didn't like (CHIPS), and unilaterally "altered the deal"
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.
Foundries aren’t the only special case. The test should be, if we can’t afford for it to fail, it shouldn’t be left to the market. Another example? Farms. Also healthcare (expect to hear more on this front in the next few years as more and more hospitals go under, especially in rural areas).
Well, "the market" is just a descriptive model that represents the aggregated pattern of economic activity within society -- there is no "outside" of the market, and everyone, including political states, are just market participants.
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.
Key graf: "The problem facing the U.S. is not simply the short-term: the real problems will arise in the 2030s and beyond. Semiconductor manufacturing decision-making does not require nimbleness; it requires gravity and the knowledge that abandoning the leading edge entails never regaining it."
Standard Silicon is a nice name. Maybe they should use it.
Other possibilities:
- Standard Circuit
- Standard Semiconductor
- Standard Microchip
I’m confused. Why is equity required when the current loan guarantees were perfectly adequate? The only answer is that the USG wanted more control and leverage than was required to achieve national security objectives. Kinda negates the whole approach to the article in my opinion.
Don't underestimate the pettiness of the current administration. They didn't like the old deal because they didn't make it. It is really as simple as that.
Were the current loan (and grant) guarantees perfectly adequate? Citation needed.
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...
Fair enough. In reality though they have absolutely committed to “public service objectives” which is a weird way to say “doing whatever the administration asks otherwise they rapidly liquidate their stake”
Not sure how many times people will keep repeating this mistake assuming they won’t be hit up for protection money again later…
This article says its steel-manning the equity stake but its actually an argument for Intel being "too big to fail" and then conflating that with an equity stake.
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.
Does the US need a domestic Intel more than domestic ASML (or Zeiss for that matter)?
The EUV light source in ASML’s lithography tools is designed and manufactured by Cymer, based on research funded by the DoE in the 1990s and conducted at various national labs.
ASML has a large factory in Wilton. & Zeiss is further away from missiles. So they're less concerned about that.
Doubtful. It's also doubtful this is about national security, protecting strategic manufacturing or anything else to benefit American people. This is a mafia shakedown.
US has ASML- lots of the patents are ultimately owned by US entities, a great deal of the research and development is done on US soil, and the Netherlands aren't rocking the boat on sanctions, etc.
As an aside, this guy really feels out of his depth post-pandemic. I get a lot more value out of folks writing more generally about macroeconomics.
could you expand upon this?
It would have been more effective to pay Micron to build up the capabilities to be a general-purpose fab to compete with TSMC.
So the gist is to make Intel the Huawei but for US&A
Maybe it's worth noting that the new CEO's explosive statement, Intel would give up development of leading edge nodes (14A and beyond) unless they find a large external customer in advance, hardly got any attention on Hacker News or other websites. But that was almost certainly the reason the US administration got involved. This blog post thankfully makes this point clear.
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.
> But that was almost certainly the reason the US administration got involved
Now the US government can coerce Nvidia, Apple or someone to use Intel's fabs with no real political repercussions...
They already could do that previously (with tariffs).
for all this talk about intel struggling, they seem to be quite capable to continue producing very competitive CPUs and other IP.
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.)
There is a lot of doom and gloom regarding Intel, but there are also signs of life. Intel is starting to show off products made on 18a and is slated to ship at least one product on that process this calendar year. Meanwhile TSMC has been stuck on 3nm for quite some time and it appears that there will not be a product with TSMC 2nm this year. If both of these prove true, Intel will have roughly caught up in terms of process. There is a lot more work to be done, but do not underestimate how quickly Intel's fortune can change if they manage to start hitting their mark and TSMC falters even slightly.
Is this the beginning of the US sovereign fund?
US own the dollar why they need a sovereign fund? sovereign fund is profitable when you invest in a foreign currency.
That's what is being said. The Intel stake is a first step to a US sovereign fund that will include ownership stakes in many corporations.
is merging interests of the state and corporations marks a return to good ole fascism ?
or is it just an alternative way of taxing capital? instead of taxing wealth and capital, just take an equity stake in it ?
"Fascism should more properly be called Corporatism because it is the merger of state and corporate power.” — Benito Mussolini
"Corporate" in that quote refers to groups consisting of something like entire industries, including employees and employers, like a guild. It doesn't refer to a business legally recognized by the state as the word is commonly used today.
But when you link evidence that hitler had secret meetings with capitalist business leaders to bankroll him, the entire mefo bill nonsense, etc to the "were nazis socialist?" argument you get downvoted.
> "were nazis socialist?" argument you get downvoted
Well it's complicated... Is China socialist? What about state capitalism in general?
Nationalized companies don't necessarily mean socialism or fascism but fascists did like giving the state fairly tight ownership and control of companies. It depends on how they handle that - if you see Trump loyalists embedded in lots of boards or top down instructions given to industry that might be a sign.
More an alternative way of controlling capital.
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?
10% is not a controlling stake, and US already controls Intel via regulation.
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
Sorry, I believe I've been misapprehended.
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.
Don't most sovereign wealth funds invest mainly (or entirely like in Norway's case) into foreign assets.
Holding significant stakes in domestic companies just seems like light state capitalism.
I'd suspect Trump would model his on Saudi Arabia's PIF rather than Norway's fund. The PIF invests in companies worldwide, including Uber and Blackstone, as well as providing capital for mega-projects like NEOM.
https://en.wikipedia.org/wiki/Public_Investment_Fund#List_of...
The book "Apple in China" by Patrick McGee focuses on this point in early 2000 top 5 contract manufacturers were in north america. By around 2010 the top one was foxconn which was larger than the next 4 combined. This is going to play out everywhere and result in extreme circumstances.
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?".
> President Donald Trump’s announcement on Friday that the U.S. government will take a 10 percent stake in long-struggling Intel marks a dangerous turn in American industrial policy. Decades of market-oriented principles have been abandoned in favor of unprecedented government ownership of private enterprise.
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.
How is this ‘equity stake’ different than nationalization? (The thing that soviet socialism did to russian property and business a hundred years ago). After all the government prints the money. So instead of just taking control of a company the govt prints the money to buy it. Isnt it the same thing?
And where is the example of a successful govt run business?
Why dont we encourage businesses here w free trade zones?
All of these questions seem more like claims. And I largely agree in spirit. Im not a fan of the government buying stock with the money that would have been given as grants. However,
>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.
It is a minority stake so they won't "control" Intel in the way we typically associate with "nationalized" businesses.
> 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.
10% is nowhere near a controlling stake, let alone "nationalization".
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.
The USPS is a really good example. Most of its modern problems are exclusively the result of politicians sabotaging it - given the constraints it operates under it's wildly successful. Even some foreigners I know have a positive view of the USPS because of their interactions with it (shipping goods to the US).
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.
> And where is the example of a successful govt run business?
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...
I wouldn't read too much into it. I think this is just the Trump administration buying the dip. they're gonna invest heavily into Intel to reduce TSMCs political leverage, the stock will go up 1000%, and Trumps friends & co. (& everyone who 'got the signal') get rich off it, US semiconductor industry is revived (maybe?), and everybody(?) wins.
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.
Note that all our issues with china would be solved if we stopped pretending like they're our enemy.
Oh yes, that nice warm fuzzy China that definitely doesn't speak regularly about war and conflict with the West.
They are a threat to American supremacy, and almost all Americans - republicans and democrats - think that supremacy is good for them. It's nearly impossible to convince them otherwise, USA#1.
Intel is dead to me for capitulating to narcissistic, authoritarian, inhuman, apathetical Donald Trump.
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.
The short version is: this can work but it won't.
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.
Counterexample: AMD almost died and see where they're now.
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.
Oh my.
Please no one take this the wrong way, but I hope AMD is not the model of "success" we're going for here.
Can you elaborate?
> 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.
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.
This is a bit of a long piece but if you're interested in this subject I think it's a good read
https://docseuss.medium.com/the-biggest-threat-facing-your-t...
I'm surprised I haven't seen this before. Thanks for mentioning it. It is long and I did skim some sections but I read large chunks. I'd actually be curious to know the author's politics because that is a deeply anti-capitalist essay (which I agree with, for the record).
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.
Yeah, one of the paradoxes I found was on the one hand talking about being responsible for projects making large sums of money, but, well...it doesn't seem like he's seen much of it.
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)
> 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
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?
There are two problems with a command economy.
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.
You don't really micromanage things, just like managers in a company shouldn't micromanage things. You don't make decisions on how much bread should be made by each of the 300 bakeries; you decide that making bread itself is important so you give subsidies. You decide that making bread locally is important so subsidies are only available to locally made and not imported bread. You decide that whole wheat bread is more important than white bread so you give subsidies only to whole wheat bread.
That's one possible outcome, yes. If the commander is smart/realist enough, you might even get it.
What is "conventional wisdom"? It's propaganda, basically.
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
> 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 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.
This is a bailout to Intel. It's essentially the US government pfoviding guarantees to Intel and its customers. How would you describe that as anything but a bailout?
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).
Bailouts are different from the CHIPS act you’ll just have to accept that those other bailout agreements didn’t have a profit-sharing clause attached.
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."
I don't understand how they can say Democrats are Communists while they do this. It's going to be interesting hearing everyone who spent decades spilling volumes about the evils of communism and the failure of the USSR quickly pivot to being champions of state capitalism.
I think you are putting too much faith in the belief that people actually understand or care about what is behind some of these labels. They are ultimately just a way to create an "us" vs "them" dichotomy.
You're mixing up communism and nationalization[1]. I suppose those are related concepts, but since communism ostensibly serves the working class, I'd expect to see nationalization under communism/socialism to start with things like health-care, civilian infrastructure, and agriculture, whereas under fascism (which famously also nationalizes), I'd expect the industries which help the state expand (military and military infrastructure) or control its own population (surveillance, telecom, police) to be prioritized in nationalization efforts.
[1]: https://en.wikipedia.org/wiki/Nationalization
I don't think the person you replied to is mixing them up, but instead, criticizing others who use "communism" as a blanket term for most any government involvement in the market.
I mean both sides are guilty. ‘08 saw us bail out banks and now the likes of Fannie Mae and Freddie Mac are GSE’s.
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.
> I mean both sides are guilty. ‘08 saw us bail out banks and now the likes of Fannie Mae and Freddie Mac are GSE’s.
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.
Whereas with banks, their failure would've thrown the global economy into a deep depression?
Which party was in power when 2008 happened?
> now the likes of Fannie Mae and Freddie Mac are GSE’s.
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.
> I don't understand how they can say Democrats are Communists while they do this.
The republican game is to call democrats <insert_any_label_here> and then do the same thing they allege democrats do.
I actually think the model here isn't communism, it's fascism/corporatism. They aren't nationalizing directly, they're intimidating private enterprises into compliance and cooperation.
One of the key features of fascism is keeping up the illusion of private property and other individual rights. When such abrogation of rights ultimately results in disasters, our intellectuals will lay the blame at the foot of capitalism without having ever really understood what it was and why the current administration is not pro-capitalist and neither is the GOP.
EARLY WARNING SIGNS OF FASCISM
Powerful and continuing nationalism
Disdain for human rights
Identification of enemies as a unifying cause
Rampant sexism
Controlled mass media
Obsession with national security
Religion and government intertwined
Corporate power protected
Labor power suppressed
Disdain for intellectual and the arts
Obsession with crime and punishment
Rampant cronyism and corruption
Credit: UNITED STATES HOLOCAUST MEMORIAL MUSEUM
As a German with extensive exposition to the third Reich I can attest to the fact that the parallels start to become uncanny.
I've been to Berlin this summer and I think every single citizen of any western democracy should see the still standing piece of the Berlin Wall and the museum bit that explains the 50 or so years that led to its construction. Even if only a quarter understood the message, we'd be better off as a civilization.
Alas, I'm afraid some people would take it as an instruction manual instead of a warning.
The credit belongs to Laurence Britt. And this was for a poster briefly sold at the museum, not produced by it. Full text: https://secularhumanism.org/2003/03/fascism-anyone/
Thanks for the details, I was only aware of the museum bit.
I think that's an incorrect framing. A more proper framing is that some industries are key to ensuring a nation is not dependent on another for key products that ensure a dominant (not supplicant like say Ukraine) position with regard to defence and therefore independence.
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.
> A more proper framing is that some industries are key to ensuring a nation is not dependent on another for key products that ensure a dominant (not supplicant like say Ukraine) position with regard to defence and therefore independence.
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.
this sounds like the situation with the Krupp Corporation
>ntel making decisions for political rather than commercial considerations
> 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!!
Everything against US Gov + Intel staek I have seen is written by traditional business minds, likely with skin in this game.
They all ignore how 'market principles' have decimated the majority to ramble support for a scheme they almost certainly benefit greatly from.
To me, it's all nothing more than emergent anxiety of their biology. The world be changin' (due to many reasons but mostly generational churn) and who will they be relative to that new world? No different than a religious person shrieking about the decline in adherence to religious principles.
Biological VHS tape re-counting a fuzzy recollection of lived experience, these words. Nothing more.
Icarus is flying high this time of year, it seems. Don't forget that some of these traditional business minds have seen the Soviet's planned economy crumble in real-time not too long ago. They may also have taken note how virtually all human-managed funds tend to do worse over time than market-driven index funds.
Make of that what you will; the arrogance of some people to assume they know better than anyone else sure is stunning.
> Make of that what you will; the arrogance of some people to assume they know better than anyone else sure is stunning.
So you make this comment right after making a really reductive, ignorant comment on the Soviet planned economy collapse?
Yeah I'm 49. I was there. Watched Soviet Union fall on live TV. Berlin wall too. After years of intentional outside effort to force it to fall.
Market-driven has worked because media told everyone it has to work, and no other nations were strong enough to exert outside influence until modern China came along.
Tell everyone the Soviet economy must work without outside influence to collapse it, does it still collapse?
You're shipping propaganda of your culture.
Since you felt the need to contact me with additional insights via email, I don’t want to withhold these from the wider HN community:
On Tue, Aug 26, 2025 at 8:15 AM Michael E—— <m@——.xyz> wrote: https://news.ycombinator.com/item?id=45027006
I was old enough to live through the fall. What your reductive ignorance excludes is years of intentional effort by the US and allies to collapse the Soviet Union, while they censored their own media to sell capitalism and markets, while also behaving as awful as Soviets and China around the world with their military.
> Make of that what you will; the arrogance of some people to assume they know better than anyone else sure is stunning.
Oh, we agree on this. You of course no better because it worked for you. Survivorship and selection bias. Still at the end of the day, one of billions with no real obligation on the rest of us to provide you healthcare or give a shit if you end up in the ditch, broke. I for one appreciate the America not making me give a shit you exist.
-- Michael E——
On Tue, Aug 26, 2025 at 17:17 Michael E—— <m@——.xyz> wrote:
Without outside influence to collapse the Soviet union and Soviets maintaining control of their media telling their people their system must survive, does it still collapse?
Rhetorical question, idgaf you even exist, ignorant ass.
On Tue, Aug 26, 2025 at 18:31 Michael E—— <m@——.xyz> wrote:
Won't know/show up if you end up broke in an alley eating ass to survive.
That kind of not care.
Thoughts and prayers but you're one of billions of meat suits, statistically irrelevant.
-m
Sent
On Tue, Aug 26, 2025 at 19:22 Michael E—— <m@——.xyz> wrote:
Aw blue language that does not venerate you.
Points remain valid.
-m
Sent
I think it's time for the people shouting so urgently about the new world order to own up and actually paint a picture for the rest of us here. because from a 'traditionalist' perspective it really looks like things are just failing and being burned down. I don't see a phoenix, maybe you can you can point it out?