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.
georgeburdell
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
troad
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.
bix6
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.
nine_k
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.
Probably because the US let software be a breeding ground for monopolies. People invest there because they understand that's the best sector to, if the company works out, get unreasonable returns. As an example, the current AI valuations make no sense if the industry doesn't solidify around one or two companies.
If you have money, the returns you'll get elsewhere are much less attractive, and can only be justified if they're very safe investments.
makestuff
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.
I feel like anything relevantly practical is denied investment.
But when it comes to anything flashy and hip, a train of dump trucks filled with cash couldn’t deliver money as quick as the VC dollars that flow into to startups with no business model and no hope of being profitable…
Yeah, I get that startups should invest profits and not actually make profits for a while… But when they’re on their 4th round of funding with thousands of employees… shouldn’t they at least try to be a bit more financially responsible?
klooney
A16Z gets a lot of guff for their bad politics, but their "American dynamism" portfolio, if a little defense heavy, seems great
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.
So many of the VC's doing the funding got rich of software and web stuff.
They don't know anything else.
Mistletoe
They should plan more long term. In an economic downturn like after 2000, all these nonsense valuations for vaporware are going to go to the center of the earth. And all signs point to another downturn for the next decade.
It's about risk / reward, and patient capital. Within 10 years I am probably going to sell my SaaS business a very rich man, and I am going to self-fund a new company in hardware and / or manufacturing. America has made so many talented people wealthy very quickly over the past 2 decades, and as the low-hanging software fruit is ever-harder to find, the skilled entrepreneurs will look for new things do to, and more of us will get into hardware.
jojobas
VCs are happy to send a vast majority of their investments in search for billion-dollar company. There is no chance to get an agricultural startup to billion dollar valuation, agricultural innovations don't scale at a click of a button.
0xDEAFBEAD
I don't see any reason in principle why a $1B+ exit wouldn't be possible.
We need regulation around how VCs work. They are in a house flipping game and nothing more, slapping on a bad kitchen remodel and then handing the hot potato onto the next sucker.
Because, despite all the belated narratives from a lot of people perusing this very website, Venture Capitalism is not a driver of innovation. It's an efficiency filter to supercharge capitalism and speed up the concentration of wealth into the pockets of the VCs themselves.
Software is nimble, has less overhead, can be optimized for profit faster, can be recombined, pivoted, repurposed way faster.
Ergo, the market economics of VC are terrible at naturally selecting for innovation with a societal benefit, because that’s absolutely not in their firmware.
otterley
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.)
nateglims
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.
otterley
I think this is an "and," not a "but." Your statement and mine aren't in conflict.
cylemons
They may be the most popular but more importantly how profitable are they
Aurornis
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.
whimsicalism
We have a massive and diversified economy - I suspect you are overgeneralizing from things adjacent to your niche in it.
supportengineer
These ads ain't gonna show themselves.
_carbyau_
So the greatest military force in the world now needs to fight the war on
...
adblockers?
bitwize
Yes, which is why people who use and advocate for "general purpose computing" will find themselves on terrorist watchlists.
monster_truck
I'm p convinced that this push for age verification using govt IDs & debit/cc tx is the death rattle of the rampant ad fraud that has sustained the tech bubble
ulfw
What 'enemies'?
tkiolp4
Exactly. If any, the US is one of those countries everybody else is afraid of. Americans may be proud of that, but that’s pure bullying.
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.
unethical_ban
I see your point, but isn't it fair to say Intel is too big to fail?
Not in the "lots of people would lose jobs" or "ripple effects would cause economic disruption" but in the true national security sense. What allied semiconductor manufacturers have significant cutting edge fabs in Europe?
deepsquirrelnet
IMO the company can fail. It’s the people, facilities and equipment that matter. Those can get picked up by a company or companies that know how to use them.
Secondarily, a TSMC fab on US soil seems like a better investment. In the catastrophic event that Taiwan were invaded — it’s still people, facilities and equipment that remain here.
If they are "too big to fail" then they shouldn't exist because they are also a national security issue. Either let them fall apart and fund everyone but them, or split them apart into multiple companies with new leadership.
unethical_ban
That sounds like you expect a competitive, free market for things as complex as the world's cutting edge CPU or nuclear weapons or fighter jet technology. I think when it gets as specialized and capital intensive as those things, a true free market is less likely to exist.
Aurornis
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.
throwaway173738
It mirrors the 8-10x multiple that you can command in your valuation for ARR.
headcanon
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.
kridsdale3
Exactly the same for me.
It's made me one of the only leaders in my Software Org that actually knows what happens below the level of the instruction set. I can talk about the power and heat implications of algorithmic decisions. But mostly nobody cares, theres always enough money to buy more servers.
esafak
That's the thing with knowing thing other people don't; they might not be able to appreciate it.
raziel2701
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?
sitzkrieg
you think on call doesn't exist in software? its a common squeeze and replace w h1b tool
BeetleB
Worked as a SW engineer for over a decade. Never did on-call.
Not all SW jobs are web related.
sevensor
Same boat. The pay was mediocre, the hours were bad and far too many, and the company used cyclical demand to keep us in perpetual fear of layoffs. Mandatory pager carry 24/7/365 unless I was on vacation out of town. Rotating weekend coverage. Rotating holiday coverage. First couple of years were 12 hour shifts on my feet, then I went to process integration and did endless meetings instead.
I loved, still love, the actual technology of semiconductor fabrication, but you’d have to pay me 8x what I was making for me to go back to the business of semiconductor fabrication.
Workaccount2
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".
kridsdale3
Sometimes, there's lasers.
AlphaSite
There are extraordinarily highly paying semi firms in the US, but neither Intel nor AMD fit that mould unfortunately.
I’ve never understood why that’s the case; they are also high leverage jobs where a few can do extraordinary work and be rewarded thus. Look at Nvidia. Their employees are well compensated and they stay and the company does fantastically.
BeetleB
> There are extraordinarily highly paying semi firms in the US, but neither Intel nor AMD fit that mould unfortunately.
Who pays more than Intel?
In this context, semiconductor jobs is referring to people actually involved with developing the fab - so Nvidia/Apple/AMD don't count.
sgerenser
I think this is more of an Intel problem than a general semi industry problem. I work for Arm and I’m compensated better than when I worked at Microsoft (although it’s partly due to stock appreciation after the IPO). But I’ve also heard that Broadcom has top-teir RSU grants as well, and even AMD is more competitive than Intel.
lumost
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.
Henchman21
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.
phendrenad2
"I saw the best minds of my generation writing spam filters" - Neal Stephenson
Same for me except I never started. Graduated EE and went straight into software. Not just higher pay, but also a hell of a lot more jobs available, especially to new grads.
frognumber
As a former EE, it's not just pay.
The cog-in-a-machine corporate culture is not fun. Tech culture is much healthier.
There's no upside to big electronics companies here.
dboreham
Also moved from the semiconductor industry to software, 30 years ago. Much more money.
packetlost
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.
_carbyau_
In every workplace I've been, I end up thinking 50% of people here could be gone tomorrow and nothing would change.
But the real trick is filtering precisely the 50% you want.
freeopinion
Who gets to determine the bottom 50th percentile?
packetlost
it doesn't really matter as long as you retain the top 10% who do 90% of the work.
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.
jollyllama
Billions for fast food delivery apps, not a dime for defense or sustainable agriculture.
Aurornis
> Billions for fast food delivery apps, not a dime for defense or sustainable agriculture
Fair enough, I suppose I was being hyperbolic, but nevertheless...
It would be interesting to see the graph before 2019. For a decade, all of the investment money, talent following behind it, piled into Uber, etc.
> has resilient even in a broader VC pullback
Yes, people are starting to catch on now. Even so, investment is at best a leading indicator. In terms of existing on-the-ground domestic infrastructure, we're sorely lagging in real-world capabilities, but the better part of the last fifteen years was spent creating a vast Grubhub-type delivery infrastructure across the US while the amount of resources dedicated to peer or near-peer conflict logistics and long term agricultural production were relatively ignored.
Fade_Dance
Beyond Meat also hit 15 billion market cap at peak.
jollyllama
I don't consider synthetic nutrition agriculture; what I'm talking about is regenerative farming practices or high tech alternatives to pesticides i.e. Carbon Robotics.
logicchains
It's only be a short term thing, because fundamentally software is more profitable because it's much less costly to scale. And individual developers have more bargaining power, because they can own the "means of production", while the means of production for hardware is much more expensive.
safety1st
Well, there's a really easy and straightforward explanation for how this happened. It's just uncomfortable for everyone who's succeeded because of it. So they don't say it.
America abandoned free enterprise in favor of managed monopolies. It happened via a wave of financialization, globalization, government bailouts, mergers and consolidation that all granted immediate financial benefits to shareholders, at the cost of long term competitiveness.
That's it that's the whole story in a nutshell, look at Boeing, Intel and others, you'll see it again and again.
This is not the right way and US economics are looking more like Mussolini's every day.
Force these incumbents to compete. With fragments of each other, or with new American companies. Perhaps shelter them from some foreign competition if you really must.
That would once again unlock the unparalleled power of the 350 million enterprising souls spread between the two coasts. Which is what got America to #1 in the first place.
Give those souls something to do again that isn't meth or opiates.
Managed monopolies are not the way.
lmm
That's backwards. US companies moved manufacturing out of the US because other countries had competitive advantages (often cheaper labour), not because they weren't free enterprises but they were. Making stuff in the US doesn't make business sense. Patriotism doesn't make business sense. If you tell companies their business is to compete with each other to be the most profitable, that's what they'll do, and that's what they did.
safety1st
It's not backwards. It's ECON101.
Government makes policy.
Government decides when and where to apply tariffs.
If government applies a tariff on imports from any country that has cheap labor, businesses will stop offshoring to that country because it will no longer be cheaper.
Or at least, that's what businesses do in a free market economy. In the free market where many firms compete for your dollar, they can and will compete on price when they have to.
But in a "managed monopolies" economy like 2025 America, they may just raise prices instead because they have at most 2-3 competitors, and all it takes is a few games of golf, a wink and a nod to keep prices high.
We used to call that a cartel, prosecute the shit out of those companies, and defend the free market.
America's government stopped doing that. Now our enforcement is Luigi. When and where will the next Luigi strike? How many Luigis do you want to see? I would rather have government resume serving the People, it will work better, like it did with Standard Oil and AT&T.
Patriotism is not required. Policy that puts the people first plus competent law enforcement against corporate crime is all that we need.
sofixa
It is wild to see someone bringing the benefits of tariffs and free markets at the same time.
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...
davedx
> 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.
dfxm12
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.
hobs
The only people arguing against big government are republicans when democrats are in power, otherwise everyone is happy to expand spending.
lovich
Taking 10% of Intel. Intel was already supposed to get this money and then retroactively were told to give up 10% for it
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.
variadix
The strategy is fine, the problem is there aren’t enough domestic competing players in cutting edge semi nodes for it to work anymore. The US had many competing foundries before its semi industry was hollowed out by Japan and Korea. Now the only player in the US is Intel and, having been mismanaged for the last decade or more, it’s at risk.
I don’t think propping up Intel is going to work though, they’re a sinking ship and their management seems too risk averse and incompetent. It might be better for the US, long term, to let them collapse and sell off strategic parts to different domestic players (NVIDIA, AMD, micron, TI, etc) and use tariffs or other trade policy to force some amount of leading edge semi fabrication to use domestic manufacturing.
duped
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.
reenorap
The reason this pivot happened was because of the Pandemic. As soon as the Pandemic hit and China stopped sending us PPE it was a violent slap in the face and an extremely rude awakening that we are completely dependent on China and other countries for basic necessities. India also stopped sending us pharmaceuticals.
This realization means that no matter what, Americans need to make certain basic necessities, and chips are one of them. I have friends at Intel that have been there for 20 years and they basically say it's dead man walking. They have chip equipment that they paid billions for that is sitting idle because they don't have the demand, but they can't turn them off otherwise it will be destroyed. However, these machines cost hundreds of millions to keep on. Plus they are already out of date compared to TSMC. The entire thing is a disaster, but Americans need an American source of chips so they have no choice but to double and triple down on a bad investment and hope that something happens that will let them become competitive again.
Neywiny
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.
marbro
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.
georgeecollins
Intel was very profitable until it was not. They spent over $800B on stock buybacks. That will buy you some fabs, some R&D. Its true they invested in R&D but not well. Maybe the answer was to fund an independent internal competitor to keep the org focused.
Financialization is a dead end when you face a nation state determined to control steps in you value chain. How profitable will apple be if they can’t get chips?
jandrese
I still think Intel missed the boat when they had the dominant process in focusing entirely on their own chips and not taking customers for third party fabbing. Samsung and especially TSMC have demonstrated conclusively that the real money is in producing chips for other companies. It might be lower margin, but the volume is undeniable and it keeps your company on its toes with node improvements.
Intel switched to a "service the stockholders before the customers" mode and they have never recovered.
The problem is when importance is not reflected in the quarterly profit margin.
treis
Chips are one of those things where being the best is simultaneously very important and not at all important. Making a 10% better chip gets you the entire market. But it makes practically no difference if your cellphone or laptop or server or whatever has a 10% worse chip.
p1necone
> Making a 10% better chip gets you the entire market
Gets you the entire datacenter market maybe. End user (PCs, cellphones etc) stuff is much more concerned about perf/$ (up front cost) than perf/watt (long term cost), and the embedded market (electronics, appliances etc) mostly care about 'good enough' as cheaply as possible - performance isn't a concern at all for many use cases.
And the corporate market mostly cares about (perceived) reliability/liability concerns over everything else - see how hard it's been for AMD cpus to penetrate despite being measurably better in every category compared to Intel at various points in time.
Workaccount2
The true place where the government should steer the ship of the market.
davedx
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
ilikerashers
The EU outsourced manufacturing without any Mag 7.
I'm sure it'll work out well for us...
kazen44
mind you that a lot of this outsourcing is also happening inside the EU from high wage western countries to lower waged eastern countries (poland, hungary, romania etc).
roughly
> 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.
JKCalhoun
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.
kevin_thibedeau
There are already domestic semiconductor fabs dedicated to the defense industry. The issue is that military semiconductors ceased to be cutting edge in the 80s and now everything runs on old processes for the enhanced reliability. That's perfect for most applications except when you need a low power handheld supercomputer that only TSMC can make.
davedx
The US already has DARPA that does semiconductor research, particularly where it intersects the military.
readthenotes1
NASA seems to outsource a lot. Would you like Boeing to create the fab next door to you? What could go wrong??
rjsw
You would still outsource running the fab to Intel, just have a government body overseeing it.
chatmasta
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.
I believe something similar is happening in drug development right now. It may take less than 5, 10, 15 years to see the impact to the US. But from someone who has a vantage point to see it across many parts of the industry, including having seen the evolution of Intel / TSMC, I think it is a very similar story. Right now is like 2007 (or maybe even a bit later) for therapeutics. In the future, we will look back on this year as the year we gave it up.
CincinnatiMan
It could be argued that new drug development is less needed during wartime than processor manufacturing.
esafak
What's happening exactly?
vel0city
Billions in grants have already been cancelled. Lots of research is losing its funding.
speleding
I would like to challenge the notion that you absolutely need state of the art fabs to win a war. Most military gear uses "proven technology" several generations behind SOTA. When push really comes to shove there is a lot you can do with the chips you already have and nationalizing the fabs under your control.
The dependence on oil from the Middle East is comparatively a bigger problem for the West (though not for the US with its shale oil reserves).
nonethewiser
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.
davedx
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.
cthalupa
Except what the government purchased is a block of non-voting shares as long as the government holds them. So what benefit does that provide over grants?
yyyk
>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.
It's not the same as taking part in decisionmaking? Intel could just say 'no' to grants. They don't have to accept the terms.
cthalupa
But they don't get to take part in the decision making with this equity stake either. The shares are non-voting while the government holds them, and revert to voting shares once sold to a private entity.
nonethewiser
And they can say no to the government with the equity stake and the government can divest.
I'm not arguing they are exactly the same... I just think the author shouldn't state the hypothesis at the end of the article without examining it.
Frankly I think it's a good summary of why Intel may be too big to fail. It's just framed wrong.
craftkiller
> 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.
doytch
Huh? He talked about and linked to a series of his older articles, including this one from 2013. [1] It's been a while.
That article is from before Intel started to decline. Quoting the end of that article:
> Intel is already the best microprocessor manufacturing company in the world
Intel was not driving themselves into the dirt if they are the best in their field. Instead, I'd suggest looking at when the process nodes were achieved:
Seems almost exactly a decade ago that Intel lost their lead and fell behind the competition.
ksec
>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.
There were a few of us warning about this well before it all happened in 2013 and 2014. Predicted the death of Intel, and surge of AMD and TSMC before majority of people even heard of TSMC.
I also feel a little sad about TSMC, now that they have invested a lot in US but US is actively and strategically trying to pop up Intel to compete. But TSMC is at least 2 cycle ahead, meaning 5 - 6 years time. Unless TSMC make any mistakes even in the best case scenario I dont see Intel catching up within that time frame. Especially now they have little to no cash cow. Server, GPU, Consumer CPU are all under threats.
AceJohnny2
This is the same reason France keeps propping up STMicroelectronics and their fab in Crolles, France (near Grenoble).
There is strategic importance in maintaining home-grown capability.
(it's also the same reason France keeps propping up many other industries, and sells weapons/jet fighters to other countries...)
mvc
If all advanced countries follow this reasoning, where does that leave us?
minkzilla
Robust and redundant manufacturing spread across the world with more opportunity for innovation?
mallets
Trillions of dollars spent just for redundancy? Most wouldn't even succeed in building a working process, forget profitable.
axus
The world collectively (mostly the US) spends trillions on national defense, that spending is unnecessary if we all just got along. I think you're right that everyone spending money on local semiconductor industries is even more wasteful.
Whats wrong with redundancy? Not having redundant supply of anything is a problem as human history has repeatedly shown. I think this kind of modern "more profit = more better" is just a ticking time bomb for a massive disaster, and it isn't like we haven't had any warning signs about critical supply problems for any number of resources and goods.
mallets
If you can print the money required with no bad consequences, go right ahead and build all the redundancies.
The problem with bleeding-edge fab is it's a (fast) moving target. It's not a solved problem. And customers can't simply migrate their designs to a different fab, as the designs are increasingly specific to a process.
I do think we need more fabs but not this kind. Very low cost fabs with standardized PDK and open(ish) tools, should be as simple as ordering a PCB. Not going to happen anytime soon though, needs old fabs to stop production and the bleeding-edge to hit a hard wall. Can't compete with fully depreciated legacy fabs/nodes.
bee_rider
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.
SlowTao
That doesn't sound unreasonable. That is Ivy Bridge/Intel Core 3rd gen capabilities. You aren't running a generative AI but can do all manner of work loads. Combined with some software efficiency gains and you could be fairly comfortable.
This part of why I have been advocating for years that the open source/free software folks should be focusing on optimization and stability/security as long term it will probably be much more useful that adding features that can be dumped on top.
epicureanideal
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.
throwawaymaths
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?
People have been raising this alarm for decades as more of our domestic manufacturing is off shored. Few listened then. It's unlikely we will come back from this.
theMMaI
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.
trhway
>There won’t be a startup to fill Intel’s place.
That’s Intel management’s FUD building a moat against such startups with the government’s help.
Several billions of dollars is not a scary level of funding these days for such startups to happen. Plus CHIPS pile of hundreds of billions. Plus Nvidia, Google, Amazon, Apple and others can always form a consortium to build a foundry. A lot of options, yet all of them are being killed by the Intel management skillfully working the bronze ear. That is how a tech race is lost - by letting government instead of the market to pick winner.
zoeysmithe
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.
vonneumannstan
>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.
twoodfin
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.
franktankbank
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.
bix6
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?
schmidtleonard
The people who own all the capital do and that's part of the problem. Nobody likes seeing red in their brokerage account.
bix6
O sure there’s no long term forethought and if you manage others’ money you’ll get fired. It’s brutal.
jack_h
> 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.
belter
To quote Dave Chappelle: "I want to wear Nike shoes...I don't want to make them!"
_DeadFred_
'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.
rangestransform
Unless you believe that rich countries should altruistically give resources to poor countries, this is the best we can do. If there were no cost advantages to manufacturing in poor countries, they would have been entirely left out of the global economic sphere and unable to trade anything for industrial machines and technology.
SlowTao
This is why I swing like a pendulum between "a better world is possible" and "let the system burn itself out.".
NitpickLawyer
> Nationalism/protectionism and capitalism are fundamentally incompatible
Huh? France and Germany are prime counter examples of your statement.
tick_tock_tick
I mean they are both shocking poor compared to the USA and France is still suffering from ridiculous youth unemployment.
zoeysmithe
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.
marbro(dead)
[dead]
micromacrofoot
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
jkestner
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.
wat10000
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.
scarface_74
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.
jrk
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.
JustExAWS
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.
bee_rider
Mobile as cellphone chips? I guess you are right, they were never really all that close to best.
Intel was very competitive in laptops until Apple started coming out with the M-chips. Now, AMD is doing pretty good. Has Microsoft released their Snapdragon surfaces? Haven’t heard much on that front.
SlowTao
Intel dropping the XScale ARM was the beginning of the end. Their iGPU's where fine so long as the peak of usage was google Earth/Maps. But it was wildly under supported and they ended up missing the boat, that could go for a lot of their products.
qwytw
Well on desktop and server they pretty much had no competition until the late 2010s or so. So they were the best by default.
Loudergood
AMD definitely gave them a scare several times before that.
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.
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.
rjsw
Intel also had adequate software for their GPUs. They didn't mess about using binary blobs for them.
JustExAWS
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
SlowTao
I have said that their benchmark to power a desktop with Google Maps in 3D. Anything beyond that was a bonus.
rickdeckard
> "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...
3D30497420
> 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?
dpkirchner
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.
201984
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.
UncleOxidant
There are other alterntives to the US Gov taking a 10% stake (and it must be noted that this is for money already distributed to Intel via the CHIPS act, so it's tough to say how the gov having a 10% stake is really helping Intel here, there's no new investment involved and Intel needs ca$h). I agree with the article that there's a significant geopolitical risk to the status quo. I think it would've been better for the president & his economic staff to arrange a meeting of US companies that need foundry services and try to get them to a "come to Jesus" moment re the geopolitical risk to their current operations relying so heavily on Taiwan. The government role here shouldn't be to own Intel (or other companies) but to incentivize those large fab customers (Apple, Nvidia, AMD, Broadcom, etc) to make a significant investment into Intel foundry services. Not sure what those incentives would look like - perhaps tax incentives. There's also the possibility that some kind of 3rd party consortium could be setup to run Intel. This way they're not trying to start from scratch (which would take too long and too much capital), but also allows those other investing companies to have some kind of control at a distance.
BlueTemplar
"Never" is a very strong statement... or do you expect the USA or the need for chips to stop existing in a time frame as short as half a century ?
rickdeckard
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)
slipperydippery
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).
tick_tock_tick
> If no one trusts Intel now, I cannot begin to imagine how anyone would view Intel plus the current US government as more trustworthy.
Because people making these decisions aren't chronically online....
acdha
This is relevant how? You can be the most dyed-in-the-wool old school businessman who only reads physical newspapers and the first thing you’d think of is the way all of your suppliers are reporting unpredictability and your buyers are talking about reduced demand. Businesses like predictability and between the chaotic massive tax hikes and aggressively politicizing the federal reserve, they don’t have a stable environment.
klooney
Best case, we get President Vance before 2028 and things settle down.
maxhille
Well given Vance's connection to Peter Thiel I don't think it would be less destructive
klooney
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.
kingkongjaffa
> Vance is such a political chameleon
What makes you say that?
nemomarx
He's reported to have many more liberal friends when he was in college, used to be vocally anti trump, wrote a book criticizing rural Americans and their culture before running on a base of them. That kinda stuff.
At minimum he's made a never Trump - maga pivot for political expediency but it also seems like his positions are tied to whatever Peter thiel wants
lantry
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.
xp84
Sure, but the thing is, from appearances Trump seems to lack the ability to think strategically, to plan, and importantly, to find and listen to people who know things.
Even setting aside most of the culture-war stuff, which is so white-hot right now that it clouds matters, I think almost any other politician other than Trump, AOC, MTG, and probably a couple more I'm forgetting, would be more likely to do that last thing.
Trump's main issue is that he gets all excited and makes rash decisions based on the last person he talked to, compounded by the fact that he chooses who to talk to overwhelmingly based on chump change "campaign contributions" (bribes), family nepotism, or just his existing network of sycophants.
I'm saying all this neutrally toward ideology and left/right. Frankly I think life was fine domestically under both G. W. Bush and Obama, because both of them weren't impulsive and easily swayed to erratic decisions.
onetimeusename
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).
HankStallone
Yeah, behind all the partisan chaff, serious people think falling behind in AI could be disastrous. Getting locked out of it altogether because you lost your only source of advanced chips would be even worse.
cricketsandmops
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.
downrightmike
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
bigyabai
> 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.
onetimeusename
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.
bigyabai
> 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.
onetimeusename
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.
nine_k
But NVidia chips are now part of national security, I suppose.
downrightmike
And to China with a 10-15% tax
scarface_74
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.
hedgehog
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.
scarface_74
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?
hedgehog
To have customers they need to do the actual work of closing deals, building the customer-facing support teams, building all the tooling integrations (PDK, simulation, etc). On the manufacturing side they have to figure out who will do all the stuff besides fab, I think they have 14nm currently in the US and Ireland but the packaging might all still be Asia. It's not something to be done in case of disruption, it's essentially starting 80% of a new company to serve customers who want a US and Europe based supplier. Government customers could work, or public/private joint venture to build commodity parts, but either way they need patient customers who can help work out the problems and pay a premium to do it.
epolanski
Modern cars are powering multiple (as in 3+) screens at the same time, including games, streams and videoconferencing.
mrheosuper
which can already be done with >7nm chip.
epolanski
Yes, everything we have out there can already be done on 28nm chips, that doesn't mean that the goal stays idle. And in a car you have hundreds of subsystems to control and monitor too.
I mean obviously it's about chip production, but shitting on the chips act is a political stunt and nothing more.
Building fabs takes lots of money and time.
Intel also doesn't have customers except themselves and have fallen far behind in the fab business and has a decade+ or mistakes to make up for.
What we have here is picking a winner and potentially insider trading/market manipulation with Trump shitting on Intel leading up the "deal".
onetimeusename
That was what I was arguing against. It seems like people cannot stop themselves from making this about Trump. I guess he does that himself though. The problem with saying he was shitting on the CHIPS Act is that Biden himself didn't even pay out the money. It's because Intel made no progress on the fab. It's pretty clear behind both Biden and Trump is a desire to have Intel's foundry working. With Intel making no progress on it, I am assuming the call to take a stake in Intel was done to mitigate all the benchmarks Intel said they would make but failed to do. Perhaps the government figured they could pass the money to Intel without giving up the reigns this way. Either way, I am very convinced there is a national security motive under all of this and neither Trump nor Biden went down this path to grandstand on it.
rich_sasha
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.
margalabargala
> 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.
woooooo
They've lifted a literal billion people out of third world, no-indoor-plumbing poverty in the last 30 years.
And, to the point of the article, SMIC is already doing 5nm manufacturing.
Political systems are more complex than dictator/freedom, there are lots of stakeholders. The USA stakeholders tend to be short-term focused financial engineers, this is separate from whether we have checks and balances or what color tie the President wears.
margalabargala
Yes, they have had great success.
The comments you made about political systems indicate you don't really grasp my point.
- Governments are formed of people. People make mistakes.
- Power tends to corrupt, and the likelihood of corruption scales with the quantity of power and the quantity of people passing through the role (that is, one person may truly have best interests at heart, but will their successor? Or their successor?)
The result of the above is that when assessing long term stability of systems, problems that can happen inevitably will. If a system allows massive sweeping changes, then they will happen, and eventually an incorrect one will be made.
For example, let's take the scenario above, where Chinese companies were ordered to begin using Chinese GPUs. Did that work out? Yes. Could it have gone poorly? Yes.
Will every similar decision go as well? No. Thus, a situation where the "you must use Chinese GPUs" dictation is possible, is less stable than one where it is not.
You brought up a comparison to the US, because the US and China always get compared I guess? The US does this sort of thing more weakly, so gains less instability from this particular source of instability. Whether it's currently more unstable in other ways is left as an exercise for the reader.
thisisit
> 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.
chatmasta
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.
epolanski
People who think that china makes crap products has probably never been in china in the last 5+ years and their knowledge about their products end up with Shein or Temu crap.
fuckaj
My perception changed when the iPhone came out. But even before tbat alot of stuff was made on China and it cant all be crap!
jajko
Yeah folks judge Chinese output by 1$ usb cables, ignoring how ie DJI came to the market and ate everybody's lunch including US companies like gopro who basically had to cancel whole drone product pipeline overnight, thats how badly behind they were.
When I picked up my DJI drone many years ago the amount of polish was top notch - hardware worked flawlessly, software was fast and without any glitch. I was looking for any signs like 'designed in Germany' or similar but nope, all Chinese.
People think about 3rd world countries and somehow end up thinking about the very definition of permanent incompetence - russia and its satellites. Like they still put chips from stolen wash machines into their ballistic missiles. When China is in comparison more like a humiliated, smart, deeply focused, hard working, ignoring some pesky human rights group of people who grokked well they don't need to bow to any foreign powers anymore if they focus and work hard on specific goals.
marcosdumay
> 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.
Workaccount2
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.
prewett
Xi is a return towards Communism, or at least Communist-style control. And things have slowly gotten worse over his tenure. I think zero-Covid and the Shanghai debacle lost a lot of trust, too.
I don’t foresee the Party choosing someone more hardline than Xi, though. China has always been authoritarian, but collective ownership was new and an unmitigated disaster. They are too smart to go back that direction, although if they did, I could see that happening.
KerrAvon
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.
simne
I really wonder, why so much noise about this case. I agree, semiconductors are extremely important in current world, but did you know, Volkswagen AG is partially owned by State of Lower Saxony (~ 11.8%)?
Also worth to remember cases of Rolls-Royce, Ericsson, and some other unfortunate Western companies, important for many humans, but once became unable to stay economically viable. (BTW it make me laugh, when I got info, Bentley now under WAG, when RR under BMW, as technically, they many decades was one entity)
WAG case is different from Intel case (and other I mention), but there are also many similarities, because of which I think, Intel case may be special for US, but is not too special for West.
And I think, such cases are bad, they are great shame, but also they are signs, we must do something, to make Western produced semiconductors more competitive.
France and The Netherlands have a combined stake of almost 40% in Air France - KLM. It's not unheard of. 10% seems very reasonable for such a critical company for US interests.
kingkongjaffa
I'm confused why you mentioned Rolls-Royce and then in relation to BMW.
The government intervention of RR was nothing to do with the cars.
The original Rolls-Royce company, which included the car division, was nationalized by the British government in 1971 due to financial issues with its aerospace business.
The car division was separated in 1973.
The parent company, Rolls-Royce plc (nothing to do with cars), was sold to the public in a share offering in 1987, meaning it was no longer government-owned.
In 1998, BMW purchased Rolls-Royce Motor Cars.
simne
> I'm confused
...
> The original Rolls-Royce company ...due to financial issues with its aerospace business.
Well, it is because you do not understand economy of business. Unfortunately, main goal of any business is to be viable, not mean profitable, just be good enough to pay expenses need to run things defined as goals.
By definition, ALL old automotive companies started as hybrids - car division to make profits and motors division to make use of outstanding knowledge gathered when making consumer cars (as highest technology of that time). There are nearly no exceptions - Daimler began as Daimler plus Maybach; BMW began as motorized vehicles garages production plus motors business; Renault began as aviation motors business, made automobiles to make additional cash.
When Rolls-Royce divided to aerospace motors and cars, it was already semi-dead business, because their aerospace behavior was non-viable without donations from car division.
To be exact, I don't mean, aerospace impossible to be viable, just RR was.
And returning to our ontopic, Intel was caught in same hole - they lost their superiority and cannot survive without external help, absolutely as RR business.
simne
BTW, Bentley was part of RR business model, as basically, Bentley was luxury-sports line of RR, in all other properties very similar to RR.
So, when first Bentley separated from RR, Bentley become rival of RR, and now Bentley and RR divide same market. And this is very bad for their economy, very much like Volkswagen Golf GTI eat market from SEAT performance models, but VW already killed SEAT to avoid unnecessary internal rivalry, and RR-Bentley cannot do this, because they are now different business entities and their coordinated moves prohibited by regulations.
elliotto
If Volkswagen goes under, the Lower Saxony government likely loses an income stream.
If Intel goes under, Taiwan becomes the battleground for WW3.
simne
Unfortunately, auto industry is core industry of modern economy for a long time. - Semiconductors and computers become core industry much later.
But core industries are just head of iceberg, you may not hear, typically 90% of iceberg are deep under water surface, very much like core vs non-core.
Any way, if large entity from core industry goes under, this could lead to killing domino effect for many "underwater" entities.
That is really big problem, which president Trump tried to avoid, when bought share of Intel.
And no, I disagree about battleground for now. What really important, really good strategists know, wars win by economy, not by military, as military could not withstand if they have not enough money for weapons and equipment.
So, basically, now US is stronger than China, so Chinese tops decide to not begin war which will not be profitable, while US is strong.
When and if China will feel competitive to US economically, they will be much more confident to begin war, so now the best what could do US tops to avoid war - to make China weaker and US stronger ECONOMICALLY.
simne
Current situation very similar to space race, which was started when Soviets launch first satellite in 1957, because ICBMs are basically space scale rockets.
Unfortunately, now China already could make space scale rockets, so competition moved to other space - to computers and semiconductors (and possible branch to nano-industry or bio-nano, or something similar).
bdangubic
we must do something, to make Western produced semiconductors more competitive.
and letting Federal Government in on this is sure to make this happen - just like everything else being ran by the Federal Government
simne
> just like everything else being ran by the Federal Government
Well, I don't like when something ran by Federal Government, but I have similar example: when somebody ill by flu, I don't like to use antibiotics, but sometimes must use antibiotics as fast measures to save life.
That is. Previous pro-semiconductor measures was not fast enough, and Intel was in real trouble and need to use something fast, and now we have bought time to do right but slow things.
bdangubic
antibiotics work albeit being shitty for you in the long run. gov never works in short or long term (and especially long term since every 4 to 8 years everything one party did the other one destroys the day after inauguration)
CharlieDigital
To be fair, US government is pretty good at strategic weapons; best in history. So if you view chips through that maybe it all works out.
bdangubic
this is being ran at about 9,800% waste which is why our department of offense budget is equal to 976 GDPs of Germany… very very bad example
HankStallone
The noise is 99% due to who is president. If President Bernie Sanders were doing exactly the same thing, most of the people complaining about it would be singing praises to his foresight, and most of the people cheering for it would be screaming about socialism. It's completely team-based.
cameldrv
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.
Insanity
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.
downrightmike
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.
Panzer04
This is just doomerism.
Intel's current chips are "fine" and competitive with AMD chips. If anything, Intel is trying out more things than AMD is.
simoncion
I wouldn't call chips that fault and/or fail after mere months of operation when run within Intel-specified power and thermal parameters to be "fine".
Intel may be trying out more things than AMD, but perhaps they shouldn't? Maybe they shouldn't be trying to chase ARM envy with mixed-performance cores and disabling MT and the like and just stick to making reliable CPUs.
Honestly, the only thing of Intel's that I'm interested in are their video cards; and that's not because they're good, but because Intel hasn't (yet) all but abandoned their video card business for "AI accelerators"... so there's room for them to become good.
bornfreddy
Well, they do have N100 & co. which are very nice low power x86 devices... Not all is bad that carries their name. But the main question is can they succeed as foundry? We will see in a few years I guess.
Diog
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.
chatmasta
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.
aurareturn
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.
whimsicalism
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.
entropyneur
The path is in the opposite direction altogether.
nonethewiser
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.
aurareturn
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.
In my humble opinion, if China wanted to, they could win it now. China's vast resources and manpower will be overwhelming. Doesn't matter if they lose a few battles or takes a few years.
The reason China doesn't want to is because they want a peaceful reunification. They want to wait when it's so obvious that Taiwan would lose and lose quickly that Taiwan simply gives itself up.
nonethewiser
> They want to wait when it's so obvious that Taiwan would lose and lose quickly that Taiwan simply gives itself up.
I agree they prefer a peaceful resolution but that would be in the form of Taiwan wanting to become part of China and deciding to reunify. It makes no sense to surrender without being forced to.
aurareturn
It makes sense if it's inevitable.
roody15
China has no reason nor any incentive to invade Taiwan. They are moving ahead with a strategy of overwhelming force and patience. In short China will simply continue to greatly expand its Navy and overall military size. It will do so until its so overwhelming that Taiwan will simply end up voting to join back with China as it will be in its own interest. China has no need to speed this process up and can simply do exactly what it is doing now.. and just watch how things will change in the next 5-10-15 years.
nonethewiser
But why would Taiwan vote to join China if China isn't going to actually attack it? Makes no sense. China could have 10x the military of the US and park it right outside Taiwan everyday for 100 years but if they dont do anything to Taiwan it has no incentive to reunify.
The scenario where Taiwan peacefully reunifies is where they decide they want to be part of China of their own interest.
qwytw
> 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.
sumanthvepa
The problem with predicting that China won't catch up on GDP per capita with the West is that the West too went through those growth phases about a century or two ago. It will take a 100-200 years, but China, and the rest of world will catch up. Just a matter of time. A long time no doubt. But it will happen.
thepryz
I think you point out the most important difference between China and most of the western world, or at least the United States.
China is patient. They seem to be taking a long term, intentional approach. Their goals are long term. In other words, they’ve been planting trees for decades and those trees are now beginning to provide shade. Americans, in the other hand are more concerned with their own self interest and the next financial quarter.
budududuroiu
> this patience has its limits
Without going into the lack of military capabilities to mount the largest amphibious invasion post-WW2 up until recently (debatable), I think you’d be hard pressed to find a group of people in the world that would be excited at the idea of being put under foreign occupation (not dissimilar to the “excitement” the Taiwanese had to be occupied by the Republic of China after WW2).
Regardless, TSMC wouldn’t survive annexation Taiwan being annexed by China in any capacity
kneegerm(dead)
[flagged]
monknomo
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.
tootie
I'm seriously not getting something about the entire argument in this blog post. How does a 10% equity stake make Intel more stable? At best it props up the stock price for a minute. If Intel continues to founder, then what? Federal government will buy more shares? Sell them? How does it affect the company's performance or decisions? Gov is not taking a board seat.
AnimalMuppet
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?
davedx
It was a grant (free money). Then the terms were (mostly) unilaterally changed to be an equity investment. Right?
cpncrunch
No. It was a grant with profit sharing. The profit sharing was turned into equity.
It was because Intel likely wasn't going to get the rest of the grant money, because Lip-Bu Tan openly told the world he won't develop 14A without commitments from customers.
If Intel is going to cease semiconductor development, then why should they get the rest of the taxpayer money? Even under Biden and Pat Gelsinger, the government was signaling to Intel that they may not get the full money if they don't make progress.
AnIrishDuck
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.
jawiggins
The US Government wanted companies to build fabs in the US so it offered them money to do it.
Intel, which was one of those companies, but not the only one, took them up on the offer and was paid to begin construction on a fab in the US.
Normally when we pay businesses to do things we don't demand equity stakes in the businesses afterwards.
Notably, the biggest shareholders in Intel appear to be retirement funds of Americans - so Trump has just pilfered some money from the retirement accounts of Americans.
downrightmike
All in so far it is $11.1 billion
righthand
As much as I dislike Trump, he didn’t extort anything. He renegotiated the profit-sharing terms for an equity stake in Intel.
cpncrunch
This is the correct answer. All the news articles seem to be lacking in details, but the deal did indeed waive the profit-sharing and claw-back provisions:
Why take issue with Trump alone then? Go ask Bernie Sanders. This is a peak at what socialism looks like in America. The country taking a stake is the people taking a stake. Strange bedfellows, perhaps, but anyone far anti-Trump should actually take this as a model of sorts.
tkel
I read all of Bernie's platform in 2016 when it was most thoroughly developed, and he didn't call for state ownership of companies like Intel. The closest he got to what you are thinking was calling for public ownership of utilities, which is standard in most capitalist countries, namely buying out/converting private electricity utility monopolies into either public or cooperative ownership.
Also, socialism means whatever the ruling class says it means. For example in China they've redefined socialism to just mean nationalism, which is the opposite of the original intent. Read about "Xi Jingping Thought" and "Socialism with Chinese Characteristics". It seems when ideas like socialism become popular, they are co-opted and stripped of meaning.
BeetleB
> and he didn't call for state ownership of companies like Intel.
But during the CHIPS act debate, he was against the Act unless the US gets a piece of the company.
In general, this is in line with his views.
999900000999
I'm not an expert, but I would of vastly preferred a fund to start a bunch of smaller fab companies.
Most systems don't need start of the art processors. Get some minimal fabs set up for RISC V chips. If we removed the profit motive, how much does this cost ?
Alternatively...
Even a refurbished GameCube can probably run a basic rest API server.
If anything we have enough EWaste that we can probably just recycle what we have. At least for most applications.
ronsor
My ideal situation is one where anyone can fab simple processors at home the same way you can 3D print almost any small object with under $5000 in total expenses.
Unfortunately that seems far away.
999900000999
I imagine if you could get it under a million, it enters the extreme higher end of the hobbyist range.
Not like everyone can personally design a chip anyway, but if a small city has at least one fab it can be something in an emergency situation.
Recycling is probably a better solution here thought.
reilly3000
Try watching DYI CPU videos on YouTube. It’s VERY far away.
high_na_euv
But what's the point of that?
There are smaller fabs already
sailfast
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.
etempleton
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.
blueplanet200
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…
nonethewiser
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.
grues-dinner
> TSMC’s foundries — and Samsung’s — are within easy reach...
To be honest, every foundry is in easy reach of something that can take it out. If there's a conflict that results in missiles hitting Korean factories, someone will be drone-bombing the power interconnects or driving trucks into water purifiers or whatever and taking out foundries in Texas.
It doesn't take much to ruin semiconductor foundry throughput. Wafers spend weeks or even months progressing from stage to stage. If you can cause a power failure, for example, you can scrap the whole content of the line and there will be no output until the pipeline refills: https://www.forbes.com/sites/tomcoughlin/2019/07/05/nand-fab...
Perhaps process robustness is better now, but in the constant scrambling state of semiconductor manufacturing, I doubt it is better enough to be able to shrug off concerted, deliberate attacks rather than just accidents, fuckups and bad luck.
keepamovin
Standard Silicon is a nice name. Maybe they should use it.
Other possibilities:
- Standard Circuit
- Standard Semiconductor
- Standard Microchip
ragazzina
Standard Silicon sounds really great, would be shortened to SS or StaSi..
keepamovin
I hereby appoint you National Secretary of Child Naming
selimnairb
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).
Gormo
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.
aesh2Xa1
To add on, the fundamental question is which risk is more palatable for something we "can't afford to fail?"
Is the risk of a hospital closing for purely financial reasons more or less acceptable than the risk of a state-run hospital being inefficient but guaranteed to exist? For critical infrastructure, I think that's a conversation worth having, and it's one that hand-waving about an all-encompassing 'market' obscures; dismissing a legitimate critique by framing the market as an all-encompassing force is just a rhetorical move.
Your comment seems to suggest that any attempt to change the market results in unfavorable results, but this doesn't hold up to scrutiny. I think you replied with a valid philosophical point, but you leaned too much on using it to challenge that anything could be done (when you yourself presented the idea that a mechanism was needed).
There is no such unmanipulated free market anywhere:
Perfect Competition: In reality, we have monopolies, oligopolies, and immense barriers to entry.
Perfect Rationality: Behavioral economics has thoroughly demonstrated that people do not act like perfectly rational, self-interested computers.
Perfect Information: There is almost always a significant knowledge gap between a seller and a buyer.
Since no truly free market exists, every economy is already a managed one. The real debate isn't whether we should intervene, but how we intervene and whose interests those interventions serve. I read selimnairb's point as that, for essential services, the rules should serve the public interest of stability and access, not just the private interest of profit.
We can examine the risks case-by-case. Here, the government is investing in a foundry. We could view the leverage this gains the US government as increasing the risk for political engineering above the previous risk of financial engineering. In financial engineering, Intel might prioritize its obligation to shareholders. In political engineering (if Intel were nationalized), Intel might keep an inefficient fab open to save jobs or just to win votes.
In the category of financial engineering as a risk, you might lump activity like stock buybacks put above R&D as exemplar of Intel. In fact, a criticism of CHIPS and this new government intervention often centers around the idea that Intel's leadership should not be rewarded.
Finally, a related case on the topic of Intel and national security: China's state-directed economy prioritizes national goals over private profit. After entering "the market," part of its core strategy has been to compel service to national interests rather than shareholders, and it seems that strategy has arguably driven its recent economic rise.
Agingcoder
I’m not sure why what he's saying is so outlandish to many ( at least to some of the papers he’s quoting ): we’re in a world which looks increasingly like the cold war all over again, and my immediate reaction when I saw the headline was ‘ah yes China this makes sense’. We’re not talking private capital - it’s national interests being pushed, for long term reasons, and probably a bit late.
Now I’m European so this seems obvious to me, coming from a culture of high government intervention but I might be very wrong!
jajko
The underlying logic is flawed though, there is no deeper action plan since they will still have 0 control over the company and any of its bigger decisions. Also nobody buys from Intel foundries, and for good reasons, this won't change any of that.
We have already seen some pretty blatant insider trading moves from current government, so I wouldn't rule that one out. But its probably way more petty - chips and manufactured war with China is all the rage in media, we all still remember covid situation, so its an easy area to get some political points, while spending other's money.
Most European government interventions, like French literally taking ownership of their common car manufacturers aren't considered any sort of success story to emulate after.
silverliver
This was always going to be the logical conclusion to US hostile policy regarding the the proliferation of IC fabrication. The US, not cost, was the primary factor that discouraged many countries from pursuing their own IC fabrication capabilities. Had they not been so hostile, many countries would have had enough capacity to cover for the US until it rebooted its own industry.
This is also the same trap that China is barrelling into right now and they will absolutely find themselves in the same position eventually.
skmurphy
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."
epolanski
OT: am I the only one who thinks booting Gelsinger was a huge mistake? Semiconductor business is not one you steer in few years, everything is planned years ahead and he had the right ideas imho.
xnx
Does the US need a domestic Intel more than domestic ASML (or Zeiss for that matter)?
jm4
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.
klooney
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.
scrlk
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.
trynumber9
ASML has a large factory in Wilton. & Zeiss is further away from missiles. So they're less concerned about that.
tick_tock_tick
The USA already owns the important part of ASML (the IP). ASML is a Dutch company purely at the USA's leisure.
ranguna
Care to elaborate?
epolanski
If semiconductors are so vital to US military, the US military should invest in research to build them on their own.
debo_
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.
evertedsphere
could you expand upon this?
webdevver
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.)
etempleton
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.
roody15
In my experience over the last 5 years the vast majority of companies I have worked with have moved to AMD for server purchases. Intel is not competing well on the home PC or server market in recent times at least that is what I am seeing.
reilly3000
100%. I’m seeing all of the new capacity in public clouds shift towards AMD. It’s hard to beat faster for cheaper. ARM has an even stronger value proposition, albeit with the requirement of compatibility. The switch would happen faster if there were enough equipment to go around… we switched all of our CI fleet to the latest AMD generation C4D‘s and got 36% faster builds, but had to go back a generation because GCP kept running out of boxes for us.
Liwink
The investment from Nvidia, instead of the government, would give Intel a better chance to survive.
I guess we just forgot about the US bailout of the big-3 auto manufacturers
cubefox
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.
Panzer04
The problem with leading edge fabs is they require obscene amounts of capital to develop and are apparently (based on Intel's experience) extraordinarily risky to build.
That's a hard thing to sell in any environment.
cubefox
Well it's easy to sell if you are the one currently ahead of the competition (TSMC) and very hard to sell if you are behind (Samsung, Intel).
qwytw
> 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...
cubefox
They already could do that previously (with tariffs).
itissid
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?".
hshdhdhj4444
I didn’t realize steelmanning requires strawmanning the opposing view.
A 10% stake does what? Nothing. The U.S. doesn’t even get decision making capabilities.
OTOH, the CHIPS Act created an incredible amount of semiconductor manufacturing capacity from a wide variety of manufacturers including both TSMC and Intel.
So the real question is what does getting a 10% stake do, that the CHIPS act which Trump is trying to retroactively destroy, isn’t doing much better?
superb-owl
Honestly the fact that we don’t have a sovereign wealth fund invested in US equities is just silly. I get that you don’t want too much central interference in the economy but it feels like leaving money on the table
ipnon
It's pretty funny to talk about central interference when the federal government already has a monopoly on monetary policy.
blitzar
Its silly I don't have a multi billion dollar trust fund. Unfortunately you need wealth to have a wealth fund.
jimmydoe
So the gist is to make Intel the Huawei but for US&A
snapcaster
The problem with that is that Huawei makes world leading products in a lot of categories and Intel's remaining dominance is slipping. I don't see how this stake impacts any of that
jimmydoe
My understanding is the piece argued state support as investor and customer might turn intel around.
Huawei started with much worse product and foundation than intel, but the state sponsorship kept it going, plus they have ultra hard working people and occasionally some shameless thieves, which made them where they are.
dehrmann
It would have been more effective to pay Micron to build up the capabilities to be a general-purpose fab to compete with TSMC.
felipeerias
Is this the beginning of the US sovereign fund?
afroboy
US own the dollar why they need a sovereign fund? sovereign fund is profitable when you invest in a foreign currency.
Telemakhos
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.
slt2021
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 ?
nyc_data_geek1
"Fascism should more properly be called Corporatism because it is the merger of state and corporate power.” — Benito Mussolini
wat10000
"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.
Der_Einzige
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.
qwytw
> "were nazis socialist?" argument you get downvoted
Well it's complicated... Is China socialist? What about state capitalism in general?
nemomarx
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.
tick_tock_tick
Or is it more socialism, the public taking ownership in the fruits of labor?
Honestly this is pure horseshoe theory where Bernie Sanders and Trump hold the same views.
bilbo0s
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?
slt2021
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
bilbo0s
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.
qwytw
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.
Telemakhos
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.
Note that all our issues with china would be solved if we stopped pretending like they're our enemy.
Herring
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.
9cb14c1ec0
Oh yes, that nice warm fuzzy China that definitely doesn't speak regularly about war and conflict with the West.
snapcaster
Look the united states is incredibly bloodthirsty and in my relatively short lifetime has killed absurd quantities of people in wars of choice. China hasn't invaded anyone as far as I know. I'm not saying they won't or don't want dominance but idk why we pretend that somehow China are the warmongers
MangoToupe
I mean, to claim china isn't expansionist overlooks their extremely violent formation. That said, they haven't been very expansionist for many many hundreds of years.
Stephen_0xFF
China wants to be number one and they have a good chance of doing it. Every nation’s leaders and people want that. It affords luxury and influence. The US understandably doesn’t want to lose their spot. It also helps making this an issue to give it a sense of urgency so things can get done — be it policy or innovation. There’s some game theory in there — e.g Prisoners Dilemma. Treating them as the enemy won’t lead to the optimal result, but if the US doesn’t and they do, it will lead to the worst result for the US. History is not filled with nations singing Kumbaya. I wish it was.
roody15
One could argue China may have already surpassed the US or at least equalled it on the world stage as of now. It will be interesting to see how historians view the rise of China and write about the emergence of a new super power.
Just a hunch and I am really going out on a limb here but I could see China wait another year or two and then step in and force a peace settlement in Ukraine. This would really show the world who the new super power is, as the US and Western powers have struggled with this conflict, a patient China could step in and reach a peace deal as they hold significant leverage over Russia.
MangoToupe
China has always been a powerhouse economy. It's really just a blip where they were surpassed in the last two hundred years.
MangoToupe
Yes, this is the attitude I'm referring to. The people who run this country (emphatically including people who frequent this forum) are far more my enemy than anyone in china could even pretend to be.
I also don't think Americans realize how quickly we will slide from relevance once our grip on the world slacks. We could have built this world into something amazing but instead we just got fat.
Herring
To be fair though, China has its morons too. If you can't deal with Republicans where you share a common language/culture/history, how are you gonna deal with a Chinese Trump on the other side of the world?
In the last election, Latinos voted 50-50 for Trump. That should have been a massive warning sign.
I like liberals, but they're way too passive. They really need to play the Prisoner's Dilemma in high school until they learn what to do when someone refuses to cooperate.
kube-system
> 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.
cheema33
> 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.
Did US govt. actually had an ownership stake in GM? Please provide some links to this effect.
kube-system
Yes, along with a number of other US companies. This was done to stabilize the economy in the wake of the 2008 economic crisis. It was a very hot political topic at the time.
They also owned AIG insurance. Probably some other companies as well.
kjkjadksj
If the US did go all the way with 100% ownership, would that even be a bad thing? American companies would have access to cutting edge chips which would presumably be able to be sold near cost at least on the domestic vs export market. No where on earth would be able to offer as competitive a margin. Innovation in so many categories would be spurred and would happen stateside.
2OEH8eoCRo0
> Intel fell behind TSMC, who was powered by massive orders from Apple in particular
> 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.
BenFranklin100
You know, we can just provide critical industries with direct assistance in the form of subsidies. There’s no need for the US government to take an equity stake.
Nationalizing companies - and that is essentially what we’re starting with Intel - worked out horribly for the Brits last century.
rdw
"We should do something to preserve leading-edge chip manufacturing in the US. This is Something, therefore we should do it."
yndoendo
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.
jmyeet
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.
baq
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.
bilbo0s
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.
foobazgt
Can you elaborate?
anonymars
This is a bit of a long piece but if you're interested in this subject I think it's a good read
"Doc Burford contends that the true danger facing teams today isn’t competition, disruption, or lack of capital—it’s leadership devoid of expertise, decision-making dominated by superficial metrics, and a culture that values appearances more than actual value creation. Sustainable success comes from building things people want, not engineering facades to appease investors or the market. Relying solely on executive titles or data without understanding the craft or customer rapidly leads to collapse."
Have to agree and think this encapsulates alot of what we have been living through in the US over last few decades.
jmyeet
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.
anonymars
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)
foobarian
> 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?
AnimalMuppet
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.
kccqzy
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.
AnimalMuppet
That's one possible outcome, yes. If the commander is smart/realist enough, you might even get it.
jmyeet
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.
Who was isolating and starving Yugoslavia? They did a pretty good job of failing on their own.
Gormo
> 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.
righthand
> 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.
jmyeet
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).
righthand
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]
> 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."
snapcaster
Do you think nitpicks like this are effective arguments? It's a bailout: they received privileged access to financing others didn't get
ModernMech
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.
3D30497420
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.
pcthrowaway
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.
spacephysics
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.
thinkharderdev
> 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.
estearum
Whereas with banks, their failure would've thrown the global economy into a deep depression?
os2warpman
> 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.
riahi
Which party was in power when 2008 happened?
empath75
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.
eej71
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.
mc32
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.
slt2021
this sounds like the situation with the Krupp Corporation
empath75
> 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.
baq(dead)
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9dev
As a German with extensive exposition to the third Reich I can attest to the fact that the parallels start to become uncanny.
baq
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.
Thanks for the details, I was only aware of the museum bit.
nine_zeros
> 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.
throw67
Another reason not to buy Intel chips
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9dev
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.
dwarksidle
> 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.
9dev
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:
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
convolvatron
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?
bawana
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?
nonethewiser
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.
kube-system
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.
dfxm12
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.
kg
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.
ks2048
> 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.
throw2432234
>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!!
diddid
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tomhow
Eschew flamebait. Avoid generic tangents. Omit internet tropes.
Please don't use Hacker News for political or ideological battle. It tramples curiosity.
To have a conversation about the US government buying a stake in Intel, and the threats of China in that space, requires one to have a conversation about both politics and ideology. It’s disingenuous to claim anything else. And to point out the irony of the passing fad on straws but deep love of fast fashion highlights the hypocrisy of US society in general and why we are incapable of having nice things or getting anything meaningful done at a scale of other countries such as China, Taiwan or even South Korea. And love or hate DEI you also can’t say companies like Target jump on and off that band wagon at shareholder will, when they aren’t ever jumping on the “we should invest in R&D and the next generation” because why would they, we haven’t asked them to so why would any other company Intel included.
samuraijack
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tomhow
Please don't reply to a bad comment with another bad comment. You can just flag comments like this and move on.
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.
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
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.
If you have money, the returns you'll get elsewhere are much less attractive, and can only be justified if they're very safe investments.
I feel like anything relevantly practical is denied investment.
But when it comes to anything flashy and hip, a train of dump trucks filled with cash couldn’t deliver money as quick as the VC dollars that flow into to startups with no business model and no hope of being profitable…
Yeah, I get that startups should invest profits and not actually make profits for a while… But when they’re on their 4th round of funding with thousands of employees… shouldn’t they at least try to be a bit more financially responsible?
They don't know anything else.
https://www.currentmarketvaluation.com/models/s&p500-mean-re...
This YCW18 ag company was acquired less than 3 years in by John Deere for $250M: https://techcrunch.com/2021/08/05/john-deere-buys-autonomous...
(Also, in neither country is the majority of its GDP comprised of websites.)
The number of countries producing leading edge semiconductors is actually small. The number of companies doing this work is very small, too. Although much of the economy needs chips to operate, those leading chips are concentrated in the production of a very small number of companies.
...
adblockers?
Is that the particular one you're referring to?
This was a poor business decision for exactly the reasons you’re pointing out. The market is dictating their failure and we’re now undermining it.
Not in the "lots of people would lose jobs" or "ripple effects would cause economic disruption" but in the true national security sense. What allied semiconductor manufacturers have significant cutting edge fabs in Europe?
Secondarily, a TSMC fab on US soil seems like a better investment. In the catastrophic event that Taiwan were invaded — it’s still people, facilities and equipment that remain here.
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.
It's made me one of the only leaders in my Software Org that actually knows what happens below the level of the instruction set. I can talk about the power and heat implications of algorithmic decisions. But mostly nobody cares, theres always enough money to buy more servers.
How about paying more then?
Show me the incentive and I'll show you the outcome.
When I interviewed at intel the position they were offering was to be the "owner" of a tool and I'd be on call.... Yeah no thanks, I get a PhD just to be owned by some company?
Not all SW jobs are web related.
I loved, still love, the actual technology of semiconductor fabrication, but you’d have to pay me 8x what I was making for me to go back to the business of semiconductor fabrication.
I’ve never understood why that’s the case; they are also high leverage jobs where a few can do extraordinary work and be rewarded thus. Look at Nvidia. Their employees are well compensated and they stay and the company does fantastically.
Who pays more than Intel?
In this context, semiconductor jobs is referring to people actually involved with developing the fab - so Nvidia/Apple/AMD don't count.
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.
https://www.youtube.com/watch?v=TE0n_5qPmRM
The cog-in-a-machine corporate culture is not fun. Tech culture is much healthier.
There's no upside to big electronics companies here.
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.
But the real trick is filtering precisely the 50% you want.
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.
Defense venture capital funding is literally in the billions and has resilient even in a broader VC pullback: https://www.spglobal.com/market-intelligence/en/news-insight...
It would be interesting to see the graph before 2019. For a decade, all of the investment money, talent following behind it, piled into Uber, etc.
> has resilient even in a broader VC pullback
Yes, people are starting to catch on now. Even so, investment is at best a leading indicator. In terms of existing on-the-ground domestic infrastructure, we're sorely lagging in real-world capabilities, but the better part of the last fifteen years was spent creating a vast Grubhub-type delivery infrastructure across the US while the amount of resources dedicated to peer or near-peer conflict logistics and long term agricultural production were relatively ignored.
America abandoned free enterprise in favor of managed monopolies. It happened via a wave of financialization, globalization, government bailouts, mergers and consolidation that all granted immediate financial benefits to shareholders, at the cost of long term competitiveness.
That's it that's the whole story in a nutshell, look at Boeing, Intel and others, you'll see it again and again.
This is not the right way and US economics are looking more like Mussolini's every day.
Force these incumbents to compete. With fragments of each other, or with new American companies. Perhaps shelter them from some foreign competition if you really must.
That would once again unlock the unparalleled power of the 350 million enterprising souls spread between the two coasts. Which is what got America to #1 in the first place.
Give those souls something to do again that isn't meth or opiates.
Managed monopolies are not the way.
Government makes policy.
Government decides when and where to apply tariffs.
If government applies a tariff on imports from any country that has cheap labor, businesses will stop offshoring to that country because it will no longer be cheaper.
Or at least, that's what businesses do in a free market economy. In the free market where many firms compete for your dollar, they can and will compete on price when they have to.
But in a "managed monopolies" economy like 2025 America, they may just raise prices instead because they have at most 2-3 competitors, and all it takes is a few games of golf, a wink and a nod to keep prices high.
We used to call that a cartel, prosecute the shit out of those companies, and defend the free market.
America's government stopped doing that. Now our enforcement is Luigi. When and where will the next Luigi strike? How many Luigis do you want to see? I would rather have government resume serving the People, it will work better, like it did with Standard Oil and AT&T.
Patriotism is not required. Policy that puts the people first plus competent law enforcement against corporate crime is all that we need.
The two are kind of antithetical.
It's a side effect of systemically putting short term gains ahead of long term research. CHIPs act may be too little, it is certainly too late...
That's more the stock market than the US government though. You could argue the US government tries to play a long game, and often the way the US plays that game is to let the free market decide (hands off, small government). It's definitely a valid strategy and has worked extremely well in a number of other industries, but for this specific niche, less so, and even then you could argue it's down to Intel's mismanagement than anything the government could or should have done.
I can't make the argument that the government is "hands off, small government" because I simply don't see the evidence of that. To the contrary, I have seen things like TARP, stimulus checks, oh, and the government buying 10% of Intel.
I don’t think propping up Intel is going to work though, they’re a sinking ship and their management seems too risk averse and incompetent. It might be better for the US, long term, to let them collapse and sell off strategic parts to different domestic players (NVIDIA, AMD, micron, TI, etc) and use tariffs or other trade policy to force some amount of leading edge semi fabrication to use domestic manufacturing.
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.
This realization means that no matter what, Americans need to make certain basic necessities, and chips are one of them. I have friends at Intel that have been there for 20 years and they basically say it's dead man walking. They have chip equipment that they paid billions for that is sitting idle because they don't have the demand, but they can't turn them off otherwise it will be destroyed. However, these machines cost hundreds of millions to keep on. Plus they are already out of date compared to TSMC. The entire thing is a disaster, but Americans need an American source of chips so they have no choice but to double and triple down on a bad investment and hope that something happens that will let them become competitive again.
Financialization is a dead end when you face a nation state determined to control steps in you value chain. How profitable will apple be if they can’t get chips?
Intel switched to a "service the stockholders before the customers" mode and they have never recovered.
Gets you the entire datacenter market maybe. End user (PCs, cellphones etc) stuff is much more concerned about perf/$ (up front cost) than perf/watt (long term cost), and the embedded market (electronics, appliances etc) mostly care about 'good enough' as cheaply as possible - performance isn't a concern at all for many use cases.
And the corporate market mostly cares about (perceived) reliability/liability concerns over everything else - see how hard it's been for AMD cpus to penetrate despite being measurably better in every category compared to Intel at various points in time.
I'm sure it'll work out well for us...
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.
The dependence on oil from the Middle East is comparatively a bigger problem for the West (though not for the US with its shale oil reserves).
The article is basically like this:
> Leading edge domestic foundry companies are a national security concern. Therefor Intel is too big to fail.
OK. Many can agree with this. And I think the author makes a very good argument for it. He makes some good points:
- Startup cant replace Intel - US cant rely on TSMC alone - Artificial demand could actually improve Intel by solving the chicken and egg problem
But that doesn't answer the question, "why the equity stake?" And for more context, it's replacing what would have been grants with the equity stake. So it's, "Why replace the $XB in grants with an equity stake?"
He does touch on it but it's just a claim thrown in at the end:
>The single most important reason for the U.S. to own part of Intel, however, is the implicit promise that Intel Foundry is not going anywhere. There simply isn’t a credible way to make that promise without having skin in the game, and that is now the case.
OK, maybe. But that now needs to be argued for. The US can give them money as grants. Grants put skin in the game for the US because they require Intel to meet the terms.
If I was explaining it I would say "a huge equity stake gives you a lot of votes and influence over the company's strategic direction", including what the returns to shareholders should look like.
Think of railways in countries where the government has say, a 50% stake.
It's not the same as taking part in decisionmaking? Intel could just say 'no' to grants. They don't have to accept the terms.
I'm not arguing they are exactly the same... I just think the author shouldn't state the hypothesis at the end of the article without examining it.
Frankly I think it's a good summary of why Intel may be too big to fail. It's just framed wrong.
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.
[1]: https://stratechery.com/2013/the-intel-opportunity/
> Intel is already the best microprocessor manufacturing company in the world
Intel was not driving themselves into the dirt if they are the best in their field. Instead, I'd suggest looking at when the process nodes were achieved:
Seems almost exactly a decade ago that Intel lost their lead and fell behind the competition.There were a few of us warning about this well before it all happened in 2013 and 2014. Predicted the death of Intel, and surge of AMD and TSMC before majority of people even heard of TSMC.
I also feel a little sad about TSMC, now that they have invested a lot in US but US is actively and strategically trying to pop up Intel to compete. But TSMC is at least 2 cycle ahead, meaning 5 - 6 years time. Unless TSMC make any mistakes even in the best case scenario I dont see Intel catching up within that time frame. Especially now they have little to no cash cow. Server, GPU, Consumer CPU are all under threats.
There is strategic importance in maintaining home-grown capability.
(it's also the same reason France keeps propping up many other industries, and sells weapons/jet fighters to other countries...)
The problem with bleeding-edge fab is it's a (fast) moving target. It's not a solved problem. And customers can't simply migrate their designs to a different fab, as the designs are increasingly specific to a process.
I do think we need more fabs but not this kind. Very low cost fabs with standardized PDK and open(ish) tools, should be as simple as ordering a PCB. Not going to happen anytime soon though, needs old fabs to stop production and the bleeding-edge to hit a hard wall. Can't compete with fully depreciated legacy fabs/nodes.
22nm is already overkill for a lot of applications. But, like, if your country gets embargoed, you should be able to make computer chips for cars and farming equipment. Top end GPUs? Not necessary. Some basic RISC-V cpu for compute appliances? That should be a capability that everybody has.
This part of why I have been advocating for years that the open source/free software folks should be focusing on optimization and stability/security as long term it will probably be much more useful that adding features that can be dumped on top.
In case the first backup fails.
What are the chances that both a primary system and its backup would fail at the same time?
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.
That’s Intel management’s FUD building a moat against such startups with the government’s help.
Several billions of dollars is not a scary level of funding these days for such startups to happen. Plus CHIPS pile of hundreds of billions. Plus Nvidia, Google, Amazon, Apple and others can always form a consortium to build a foundry. A lot of options, yet all of them are being killed by the Intel management skillfully working the bronze ear. That is how a tech race is lost - by letting government instead of the market to pick winner.
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.
This is the same short sighted nonsense that got us into this mess. What happens if China invades Taiwan tomorrow? They can cut off the supply of chips to most of the world and global economies will collapse overnight. You really haven't thought through the implications of having critical dependence on a single small island that a global power is incredibly invested in controlling.
It sucks for a while; the system is strong and adapts.
I appreciate fabs are multi-year, massive capital investments, but TSMC already has one up and running in Arizona. There are others (including owned by Intel) all around the world. They won’t go poof when INTC is no more.
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.
Current American culture can be pretty ugly.
Huh? France and Germany are prime counter examples of your statement.
Their benefits are almost purely from the strength of the working class, hence workers having it better there.
In France, the percentage of employees covered by a collective bargaining agreement, which is very high (around 95-98%)
In Germany, about 50% of workers are directly covered by collective bargaining agreements (CBAs)
In 2024, the union membership rate in the United States was 9.9%, representing 14.3 million workers, while 16.0 million workers were represented by a union under a collective agreement, accounting for 11.1% of the workforce.
---
If American workers want a better life they need CBA's and unions, not protectionist tariffs and buying chunks of random tech companies.
Even for integrated graphics, Intel has been behind Apple’s/TSMC ARM based processor before the Mx based Macs.
The reason they are in the shape they are in right now is because they didn’t have the volume to invest in the next generation and even now the CEO said they aren’t going to invest in making a cutting edge foundry until they have customers committed to it.
Intel was very competitive in laptops until Apple started coming out with the M-chips. Now, AMD is doing pretty good. Has Microsoft released their Snapdragon surfaces? Haven’t heard much on that front.
If the last 8 Months of this year has shown something, it's that every decision the US takes could be considerate, but as likely also completely random and reversed and bent at any moment in the future.
Accepting those risks in order to sell in the US-market (assuming it would be required) requires that the US-market also provides the commercial rewards.
For now I don't see that this is secured in sufficient volume to justify such an investment, considering that it will take YEARS for Intel to actually become a viable foundry and have a customer product ready to be produced there. And I'm not even talking about the potential cost-increase vs. an established high-volume foundry...
This my main problem with this investment. I can certainly appreciate the benefit of US government investment to ensure "homegrown" production capabilities. However, this depends a lot on a level of understanding, intelligence, and planning from the US federal government which is monumentally lacking. If no one trusts Intel now, I cannot begin to imagine how anyone would view Intel plus the current US government as more trustworthy.
Just look at the current approach to tariffs as a good example for how current "industrial policy" is being carried out. Unpredictable, vengeful, and declared with little plan or forethought. Why should we expect any differently from other policies?
Everything can for now be put under the umbrella of "US semiconductor sovereignty", but actually making this happen involves much more strategic planning and investment from the government.
For example, I doubt that Intel has sufficient experience as a foundry to support design-finalization for ARM, they are JUST starting NOW with this.
So who will pay for closing such gaps? Would they force e.g. Apple to use Intel as foundry and swallow all the associated cost, or would they rather accept Apple to source from a TSMC fab (which is built in US for the big customers like Apple and nVidia)
... this ain't that, though. It's a one-off, not a reliable broadly-applicable policy, and it's not clear what kind of strategy it represents in the bigger picture. I also doubt the ownership structure is as hands-off as I'd prefer, though I admit I've not looked into the details (if there even are details yet—we've had a lot of reporting on things as if they've happened, that then sometimes go on to never actually happen, lately)
[EDIT] I further think it would be better than the status quo to acknowledge that we have an economy dominated by Zaibatsu now, and to use the government to leverage them for public benefit the way the "Asian Tigers" do/have, though I don't think this is that happening, either. I think we're currently picking the worst of three options, of "intentionally use them to their fullest; break them up; do nothing" (we've been on the "do nothing" track so far, having abandoned "break them up" in the '70s).
Because people making these decisions aren't chronically online....
What makes you say that?
At minimum he's made a never Trump - maga pivot for political expediency but it also seems like his positions are tied to whatever Peter thiel wants
Even setting aside most of the culture-war stuff, which is so white-hot right now that it clouds matters, I think almost any other politician other than Trump, AOC, MTG, and probably a couple more I'm forgetting, would be more likely to do that last thing.
Trump's main issue is that he gets all excited and makes rash decisions based on the last person he talked to, compounded by the fact that he chooses who to talk to overwhelmingly based on chump change "campaign contributions" (bribes), family nepotism, or just his existing network of sycophants.
I'm saying all this neutrally toward ideology and left/right. Frankly I think life was fine domestically under both G. W. Bush and Obama, because both of them weren't impulsive and easily swayed to erratic decisions.
Second, there is an AI race going on. US intelligence is taking it very seriously and views supremacy of our AI as very important. Recently, the US was pushing NVDA to start using Intel's foundry. I assume it's for national security reasons.
Finally, a couple of details from the Intel deal that were not widely discussed is that the US is taking a passive seat[1]
The government’s investment in Intel will be a passive ownership, with no Board representation or other governance or information rights. The government also agrees to vote with the Company’s Board of Directors on matters requiring shareholder approval, with limited exceptions.
There are also warrants being given whose status is based on Intel's foundry. That suggests the foundry was the interest all along.
[1]: https://www.intc.com/news-events/press-releases/detail/1748/...
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).
Their lack of planning doesn't constitute an emergency on the public's part
The real reason is simple, if you've been following IFS: Intel's foundry has no large customers. The free market has spoken and almost every single customer prefers TSMC or Samsung silicon. America was boxed-out of serious world-class chip manufacturing ever since Intel swerved on EULV. If it was for natsec reasons then I doubt the fed would waste their time taking a passive seat when they could claim Intel as eminent domain.
It's not about national security whatsoever; this is part of a last-ditch effort to force Apple and Nvidia to buy American silicon.
I just don't think we're ever going to see eye-to-eye if this is your belief. In realpolitiks terms, Intel hasn't been a player on the AI board since Gaudi. And even that was a total flop.
If securing AI compute was the goal, buying Intel is about as large of a mistake as you can possibly make. Even Samsung has more skin in the game at this point. The only logical explanation, given Intel's history, is that they're desperate for customers and need help from the fed. If this is our plan to win the "AI cold war" then we've already lost.
So my point is that I think US Defense is motivated by national security interests but that doesn't mean this plan is going to work well or that we haven't already lost the AI war. It's probably too little too late. I am just pointing out over and over that I don't think grandstanding is the motive. I am sure that will happen but I think at some point it hit US Defense that relying on Taiwan put's us in a precarious situation.
What TSMC traditionally does is keep trailing edge fabs online that are fully depreciated and use those to produce chips that don’t need to be leading edge. It wouldn’t make sense to create a new fab for trailing edge chips.
Car manufacturers aren’t going to all of the sudden start using 2mm expensive chips for their cars.
Even for TVs, the BOM for the “smarts” need to be under $10.
Building fabs takes lots of money and time. Intel also doesn't have customers except themselves and have fallen far behind in the fab business and has a decade+ or mistakes to make up for.
What we have here is picking a winner and potentially insider trading/market manipulation with Trump shitting on Intel leading up the "deal".
On the one hand, I strongly agree with this article. This kind of state ownership never brings anyhing good. I don't see how this is different.
On the other, it is hard to deny how impressive the new wave of Chinese manufacturing is. No longer are they just making knock offs of Western products with stolen IP. BYD for example seems genuinely innovative, a top product. There are many other examples.
Now, these are clearly not state-ran enterprises, but equally the state is heavily involved. Or, Nvidia is concerned because China can mandate that the whole country pivots to using Chinese GPUs, seemingly with no deteiment to their AI research, while amazingly benefitting their own chip production ability.
I'm not sure how I reconcile these two.
There's short term stable and long term stable.
Having a BDFL can, when the BDFL is genuinely concerned with the welfare of whatever they are managing, result in something much better than what would be created if designed by committee. This is equally true for software projects and nation-states. China, Singapore, Linux, Python, etc.
In the long term, having a BDFL really relies on that "B" being there, and especially when a nation state is involved, the tendency of human nature to corrupt will likely eventually take over.
Basically, while China is acting with great coordination from the now with good results, they are doomed to eventually either fall to pieces when the diktat is bad, a la "Great Leap Forward", or else transition to a more stable (less authoritarian) system.
They can only do things like:
> China can mandate that the whole country pivots to using Chinese GPUs
so many times before getting it wrong disastrously, and the longer it goes the more likely someone will get it wrong.
And, to the point of the article, SMIC is already doing 5nm manufacturing.
Political systems are more complex than dictator/freedom, there are lots of stakeholders. The USA stakeholders tend to be short-term focused financial engineers, this is separate from whether we have checks and balances or what color tie the President wears.
The comments you made about political systems indicate you don't really grasp my point.
- Governments are formed of people. People make mistakes.
- Power tends to corrupt, and the likelihood of corruption scales with the quantity of power and the quantity of people passing through the role (that is, one person may truly have best interests at heart, but will their successor? Or their successor?)
The result of the above is that when assessing long term stability of systems, problems that can happen inevitably will. If a system allows massive sweeping changes, then they will happen, and eventually an incorrect one will be made.
For example, let's take the scenario above, where Chinese companies were ordered to begin using Chinese GPUs. Did that work out? Yes. Could it have gone poorly? Yes.
Will every similar decision go as well? No. Thus, a situation where the "you must use Chinese GPUs" dictation is possible, is less stable than one where it is not.
You brought up a comparison to the US, because the US and China always get compared I guess? The US does this sort of thing more weakly, so gains less instability from this particular source of instability. Whether it's currently more unstable in other ways is left as an exercise for the reader.
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.
When I picked up my DJI drone many years ago the amount of polish was top notch - hardware worked flawlessly, software was fast and without any glitch. I was looking for any signs like 'designed in Germany' or similar but nope, all Chinese.
People think about 3rd world countries and somehow end up thinking about the very definition of permanent incompetence - russia and its satellites. Like they still put chips from stolen wash machines into their ballistic missiles. When China is in comparison more like a humiliated, smart, deeply focused, hard working, ignoring some pesky human rights group of people who grokked well they don't need to bow to any foreign powers anymore if they focus and work hard on specific goals.
The 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.
If something happened to Xi and the party elected a hard nosed communist, China would unravel itself.
I don’t foresee the Party choosing someone more hardline than Xi, though. China has always been authoritarian, but collective ownership was new and an unmitigated disaster. They are too smart to go back that direction, although if they did, I could see that happening.
Also worth to remember cases of Rolls-Royce, Ericsson, and some other unfortunate Western companies, important for many humans, but once became unable to stay economically viable. (BTW it make me laugh, when I got info, Bentley now under WAG, when RR under BMW, as technically, they many decades was one entity)
WAG case is different from Intel case (and other I mention), but there are also many similarities, because of which I think, Intel case may be special for US, but is not too special for West.
And I think, such cases are bad, they are great shame, but also they are signs, we must do something, to make Western produced semiconductors more competitive.
https://en.wikipedia.org/wiki/Volkswagen_Group
The government intervention of RR was nothing to do with the cars.
The original Rolls-Royce company, which included the car division, was nationalized by the British government in 1971 due to financial issues with its aerospace business.
The car division was separated in 1973.
The parent company, Rolls-Royce plc (nothing to do with cars), was sold to the public in a share offering in 1987, meaning it was no longer government-owned.
In 1998, BMW purchased Rolls-Royce Motor Cars.
Well, it is because you do not understand economy of business. Unfortunately, main goal of any business is to be viable, not mean profitable, just be good enough to pay expenses need to run things defined as goals.
By definition, ALL old automotive companies started as hybrids - car division to make profits and motors division to make use of outstanding knowledge gathered when making consumer cars (as highest technology of that time). There are nearly no exceptions - Daimler began as Daimler plus Maybach; BMW began as motorized vehicles garages production plus motors business; Renault began as aviation motors business, made automobiles to make additional cash.
When Rolls-Royce divided to aerospace motors and cars, it was already semi-dead business, because their aerospace behavior was non-viable without donations from car division.
To be exact, I don't mean, aerospace impossible to be viable, just RR was.
And returning to our ontopic, Intel was caught in same hole - they lost their superiority and cannot survive without external help, absolutely as RR business.
So, when first Bentley separated from RR, Bentley become rival of RR, and now Bentley and RR divide same market. And this is very bad for their economy, very much like Volkswagen Golf GTI eat market from SEAT performance models, but VW already killed SEAT to avoid unnecessary internal rivalry, and RR-Bentley cannot do this, because they are now different business entities and their coordinated moves prohibited by regulations.
If Intel goes under, Taiwan becomes the battleground for WW3.
But core industries are just head of iceberg, you may not hear, typically 90% of iceberg are deep under water surface, very much like core vs non-core.
Any way, if large entity from core industry goes under, this could lead to killing domino effect for many "underwater" entities.
That is really big problem, which president Trump tried to avoid, when bought share of Intel.
And no, I disagree about battleground for now. What really important, really good strategists know, wars win by economy, not by military, as military could not withstand if they have not enough money for weapons and equipment.
So, basically, now US is stronger than China, so Chinese tops decide to not begin war which will not be profitable, while US is strong.
When and if China will feel competitive to US economically, they will be much more confident to begin war, so now the best what could do US tops to avoid war - to make China weaker and US stronger ECONOMICALLY.
Unfortunately, now China already could make space scale rockets, so competition moved to other space - to computers and semiconductors (and possible branch to nano-industry or bio-nano, or something similar).
and letting Federal Government in on this is sure to make this happen - just like everything else being ran by the Federal Government
Well, I don't like when something ran by Federal Government, but I have similar example: when somebody ill by flu, I don't like to use antibiotics, but sometimes must use antibiotics as fast measures to save life.
That is. Previous pro-semiconductor measures was not fast enough, and Intel was in real trouble and need to use something fast, and now we have bought time to do right but slow things.
Without the right people at the company, you can dump almost infinite money at a problem and still not solve it.
The Pentium -> Core2Duo was a great era for intel, but I feel like ever since then they've started a decline in both price/value proposition as well as just general hardware.
The i-series was arguably pretty good for gaming, but then they started exploiting that position by having relatively poor price-to-performance, thinking they wouldn't have any competition.. and they kept the 'we are winning' mindset even while AMD was hot on their heels.
Even recently, we've seen that all intel can do is increase cores and increase power consumption, and they still can't compete. This is itanium all over again, because that is how intel functions.
Intel's current chips are "fine" and competitive with AMD chips. If anything, Intel is trying out more things than AMD is.
Intel may be trying out more things than AMD, but perhaps they shouldn't? Maybe they shouldn't be trying to chase ARM envy with mixed-performance cores and disabling MT and the like and just stick to making reliable CPUs.
Honestly, the only thing of Intel's that I'm interested in are their video cards; and that's not because they're good, but because Intel hasn't (yet) all but abandoned their video card business for "AI accelerators"... so there's room for them to become good.
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 reason China doesn't want to is because they want a peaceful reunification. They want to wait when it's so obvious that Taiwan would lose and lose quickly that Taiwan simply gives itself up.
I agree they prefer a peaceful resolution but that would be in the form of Taiwan wanting to become part of China and deciding to reunify. It makes no sense to surrender without being forced to.
The scenario where Taiwan peacefully reunifies is where they decide they want to be part of China of their own interest.
It's easy to grow very fast when you are starting from a very low base. Especially when you are chasing someone.
It's a bit like China's GDP per capita. If it continued growing at the same pace as between 2000 and 2020 it might have had a chance to catch up with US in a few decades or so from now. Certainly Western Europe.
Yet based on current trends they will never close the gap (then again who knows what will change in the next 10-20 years or so).
Of course demographic collapse is not that far either. US and Europe at least have immigrants propping them up.
China is patient. They seem to be taking a long term, intentional approach. Their goals are long term. In other words, they’ve been planting trees for decades and those trees are now beginning to provide shade. Americans, in the other hand are more concerned with their own self interest and the next financial quarter.
Without going into the lack of military capabilities to mount the largest amphibious invasion post-WW2 up until recently (debatable), I think you’d be hard pressed to find a group of people in the world that would be excited at the idea of being put under foreign occupation (not dissimilar to the “excitement” the Taiwanese had to be occupied by the Republic of China after WW2).
Regardless, TSMC wouldn’t survive annexation Taiwan being annexed by China in any capacity
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?
https://www.intc.com/news-events/press-releases/detail/1748/...
If Intel is going to cease semiconductor development, then why should they get the rest of the taxpayer money? Even under Biden and Pat Gelsinger, the government was signaling to Intel that they may not get the full money if they don't make progress.
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.
Normally when we pay businesses to do things we don't demand equity stakes in the businesses afterwards.
Notably, the biggest shareholders in Intel appear to be retirement funds of Americans - so Trump has just pilfered some money from the retirement accounts of Americans.
https://www.intc.com/news-events/press-releases/detail/1748/...
Also, socialism means whatever the ruling class says it means. For example in China they've redefined socialism to just mean nationalism, which is the opposite of the original intent. Read about "Xi Jingping Thought" and "Socialism with Chinese Characteristics". It seems when ideas like socialism become popular, they are co-opted and stripped of meaning.
But during the CHIPS act debate, he was against the Act unless the US gets a piece of the company.
In general, this is in line with his views.
Most systems don't need start of the art processors. Get some minimal fabs set up for RISC V chips. If we removed the profit motive, how much does this cost ?
Alternatively... Even a refurbished GameCube can probably run a basic rest API server.
If anything we have enough EWaste that we can probably just recycle what we have. At least for most applications.
Unfortunately that seems far away.
Not like everyone can personally design a chip anyway, but if a small city has at least one fab it can be something in an emergency situation.
Recycling is probably a better solution here thought.
There are smaller fabs already
In some investors view they were not.
> "The deal certainly has the appearance of the government clawing back the remaining portion of the previous grant, as the government is getting equity not previously contemplated for dollars already committed," Morgan Stanley analysts "The trade-off, in our view, is that the company will have the flexibility to optimize its own business model without commitment to public service objectives, which may or may not include foundry services at 14A as articulated on the last earnings call
https://www.investopedia.com/intel-stock-keeps-getting-a-boo...
Not sure how many times people will keep repeating this mistake assuming they won’t be hit up for protection money again later…
I do find his argument for Intel being "too big to fail" compelling, for whatever it's worth. But it was kind of surprising to only see 1 sentence at the end claiming the equity stake is necessary. I thought we were actually going to get an analysis on the deal and the dynamic it would create.
To be honest, every foundry is in easy reach of something that can take it out. If there's a conflict that results in missiles hitting Korean factories, someone will be drone-bombing the power interconnects or driving trucks into water purifiers or whatever and taking out foundries in Texas.
It doesn't take much to ruin semiconductor foundry throughput. Wafers spend weeks or even months progressing from stage to stage. If you can cause a power failure, for example, you can scrap the whole content of the line and there will be no output until the pipeline refills: https://www.forbes.com/sites/tomcoughlin/2019/07/05/nand-fab...
Perhaps process robustness is better now, but in the constant scrambling state of semiconductor manufacturing, I doubt it is better enough to be able to shrug off concerted, deliberate attacks rather than just accidents, fuckups and bad luck.
Other possibilities:
- Standard Circuit
- Standard Semiconductor
- Standard Microchip
Arguing against things being "left to the market" in the abstract is not sufficient to address the particular incentives that are producing undesirable outcomes, and does not offer any viable mechanism for shifting those incentives.
Specific proposals that attempt to operationalize what you're arguing here always seem to gravitate toward giving monopolistic power to a specific institution that invariably demonstrates that its own incentive structures are riskier than those in the broader market, and its failure modalities far more destructive.
Is the risk of a hospital closing for purely financial reasons more or less acceptable than the risk of a state-run hospital being inefficient but guaranteed to exist? For critical infrastructure, I think that's a conversation worth having, and it's one that hand-waving about an all-encompassing 'market' obscures; dismissing a legitimate critique by framing the market as an all-encompassing force is just a rhetorical move.
Your comment seems to suggest that any attempt to change the market results in unfavorable results, but this doesn't hold up to scrutiny. I think you replied with a valid philosophical point, but you leaned too much on using it to challenge that anything could be done (when you yourself presented the idea that a mechanism was needed).
There is no such unmanipulated free market anywhere:
Perfect Competition: In reality, we have monopolies, oligopolies, and immense barriers to entry.
Perfect Rationality: Behavioral economics has thoroughly demonstrated that people do not act like perfectly rational, self-interested computers.
Perfect Information: There is almost always a significant knowledge gap between a seller and a buyer.
Since no truly free market exists, every economy is already a managed one. The real debate isn't whether we should intervene, but how we intervene and whose interests those interventions serve. I read selimnairb's point as that, for essential services, the rules should serve the public interest of stability and access, not just the private interest of profit.
We can examine the risks case-by-case. Here, the government is investing in a foundry. We could view the leverage this gains the US government as increasing the risk for political engineering above the previous risk of financial engineering. In financial engineering, Intel might prioritize its obligation to shareholders. In political engineering (if Intel were nationalized), Intel might keep an inefficient fab open to save jobs or just to win votes.
In the category of financial engineering as a risk, you might lump activity like stock buybacks put above R&D as exemplar of Intel. In fact, a criticism of CHIPS and this new government intervention often centers around the idea that Intel's leadership should not be rewarded.
Finally, a related case on the topic of Intel and national security: China's state-directed economy prioritizes national goals over private profit. After entering "the market," part of its core strategy has been to compel service to national interests rather than shareholders, and it seems that strategy has arguably driven its recent economic rise.
Now I’m European so this seems obvious to me, coming from a culture of high government intervention but I might be very wrong!
We have already seen some pretty blatant insider trading moves from current government, so I wouldn't rule that one out. But its probably way more petty - chips and manufactured war with China is all the rage in media, we all still remember covid situation, so its an easy area to get some political points, while spending other's money.
Most European government interventions, like French literally taking ownership of their common car manufacturers aren't considered any sort of success story to emulate after.
This is also the same trap that China is barrelling into right now and they will absolutely find themselves in the same position eventually.
my understanding is that they are still doing well in the datacentre world, unless that has changed?
its worth keeping in mind Intel is quite a big company... and naturally, the parts that are chugging along just fine are not going to be making headlines (or much noise at all really.)
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.
That's a hard thing to sell in any environment.
Now the US government can coerce Nvidia, Apple or someone to use Intel's fabs with no real political repercussions...
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?".
A 10% stake does what? Nothing. The U.S. doesn’t even get decision making capabilities.
OTOH, the CHIPS Act created an incredible amount of semiconductor manufacturing capacity from a wide variety of manufacturers including both TSMC and Intel.
So the real question is what does getting a 10% stake do, that the CHIPS act which Trump is trying to retroactively destroy, isn’t doing much better?
Huawei started with much worse product and foundation than intel, but the state sponsorship kept it going, plus they have ultra hard working people and occasionally some shameless thieves, which made them where they are.
or is it just an alternative way of taxing capital? instead of taxing wealth and capital, just take an equity stake in it ?
Well it's complicated... Is China socialist? What about state capitalism in general?
Honestly this is pure horseshoe theory where Bernie Sanders and Trump hold the same views.
If you wanted to tax capital via equity stakes, you'd simply have demanded a much larger stake.
What we're doing is starting down the road of "capitalism with Chinese characteristics". It's a tacit admission that the Chinese model can be effective at achieving a nation's strategic economic goals. (More effective than the model we previously championed.)
The real flip side in all of this is that everyone else sees what we're doing for what it is, and they also implement capitalism with Chinese characteristics. Which in and of itself wouldn't be bad. But what if nations like India or Indonesia turn out to be just flat out better than us at it?
Or, God forbid, the nightmare scenario, which would be nations like Brazil being better than us at it?
Most importantly, Intel's market cap is minuscule $100 bln, it doesnt allow control over meaningful amount of capital
Socialism with Chinese characteristics - it reduces private wealth and curbs control of oligarchs like Jack Ma. I feel like US is the opposite, where oligarchs directly control the government already
I didn't mean the intent is to control Intel's capital.
I meant controlling capital flows. In this particular case, controlling the flow of capital in a strategic sector out to TSMC et al. The idea is that regulation, state backed companies, etc etc all concert to oblige the market to keep those capital flows inside of your jurisdiction.
China does the same. It's extraordinarily difficult to exfiltrate capital from China. One of the only ways to do it is to turn the capital into products and exfiltrate those products out of China in place of the capital.
I think, long term, the US wants the same sort of environment over here.
Holding significant stakes in domestic companies just seems like light state capitalism.
https://en.wikipedia.org/wiki/Public_Investment_Fund#List_of...
Just a hunch and I am really going out on a limb here but I could see China wait another year or two and then step in and force a peace settlement in Ukraine. This would really show the world who the new super power is, as the US and Western powers have struggled with this conflict, a patient China could step in and reach a peace deal as they hold significant leverage over Russia.
I also don't think Americans realize how quickly we will slide from relevance once our grip on the world slacks. We could have built this world into something amazing but instead we just got fat.
In the last election, Latinos voted 50-50 for Trump. That should have been a massive warning sign.
I like liberals, but they're way too passive. They really need to play the Prisoner's Dilemma in high school until they learn what to do when someone refuses to cooperate.
Really? A decade and a half ago the US government owned a 60.8% of GM and none less than Barack Obama was directing management changes.
The US has a long and well established history of being a mixed-market economy to varying degrees.
Did US govt. actually had an ownership stake in GM? Please provide some links to this effect.
https://www.politico.com/story/2009/05/obama-reluctant-share...
https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
> 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.
Nationalizing companies - and that is essentially what we’re starting with Intel - worked out horribly for the Brits last century.
There is no one in the Trump administrator that has the balls to tell Donald Trump he is and idiot and doesn't know what he is talking about. Intel will bend over backwards and fail because of this mentality. Donald Trump knows better than all the engineers at Intel according to his followers. Just like when stated he knows more about dish washers than anyone else in the world.
Intel will need to hide the actual course their are taking to actual product a viable solution. This scenario seems to mirror the development of the MP43/MP44. Government was against it because the administration was too dumb to understand it. Government will also like short versus long term gains because the short gains allow for quick propaganda usage.
Let me just say, for those of us who remember the 1990s and 2000s, Intel's drop off has been something nobody would've predicted. It's hard to overstate just how dominant they were (other than the fairly brief but significant Athlon64 era). And even when they were behind on consumer CPUs, which they were until the Core Duo/Centrino platform (which was really the Pentium 3) saved them from the Pentium 4 disaster, their fab ability was second to none.
So what happened? Capitalism happened. More specifically, financialization happened. Everything US companies does comes down to simply cutting costs and increasing profits for short-term financial performance. There is (now) absolutely no long term thinking. CEOs get parachuted in and stay just long enough to collect a huge golden parachute before the merry-go-round continues. And who are approving these massive CEO pay packets? Other CEOs who sit on the board.
We've seen this exact same thing happen with Boeing. The only things holding Boeing together are the inertia from earlier successes, the 737 type rating monopoly for budget airlines and defense contracting. Just look at the Starliner project to see Boeing actually try to build anything.
An example of this financialization is the likes of Dell, Gateway, IBM, HP, Compaq, etc all started to cut costs by offshoring parts of their operations to Taiwan. At first it was just assembly and then it was certain parts (eg motherboards) and at some point they had completely funded the Taiwan PC industry and created Asus, Acer, MSI, etc. US computer manufacturers completely paid for the Taiwan PC industry by short-term profit seeking.
There are multiple ways to describe China's economy but the most accurate and relevant for this topic is that it's a command economy and the coming years will show just how much more devastatingly effective this will be. Really the only thing stopping Chinese companies from destroying Western competitors is trade barriers (eg BYD).
So I think the US government should take equity interests in companies they bail out rather than just giving them gifts or even loans. The government should (IMHO) also take equity stakes in any extraction companies (eg oil and gas). China shows this can work.
So why won't it work here? Because the administration is both corrupt and incompetent. Everything done by the administration is to line the pockets of politicians and the wealthy on a very short-term basis. You see it in Congressional stock trades (eg buying up Intel ahead of the announcement).
As for the author, I suspect he represents the American corporate view that any kind of government intervention (beyond bail outs) cannot work because they don't want that long term. It would reduce profits and/or make a few people slightly less wealthy. They spend a lot of money on propaganda to convince ordinary people that corporatism is good and collectivisim of any kind is bad, that governments aren't capable of anything, etc.
All Western companies and billionaires want is public-private partnerships because they're a massive wealth transfer from the government to the wealthy. They don't want the government taking away profits from private hands.
Intel needs a major shakeup, it has been brewing for a long time, but coffers were too full. Cushion is gone now, urgency is now understood by everyone; now it takes a visionary and some successful execution, for once.
If you say corruption is the difference, maybe - but I wouldn't be so pessimistic... yet.
Please no one take this the wrong way, but I hope AMD is not the model of "success" we're going for here.
https://docseuss.medium.com/the-biggest-threat-facing-your-t...
"Doc Burford contends that the true danger facing teams today isn’t competition, disruption, or lack of capital—it’s leadership devoid of expertise, decision-making dominated by superficial metrics, and a culture that values appearances more than actual value creation. Sustainable success comes from building things people want, not engineering facades to appease investors or the market. Relying solely on executive titles or data without understanding the craft or customer rapidly leads to collapse."
Have to agree and think this encapsulates alot of what we have been living through in the US over last few decades.
The Bungie grenade example was funny because I've seen this exact same ignorant data fuckery. Blizzard does this with World of Warcraft now because they're tuning talents that classes have based on how much they're used, which ignores how often people just copy builds and how some abilities are just inherently fun (as the grenades apparently were). The net result is they just keep nerfing anything people like.
When he was talking about Valve and Steam and EA and sports exclusivity, he may as well have just said "enclosures" (in the capitalist) sense because that's exactly what he means.
Every modern corporation is just looking for a formula that they can repeat ad nauseum. He talks about this with media properties and the Marvel and Star Wars slop (my word, not his) that we get as a result. This is fundamentally incompatible with creative projects, be it movies or games.
One of the most destructive ideas to come out of the 20th century is this idea that a good business leader can manage anything. So we get a lot of "leaders" who end up running things they know nothing about and in large companies, "leaders" get shuffled around every 6-12 months on purpose, to avoid them ever failing because they're never anywhere long enough to see the consequences of their actions.
You see that with the VP shuffle at any large tech company.
I also appreciate that he was anti-NFTs as I was for the exact same reasons: it doesn't actually solve any problems or give consumers anything they actually want.
But indeed I feel like at some level there's been a pendulum swing from, let's say "stories" to "data" - indeed he touches on sabermetrics/McNamara. I like how he torches this: data is important but it's not enough (the map is not the territory) -- I started wondering about this a lot for example with Windows. "Oh, we removed this feature because telemetry showed it wasn't used." Well, why? Because it wasn't useful? Because it wasn't discoverable? Because it wasn't intuitive?
And that assumes the numbers are even any good: I remember from one of Sinofsky's Windows engineering blog posts, in which he talked about some feature and the percent of sessions in which it was used. And I thought, well, hold up. I hibernate and rarely restart, whereas many less sophisticated users shut down their computer entirely. So does that mean they effectively are counting those non-power users a lot more than me because they have more sessions?
And then there are other second order effects. If you lose your power users, do they then stop recommending your product, and what then? I see your net promoter score and raise you Goodhart's law (once a measure becomes a target it ceases to become a useful measure)
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 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
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.
The US government never gave bailout and gifts to Intel. The original agreement was profit-sharing with Intel through the CHIPS act is standard with any business wanting the funds. All Trump did specifically for Intel was alter the deal to be an equity stake instead, which will still only be beneficial is Intel is profitable.
Your entire comment is faulting on this premise. Please stop spreading this lie.
But really I was talking generally, such as the bank bailouts in 2008. When a bank normally fails the FDIC comes in and takes control of it including ownership. The shareholders are SOL. In my mind, this is exactly what should've happened to all the banks that were essentially insolvent.
As another example, the US government bailed out LTCM in the 1990s when there was a willing buyer (Warren Buffett).
Emotionally you call it a bailout but it is not and by trying to enforce that fact you are ignoring the truth and pressing a lie.
Plain and simple the CHIPS Act is not a bailout. [0]
[0] “Biden to require chips companies winning subsidies to share excess profits” >> https://www.reuters.com/technology/us-require-companies-winn...
> Recipients who receive more than $150 million in direct funding "will be required to share with the U.S. government a portion of any cash flows or returns that exceed the applicant’s projections by an agreed-upon threshold," the department said.
> Companies winning funding are also prohibited from using chips funds for dividends or stock buybacks, and must provide details of any plans to buy back their own shares over five years. The department will consider an "applicant’s commitments to refrain from stock buybacks."
[1]: https://en.wikipedia.org/wiki/Nationalization
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.
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.
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.
This is recognized by the current administration but is also a continuation of the previous administration's pivot toward undergirding and supporting key industries. I hope it's also recognized by any subsequent administration.
I think even neocons now recognize the "new world order" is not sustainable if some players don't play by the rules that they all agreed on.
No country with an ability to avoid it wants to be subject to being held by the neck.
That was why they passed the chips act to direct this money to Intel. It has nothing to do with Trump forcing them to dilute shareholder value in order to get money that they had already been allotted by congress.
Alas, I'm afraid some people would take it as an instruction manual instead of a warning.
The republican game is to call democrats <insert_any_label_here> and then do the same thing they allege democrats do.
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.
On Tue, Aug 26, 2025 at 8:15 AM Michael E—— <m@——.xyz> wrote: https://www.hackerneue.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
And where is the example of a successful govt run business?
Why dont we encourage businesses here w free trade zones?
>How is this ‘equity stake’ different than nationalization?
Ownership scope and control. A nationalized company is owned and run by the government. This equity stake is the US buying stock in Intel instead of issuing the money as grants. I would agree this creates conflicts of interests for both parties. And that it shouldnt happen. But this is wildly different than nationalization.
> And where is the example of a successful govt run business?
This is a bit of a loaded political question until you first define "success" and "business". Most of the reasons you'd even want a company to be run by the government in a mixed-market economy are precisely because you want it to be run differently than a private company.
And where is the example of a successful govt run business?
USPS, TVA, Paris Metro...
I know many are irrationally scared of the S and C words, but this ain't it.
It offers good service to everyone in the US - even people living in the middle of nowhere - with fairly good delivery speeds and strong reliability. I can't remember the last time I had a package or mailpiece get lost, and I think I've had a package get damaged exactly once in my entire life.
If you look at the list of largest companies by revenue [1], 4 of the top 6 are state-owned. (I'm not saying I support this move by Trump - and natural resources are probably different than technology, etc.. But just to answer the question).
[1] https://en.wikipedia.org/wiki/List_of_largest_companies_by_r...
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.
> Intel’s board prioritizing government interests over their fiduciary duties
How about Disney, Mozilla and every major corporation? You must hire right people (including this lame CEO and board), or no loans and contract for you!!!
US government pushed really really hard their agenda onto ALL industries without any lube for past 40 years!
If US gov actually directly express what they want, and just buy 10% of strategic company on open market, it is super refreshing!!
Please don't use Hacker News for political or ideological battle. It tramples curiosity.
https://news.ycombinator.com/newsguidelines.html