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.
To fund a similar sized hardware start-up you need a full lab andddd already the proposition is dead.
Contrast this with biotech venture capital which has been doing well for decades, often investing more capital in a year than software VCs. The difference is that all the research, clinical trial, and manufacturing expertise is already here and concentrated in a few localities like South San Francisco, San Diego, and Boston.
I 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?
- The chatbot people have a personal attachment to
- The processing tool.
In the second, you only care about the result. Something like Claude Code can call any other provider if that's cheaper and visa-verse. Once I have the result, my dependency / lock-in is no more than a brand of toilet paper. The providers will have to do the 'capitalism thing' and compete.
It's almost like WeWork's, valuated at IT levels by being in the style, only for investors to eventually figure out the marginal production costs are not reducible to near 0, and you can't just bully out competition / network-effect to get a monopoly.
And this applies to any company that wraps and re-sells AI.
Something the tech-VC world is so unfamiliar with, it's scrambling to present the truth of what is 'econ-101' for the rest of the world.
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...
That said, allowing VC into 401ks and such I would agree is an abominable idea, because this stuff isn't marked properly until it is in distress. Actually, that area could use better regulation. Volatility laundering is already a systemic risk. Many of these vehicles have creative ways to not mark to their market value, which makes pension fund managers and leered participants happy because it greatly improves the perceived risk metrics and performance, at the equal expense of cloaked fragility.
But perhaps just let them have a thunderdome, and if they want to breach the walls and enter areas like retirement funds where society agrees standard are higher, there is a strong set of filters/regulations that must be adhered to.
(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.
It's slightly weird to me how foreigners seem to look on the Trump era as personifying the US to a greater degree than e.g. the Biden or Obama eras. Trump is not especially popular right now: https://www.economist.com/interactive/trump-approval-tracker
This was a poor business decision for exactly the reasons you’re pointing out. The market is dictating their failure and we’re now undermining it.
Not in the "lots of people would lose jobs" or "ripple effects would cause economic disruption" but in the true national security sense. What allied semiconductor manufacturers have significant cutting edge fabs in Europe?
Secondarily, a TSMC fab on US soil seems like a better investment. In the catastrophic event that Taiwan were invaded — it’s still people, facilities and equipment that remain here.
This trope keeps getting repeated on HN.
No, the point of the top level comment and article is that no US based company will replace Intel's fabs, nor will they form a "better" Intel. This stuff is intensely capital intensive, and nothing short of a government mandate will make any other company spend so much money on such a big risk.
Trust me - if they could have, they would have. Intel's fabs have pretty much been up for sale since Pat was ousted.
The only companies that know how to use the people and the equipment are not US based. TSMC already had an opportunity to buy much of Intel's fabs, and they concluded that shifting their process to match TSMCs would be cost prohibitive.
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.
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.
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?
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.
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.
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.
This isn't SW. Those ratios don't exist in the HW world.
(And to be frank, it's a myth in SW too).
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.
I think your comment is low quality. Like I made an effort here to write at length about how government and economics work in the hopes that someone would learn from it, and you strawmanned one idea and called it "wild." This is not the Hacker News way and it is not commenting in good faith.
Free markets only exist in unnaturally heavily regulated circumstances. If you let the markets to be on their own devices then you get monopoly. Regulation is ironically what makes free markets possible.
It's basically exactly the same as democracy vs feudalism.
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.
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.
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.
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.
There are loads of ways you can effectively steer an economy to stimulate growth while also meeting geopolitical needs through effective and liberal application of the national purse. DOGE seems to have different ideas about the value of such programs.
Most new drugs come from biotechs nowadays (not all of them, not GLP-1’s). But many do. If that innovation is happening in China and not the US today then it will create an issue in several years. We will not control our supply chain for a critical set of goods.
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.
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).
Over a decade ago Intel wasn't driving itself into the dirt. Their failure was just beginning approximately 1 decade ago, starting with their failure at EUV leaving them trapped on 14nm.
> Intel is already the best microprocessor manufacturing company in the world
Intel was not driving themselves into the dirt if they are the best in their field. Instead, I'd suggest looking at when the process nodes were achieved:
| | Someone Else | Intel | Lead |
|------+----------------+-------+------|
| 32nm | 2011 (Samsung) | 2009 | 2 |
| 22nm | 2013 (IBM) | 2011 | 2 |
| 14nm | 2015 (Samsung) | 2014 | 1 |
| 10nm | 2017 (Samsung) | 2018 | -1 |
| 7nm | 2018 (TSMC) | 2021 | -3 |
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...)
This is how places like the US despite having 4% of the population have about a quarter of the material and energy consumption. Not to single them out, I am in Australia, it is a similar ratio.
I am not defending this situation, just highlighting its role.
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.
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.
In case the first backup fails.
What are the chances that both a primary system and its backup would fail at the same time?
And for what?
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.
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.
Current American culture can be pretty ugly.
It can mean outsourcing, but I think your broader point is undercut by the fact that the USD holds a very special place as the world reserve currency. This creates high foreign demand for the USD which pushes up the exchange rate and leads to US exports being less competitive on the international market (i.e. our manufacturing base gets hollowed out because it cannot compete). This is a large market distortion that the US actively defends because it benefits us in other ways. Tariffs and general protectionism is not a good thing in a free market, but that's not really what is happening at the international level.
Huh? France and Germany are prime counter examples of your statement.
Their benefits are almost purely from the strength of the working class, hence workers having it better there.
In France, the percentage of employees covered by a collective bargaining agreement, which is very high (around 95-98%)
In Germany, about 50% of workers are directly covered by collective bargaining agreements (CBAs)
In 2024, the union membership rate in the United States was 9.9%, representing 14.3 million workers, while 16.0 million workers were represented by a union under a collective agreement, accounting for 11.1% of the workforce.
---
If American workers want a better life they need CBA's and unions, not protectionist tariffs and buying chunks of random tech companies.
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.
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.
IMO that's much less of a case for laptop and desktop (let alone server). Even if people don't understand the technical details e.g. Apple's superior performance per watt (or its implications at least) is something a lot more people notice.
Like I did (at the time) high-end gaming on it, back when gaming used to sometimes tax your CPU and not only your GPU, and in that entire time I didn't ever feel like I would have benefitted at all from an upgrade, it was so far ahead of the curve. And that was AMD's budget chip line! They simply didn't deliberately cripple it nearly as much as Intel did their Celerons.
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.