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The US government? Isn't it Intel's problem in the first place? Don't the leaders of Intel care if their latest processor technology is copied and then used by

The US government? Isn't it Intel's problem in the first place? Don't the leaders of Intel care if their latest processor technology is copied and then used by competitors?

40acres 8y ago
Yes absolutely, and look -- this is not to say that Intel does not have strict guidelines and processes that protect information. Certain things are definitely need to know around here. However, Intel is a business and if they've calculated that the cost of doing business is worth the risk they will take the risk. The government has put restrictions on semiconductors doing certain types of manufacturing in China but I wonder if these regulations are sufficient enough. For instance, you can only manufacture CPUs in certain countries if the process is a couple of generations old. As Moore's law slow down the improvement from generation to generation will become less, are our current regulations sufficient enough to address this coming future? That's my concern.
- _cs2017_ 8y ago
  You say Intel decided the risk is worth the reward. Are you suggesting that the trade-off they chose is not the right choice for the US as a country? Why? Wouldn't Intel be the one hurt the most by any IP theft?
  - newnewpdro 8y ago
    I think it's not unusual for companies to be forced to accept such risks if their competitors have already done so and that's enabling the competitors to win. Governments can intervene to keep the playing field level, while protecting the national interests. If it's true that the US has a dominant position in this space, then it's true that the US government has an opportunity to prevent the US companies from shifting manufacturing to where it's likely to result in IP theft in the process of competing with eachother in the manufacturing costs deparment. If all the companies in the space are forced to ignore the cheaper manufacturing option, that self-destructive avenue of competition is off the table on equal terms. However there's still the threat of foreign competition undercutting on manufacturing, if they catch up in the IP department (which IP theft certainly accelerates).
    - _cs2017_ 8y ago
      This makes sense... So IIUC, it's not clear whether government restrictions are a net positive or negative for the US economy: it helps against one source of IP theft, but hurts in the sense of lower global competitiveness due to higher manufacturing costs. A very difficult trade-off I guess.
  - mattnewton 8y ago
    IANAL but I believe the US government considers access to superior Silicon a matter of national security and regulates it as such.
    - rangibaby 8y ago
      It made a crucial difference in the 1980s but now? Who cares if your CPU is a couple of generations old?
      - jhanschoo 8y ago
        It's more expensive to manufacture the same amount of compute power using older processes. That makes old silicon not competitive. From the viewpoint of the consumer, indeed, price per compute power is relatively constant, but from the viewpoint of a silicon manufacturer, newer processes are cheaper per compute power.
        xyzzyz 8y ago
        This doesn’t answer the parent point. Compute is more expensive with older tech, so what? They’ll just pay more. Consider North Korea. Their ICBM technology is pretty bad compared to the state of an art, however it is still great security concern.
        jhanschoo 8y ago
        They won't sell, and not enough to fund competing research. I'm pretty sure the security concern isn't directly related to defense, but to the security of US industries and economy.
- fpoling 8y ago
  How exactly can one calculate such risk? At best somebody put an Exel file with a model that was wrong but that looked impressive in a presentation. But I doubt that even that was done. Somebody just put vague words that everybody was doing that. There are things that one should not do no matter how tempting it looks. Rusdian roulette can be very attractive as 5 out 6 persons who tried claimed that it was a harmless.
- nickpsecurity 8y ago
  Dont forget it's often as simple as executives bonuses could be easily gained by offshoring (motive), everyone was doing (opportunity), and they did it purely for selfish gain in short term. What happens in long term is next executives' problem, something to hand off to PR folks, and so on. Happens all the time.
- fspeech 8y ago
  Your whole premise is that China can't do it on their own, which is proved false by the supercomputer chip ban. Now Intel not only lost their market, China actually gained the capability and revenue to support future R&D. Your leaders at Intel appear to know more about business than you do: that it is higher risk over the long term to lose market share, because that gives your competitors revenue to support R&D and opportunities to work with and leverage a customer base to develop a better product. China has no problem making a CPU on their own. They just can't make a commercially competitive CPU, yet.
  - jhanschoo 8y ago
    I've read through your argument multiple times and it still doesn't make sense to me. > Your leaders at Intel appear to know more about business than you do: that it is higher risk over the long term to lose market share, because that gives your competitors revenue to support R&D and opportunities to work with and leverage a customer base to develop a better product. Why would Intel be losing market share by not manufacturing chips in China? They may still manufacture the same number of chips but with less profit. > China has no problem making a CPU on their own. They just can't make a commercially competitive CPU, yet. Pretty sure parent comments meant processor fab tech in addition to processor tech. That is, tech that makes it possible to manufacture a competitive CPU at competitive costs.
    - fspeech 8y ago
      As I said earlier it is not just about profit at the margin to put a plant in China, it is about showing good faith with the government. Intel's technology lead is relative. It faces competitors like Loongson (MIPS), ARM licensees, AMD licensee and even Alpha licensees. It can't afford to take an antagonistic stance against a very large customer as any lost sales would go to supporting a competitor, and more importantly give the competition a customer base to sustain a positive feedback cycle of product improvements.
    - fmajid 8y ago
      Fabs are so fabulously expensive nowadays that you need serious volume to make them viable, and the volume today comes from mobile phones, IoT and telecoms equipment. That's why TSMC and Samsung are spanking Intel in fab technology, which was originally Intel's competitive advantage, because Intel dropped the ball on ARM architecture chips due to its inwards-looking obsession with profitable x86. Intel is now boxed into the same low-volume corner as, say IBM PowerPC and ultimately condemned to irrelevance. The last thing you want is for the Chinese to start investing in their own fabs and have a captive source of demand for those fabs' output, e.g. x86/x64 chips licensed from AMD. Quite frankly, they're going to steal the technology from TSMC and Samsung, not a has-been like Intel that's been incapable of moving to 10nm. I'd argue a company like Huawei is probably able to make that kind of fab investment (they also design their own ARM chips), and they've shown in the past they are willing to take the long view by out-investing in R&D their Western competitors managed by the typical short-termist bean counter MBAs. That's why Huawei's CFO (and daughter of the founder) was arrested in Canada, to pressure them not to cooperate with the Chinese government's "Made in China 2025" plan to wean itself off dependence on US-controlled microelectronics. The fact John Bolton admitted he was aware of the move shows it was made on geopolitical grounds.
sbierwagen 8y ago
The CEO of Intel is 58 years old. What does he care if China steals all of Intel's IP? He'll be retired by then.
- chrisco255 8y ago
  Not knowing anything about the CEO of Intel, there are certainly many other driving motives for folks besides money and retirement. There's legacy, loyalty to family, country, environmentalism, pride, general ethics, etc. Certainly some business managers are driven by pure greed, but you'd certainly have to make a case more than point out someone's age to indicate that.
  - sbierwagen 8y ago
    GP observes that Intel is behaving in a way that indicates it does not value future cash flows. I reply with one hypothesis for why Intel is discounting future earnings. (Very high discount rate on future cash flows, perhaps) You respond with reasons its discount rate could be lower. Yes, I agree it would be nice for the United States if Intel's discount rate was lower, but where's the evidence? Does opening a chip packaging plant in China show "legacy, loyalty to family, country, environmentalism, pride, general ethics, etc"?
  - claudiawerner 8y ago
    Although I think it's unfair to call out the CEO for his age, the notion of people behaving according to the laws of the system they live in, despite trying (and occasionally succeeding) in raising themselves above them, was noticed as far back as Ricardo and and only really put into perspective by Marx in the 1867 preface to the German edition of Capital: >To prevent possible misunderstanding, a word. I paint the capitalist and the landlord in no sense couleur de rose [i.e., seen through rose-tinted glasses]. But here individuals are dealt with only in so far as they are the personifications of economic categories, embodiments of particular class-relations and class-interests. My standpoint, from which the evolution of the economic formation of society is viewed as a process of natural history, can less than any other make the individual responsible for relations whose creature he socially remains, however much he may subjectively raise himself above them. The preface ends on a wonderful little note that hopefully everyone can agree on: >Every opinion based on scientific criticism I welcome. As to prejudices of so-called public opinion, to which I have never made concessions, now as aforetime the maxim of the great Florentine is mine: “Segui il tuo corso, e lascia dir le genti.” [Follow your own course, and let people talk – paraphrased from Dante] Karl Marx, London. July 25, 1867.
azinman2 8y ago
You could say the same about outsourcing in general. It was a giant trend that everyone hopped on, and now it's affecting the entire US economy and transferring know-how to locals in other countries that are now starting their own competitors with government backing. The markets and businesses can be very short-sided.
georgeecollins 8y ago
That is assuming that a manager at Intel cares more today about another company stealing his companies technology and using it in future as opposed to getting the lowest cost for a new plant today. If the answer isn't obvious, here is a hint: which thing do you think the manager gets a bonus for?

The US government? Isn't it Intel's problem in the first place? Don't the leaders of Intel care if their latest processor technology is copied and then used by competitors?

40acres 8y ago

Yes absolutely, and look -- this is not to say that Intel does not have strict guidelines and processes that protect information. Certain things are definitely need to know around here. However, Intel is a business and if they've calculated that the cost of doing business is worth the risk they will take the risk. The government has put restrictions on semiconductors doing certain types of manufacturing in China but I wonder if these regulations are sufficient enough. For instance, you can only manufacture CPUs in certain countries if the process is a couple of generations old. As Moore's law slow down the improvement from generation to generation will become less, are our current regulations sufficient enough to address this coming future? That's my concern.

_cs2017_ 8y ago
You say Intel decided the risk is worth the reward. Are you suggesting that the trade-off they chose is not the right choice for the US as a country? Why? Wouldn't Intel be the one hurt the most by any IP theft?
- newnewpdro 8y ago
  I think it's not unusual for companies to be forced to accept such risks if their competitors have already done so and that's enabling the competitors to win. Governments can intervene to keep the playing field level, while protecting the national interests. If it's true that the US has a dominant position in this space, then it's true that the US government has an opportunity to prevent the US companies from shifting manufacturing to where it's likely to result in IP theft in the process of competing with eachother in the manufacturing costs deparment. If all the companies in the space are forced to ignore the cheaper manufacturing option, that self-destructive avenue of competition is off the table on equal terms. However there's still the threat of foreign competition undercutting on manufacturing, if they catch up in the IP department (which IP theft certainly accelerates).
  - _cs2017_ 8y ago
    This makes sense... So IIUC, it's not clear whether government restrictions are a net positive or negative for the US economy: it helps against one source of IP theft, but hurts in the sense of lower global competitiveness due to higher manufacturing costs. A very difficult trade-off I guess.
- mattnewton 8y ago
  IANAL but I believe the US government considers access to superior Silicon a matter of national security and regulates it as such.
  - rangibaby 8y ago
    It made a crucial difference in the 1980s but now? Who cares if your CPU is a couple of generations old?
    - jhanschoo 8y ago
      It's more expensive to manufacture the same amount of compute power using older processes. That makes old silicon not competitive. From the viewpoint of the consumer, indeed, price per compute power is relatively constant, but from the viewpoint of a silicon manufacturer, newer processes are cheaper per compute power.
      - xyzzyz 8y ago
        This doesn’t answer the parent point. Compute is more expensive with older tech, so what? They’ll just pay more. Consider North Korea. Their ICBM technology is pretty bad compared to the state of an art, however it is still great security concern.
        jhanschoo 8y ago
        They won't sell, and not enough to fund competing research. I'm pretty sure the security concern isn't directly related to defense, but to the security of US industries and economy.
fpoling 8y ago
How exactly can one calculate such risk? At best somebody put an Exel file with a model that was wrong but that looked impressive in a presentation. But I doubt that even that was done. Somebody just put vague words that everybody was doing that. There are things that one should not do no matter how tempting it looks. Rusdian roulette can be very attractive as 5 out 6 persons who tried claimed that it was a harmless.
nickpsecurity 8y ago
Dont forget it's often as simple as executives bonuses could be easily gained by offshoring (motive), everyone was doing (opportunity), and they did it purely for selfish gain in short term. What happens in long term is next executives' problem, something to hand off to PR folks, and so on. Happens all the time.
fspeech 8y ago
Your whole premise is that China can't do it on their own, which is proved false by the supercomputer chip ban. Now Intel not only lost their market, China actually gained the capability and revenue to support future R&D. Your leaders at Intel appear to know more about business than you do: that it is higher risk over the long term to lose market share, because that gives your competitors revenue to support R&D and opportunities to work with and leverage a customer base to develop a better product. China has no problem making a CPU on their own. They just can't make a commercially competitive CPU, yet.
- jhanschoo 8y ago
  I've read through your argument multiple times and it still doesn't make sense to me. > Your leaders at Intel appear to know more about business than you do: that it is higher risk over the long term to lose market share, because that gives your competitors revenue to support R&D and opportunities to work with and leverage a customer base to develop a better product. Why would Intel be losing market share by not manufacturing chips in China? They may still manufacture the same number of chips but with less profit. > China has no problem making a CPU on their own. They just can't make a commercially competitive CPU, yet. Pretty sure parent comments meant processor fab tech in addition to processor tech. That is, tech that makes it possible to manufacture a competitive CPU at competitive costs.
  - fspeech 8y ago
    As I said earlier it is not just about profit at the margin to put a plant in China, it is about showing good faith with the government. Intel's technology lead is relative. It faces competitors like Loongson (MIPS), ARM licensees, AMD licensee and even Alpha licensees. It can't afford to take an antagonistic stance against a very large customer as any lost sales would go to supporting a competitor, and more importantly give the competition a customer base to sustain a positive feedback cycle of product improvements.
  - fmajid 8y ago
    Fabs are so fabulously expensive nowadays that you need serious volume to make them viable, and the volume today comes from mobile phones, IoT and telecoms equipment. That's why TSMC and Samsung are spanking Intel in fab technology, which was originally Intel's competitive advantage, because Intel dropped the ball on ARM architecture chips due to its inwards-looking obsession with profitable x86. Intel is now boxed into the same low-volume corner as, say IBM PowerPC and ultimately condemned to irrelevance. The last thing you want is for the Chinese to start investing in their own fabs and have a captive source of demand for those fabs' output, e.g. x86/x64 chips licensed from AMD. Quite frankly, they're going to steal the technology from TSMC and Samsung, not a has-been like Intel that's been incapable of moving to 10nm. I'd argue a company like Huawei is probably able to make that kind of fab investment (they also design their own ARM chips), and they've shown in the past they are willing to take the long view by out-investing in R&D their Western competitors managed by the typical short-termist bean counter MBAs. That's why Huawei's CFO (and daughter of the founder) was arrested in Canada, to pressure them not to cooperate with the Chinese government's "Made in China 2025" plan to wean itself off dependence on US-controlled microelectronics. The fact John Bolton admitted he was aware of the move shows it was made on geopolitical grounds.

sbierwagen 8y ago

The CEO of Intel is 58 years old. What does he care if China steals all of Intel's IP? He'll be retired by then.

chrisco255 8y ago
Not knowing anything about the CEO of Intel, there are certainly many other driving motives for folks besides money and retirement. There's legacy, loyalty to family, country, environmentalism, pride, general ethics, etc. Certainly some business managers are driven by pure greed, but you'd certainly have to make a case more than point out someone's age to indicate that.
- sbierwagen 8y ago
  GP observes that Intel is behaving in a way that indicates it does not value future cash flows. I reply with one hypothesis for why Intel is discounting future earnings. (Very high discount rate on future cash flows, perhaps) You respond with reasons its discount rate could be lower. Yes, I agree it would be nice for the United States if Intel's discount rate was lower, but where's the evidence? Does opening a chip packaging plant in China show "legacy, loyalty to family, country, environmentalism, pride, general ethics, etc"?
- claudiawerner 8y ago
  Although I think it's unfair to call out the CEO for his age, the notion of people behaving according to the laws of the system they live in, despite trying (and occasionally succeeding) in raising themselves above them, was noticed as far back as Ricardo and and only really put into perspective by Marx in the 1867 preface to the German edition of Capital: >To prevent possible misunderstanding, a word. I paint the capitalist and the landlord in no sense couleur de rose [i.e., seen through rose-tinted glasses]. But here individuals are dealt with only in so far as they are the personifications of economic categories, embodiments of particular class-relations and class-interests. My standpoint, from which the evolution of the economic formation of society is viewed as a process of natural history, can less than any other make the individual responsible for relations whose creature he socially remains, however much he may subjectively raise himself above them. The preface ends on a wonderful little note that hopefully everyone can agree on: >Every opinion based on scientific criticism I welcome. As to prejudices of so-called public opinion, to which I have never made concessions, now as aforetime the maxim of the great Florentine is mine: “Segui il tuo corso, e lascia dir le genti.” [Follow your own course, and let people talk – paraphrased from Dante] Karl Marx, London. July 25, 1867.

azinman2 8y ago

You could say the same about outsourcing in general. It was a giant trend that everyone hopped on, and now it's affecting the entire US economy and transferring know-how to locals in other countries that are now starting their own competitors with government backing. The markets and businesses can be very short-sided.

georgeecollins 8y ago

That is assuming that a manager at Intel cares more today about another company stealing his companies technology and using it in future as opposed to getting the lowest cost for a new plant today. If the answer isn't obvious, here is a hint: which thing do you think the manager gets a bonus for?