12 ms·

The real shitshow starts when the CFO becomes the CEO (as is usually the case), so Intel is pretty much dead as is US tech innovation on this scale (until VCs d

by bnt 6y ago

The real shitshow starts when the CFO becomes the CEO (as is usually the case), so Intel is pretty much dead as is US tech innovation on this scale (until VCs do what China does and start pouring money into hard stuff, not just fluffy software).

duhast 6y ago
Fluffy software drives demand for fancy hardware. Intel valuation wouldn’t be where it is without growing software market.
- baybal2 6y ago
  > Fluffy software drives demand for fancy hardware. Fluffy hardware drives demand for fancy semiconductors. Intel valuation wouldn’t be where it is without... eh, what? And this is where the skeleton in the closet is. For a major silicon vendor, it becomes more, and more scary to not simply get on the wrong side with chip manufacturer, but even just missing on the next best deal possible. Companies that actually make all those chips don't matter as much when you are a 3rd-4th-5th tier company in your niche, and they don't care much about you. But the moment you become a bigger fish, your stakes become much, much higher. If a popular part (like a cellphone SOC) vendor gets a 10% worse fab deal than its competitor, that part vendor is likely on the way out. In fact, it's a long going "conspiracy theory" in the industry that chip makers keep playing their biggest clients against each other to prevent any of them getting too much negotiating power.
mschuster91 6y ago
> until VCs do what China does and start pouring money into hard stuff, not just fluffy software VCs won't do that, it's not their business model. The only way out is government funding - the way it has been for decades.
- someperson 6y ago
  5 of the "traitorous eight" from Fairchild Semiconductor were the investors who funded Intel
  - brain5ide 6y ago
    This happened once.
    - paulgerhardt 6y ago
      Intel went on to fund 1500 more companies, 200 of which went public, one of which was Broadcom.
rvba 6y ago
Barrier to enter hardware is too high: you need a lot of investment. Then there are patents. In China the state pushes for own hardware and they dont care about patents.
Reason077 6y ago
> "Intel is pretty much dead as is US tech innovation on this scale" The US still has Apple, Nvidia, Tesla, etc. All doing world-leading stuff. I would say US tech is far from dead.
- deleted 6y ago
  [deleted]
- keypusher 6y ago
  Apple does research, design and software but all the manufacturing and assembly is done in China by Chinese companies. Mostly Samsung and Foxconn. Nvidia is the same but the chips are fabbed by TSMC (Taiwan Semiconductor).
  - bruckie 6y ago
    Samsung is Korean.
  - simonh 6y ago
    Very few iPhone components are actually manufactured in China even now, it's just where all the parts are assembled, but the value contribution of assembly is only a few dollars per device[0]. Back in the day as much as about 40% of the components by value were manufactured in the USA, including the early Samsung CPUs made in a fab in Texas, and Gorilla Glass made by Corning in New York state. That was actually the case at the height of the furore about iPhones being made in China around 2010-2012, although few commentators bothered finding that out. Nowadays the countries of origin are more diverse, and the proportion made in the USA has fallen. The biggest single change though was moving from US made Samsung CPUs to TSMC chips from Taiwan. I believe some of the more sophisticated assembly and QA test equipment is US made, or at least used to be but can't find a reference for that online. [0]https://www.lifewire.com/where-is-the-iphone-made-1999503 https://www.lifewire.com/where-is-the-iphone-made-1999503
    - tooltalk 6y ago
      China accounts for only about 5% of global semi sales, according to SIAC's 2019 annual report. The US still dominates in logic and analog sub-product categories by a wide margin. > Back in the day as much as about 40%... 40% sounds too high -- I think 18% at max is more realistic. Apple's A chip cost was estimated between $12-$20 or about 7%-8% of total BOM. Aside from Apple's A chips fabbed by Samsung and baseband/RF/sensors by Qualcomm/Skyworks, I can't think of any other significant US components in Apple's mobile product. The most valuable components in the iPhones in those days were DRAM/NAND flash storage (about 30% of BOM) and displays and they came from either Japan or South Korea. Micron wasn't an significant supplier until Apple's relationship with Samsung soured. Sure, who can forget Tim Apple's rare CBS interview where he proudly declared the engines of their portable devices were made in the US, after which Apple promptly outsourced it to TSMC in Taiwan. I suspect that that was a calculated move to make the final defense of their outsourcing practices before moving that out of the US as well.
mobilio 6y ago
Same happens to Boeing too.
- ChuckNorris89 6y ago
  Except Boeing will be bailed out eternally since it's the US's only civil aircraft manufacturer and has lots of defense contracts.
  - Cullinet 6y ago
    Mike Milken's first junk bond pitch was a case study of the corruption at Lockheed in the 70s, and how much he made buying their "fallen angel" debt, secure on his knowledge of congressional forgiveness. The enabler of present day Boeing is the market has long since made implicit guarantees part of their overt modeling and client analysis. The sickly results include a management insulated from even catastrophic mistakes.
  - bryanlarsen 6y ago
    The bailout can and should be after they declare Chapter 11 bankruptcy. Save the factories and the jobs, but there is no need to bail out the shareholders or bondholders.
    - ChuckNorris89 6y ago
      Letting Bieing get to chapter 11 means letting Airbus eat their lunches and the US would never let that happen.
      - bryanlarsen 6y ago
        Why? Chapter 11 doesn't mean they stop making or selling planes. The biggest problem would be uncertainty, and that can be dealt with by announcing the intention of bailout immediately after the chapter 11 announcement. For example GM went through chapter 11 in 2009. This helped their sales rather than hurt it.
mathattack 6y ago
It’s natural for large tech companies to enter the harvesting business when they can’t innovate anymore. Look at IBM. They just can’t innovate, so they do all kinds of financial engineering on the back of a robust customer audit program. Eventually that money gets recycled into funding earlier stage companies. (If a company buys back stock, the old investors have to put the money somewhere)
- dragontamer 6y ago
  IBM's chips seem pretty innovative to me. A large amount of IBM's software is stagnant though. OpenCAPI, SMT4... and POWER10 has those GDDR modules coming for ~1000GBps memory bandwidths.
- sitkack 6y ago
  IBM has a full hardware/software stack, cloud computing and consulting services. What is your basis the claim?
  - TedDoesntTalk 6y ago
    Have you seen their customers vs their competitors’ customers? And Watson is a joke.
  - mathattack 6y ago
    Too much time working with them as a partner and vendor.
- TedDoesntTalk 6y ago
  > Look at IBM. They just can’t innovate Indeed. But they shot themselves in the foot when they replaced their experienced, expensive staff with low-wage Indian workers (not to pick specifically on Indians... there are certainly Pakistanis and other Asian cultures represented in that cohort).
  - moneywoes 6y ago
    Was it their development team?
yourapostasy 6y ago
The challenge even when "VCs do what China does and start pouring money into hard stuff, not just fluffy software" is that like Feynman's There's Plenty of Room at the Bottom observation, there is plenty of innovation room in the intricacies of "low-end", "low-margin" manufacturing. Divorcing that operational, get-your-hands-dirty aspect from your business closes off insights that arise from the ongoing software-eats-the-world wave still building up steam around the world. The more you cram together the people networks, culture, knowledge, tooling and practices of how to create all this stuff into a single ecosystem, the more they start making Burke-like Connections. Thinking you can Jira-innovate your way to dominance on an ever-narrowing technology stack is architecture astronaut'ing on a strategic corporate scale. If Amazon had outsourced their IT operations to an IBM, would their internal culture still have de novo evolved the nascent devops principles back then into AWS? It isn't what Intel gives up now by selling this business that will hurt their innovation. It is the options that suddenly get a lot more expensive to investigate in the future for future innovation. Technology innovation is evolution: extremely messy, more dead ends than successful adaptations, enormously energy-intensive from lots of majority-repetition, and highly organic. You can certainly optimize around the edges to make it slightly less jagged-edge, but innovation sparks at the tiny interstices, usually not at the top.
- tharne 6y ago
  It's amazing that pretty much every economist, journalist, business school professor and overpaid McKinsey consultant miss this critical point about how innovation works.
  - yourapostasy 6y ago
    Indeed. And it is even more amazing that "staunch free market advocates" among this leadership cadre mostly do not see the parallels between evolution and capitalism. And they blithely praise the innovative superiority of capitalism in one meeting, then create elaborate narratives how selling off "non-core" capabilities shrinking their innovation Petri dish agar surface area increases innovation in the next meeting. Somehow the innovation spurred by capitalism from the freewheeling, chaotic free market is suddenly amenable when it crosses the corporate threshold to sprints, top-down grand corporate architectural visions, and five-year plans. I wish as much as anyone innovation wasn't such a massively, messily, wasteful, organic process. But after decades of experience bashing my head against the wall with everyone else trying the top-down, bottle-it-up-and-sell-it hopeium, I've been pleasantly surprised with "letting go" and letting the "floor" mix it up, take input from it, feed back into it, and create a constantly-boiling stew of ideas. The finance management part in me has to be locked away in the padded cell here and there for their own good, but they and I can't argue with the results.
fnord77 6y ago
> until VCs... start pouring money into hard stuff this is pretty unlikely. big government projects (.mil, .nasa) are better at kick starting the hard stuff. america has gotten so fragmented though that I doubt we'll ever have a moon-shot scale project ever again.

by bnt 6y ago

duhast 6y ago

Fluffy software drives demand for fancy hardware. Intel valuation wouldn’t be where it is without growing software market.

baybal2 6y ago
> Fluffy software drives demand for fancy hardware. Fluffy hardware drives demand for fancy semiconductors. Intel valuation wouldn’t be where it is without... eh, what? And this is where the skeleton in the closet is. For a major silicon vendor, it becomes more, and more scary to not simply get on the wrong side with chip manufacturer, but even just missing on the next best deal possible. Companies that actually make all those chips don't matter as much when you are a 3rd-4th-5th tier company in your niche, and they don't care much about you. But the moment you become a bigger fish, your stakes become much, much higher. If a popular part (like a cellphone SOC) vendor gets a 10% worse fab deal than its competitor, that part vendor is likely on the way out. In fact, it's a long going "conspiracy theory" in the industry that chip makers keep playing their biggest clients against each other to prevent any of them getting too much negotiating power.

mschuster91 6y ago

> until VCs do what China does and start pouring money into hard stuff, not just fluffy software VCs won't do that, it's not their business model. The only way out is government funding - the way it has been for decades.

someperson 6y ago
5 of the "traitorous eight" from Fairchild Semiconductor were the investors who funded Intel
- brain5ide 6y ago
  This happened once.
  - paulgerhardt 6y ago
    Intel went on to fund 1500 more companies, 200 of which went public, one of which was Broadcom.

rvba 6y ago

Barrier to enter hardware is too high: you need a lot of investment. Then there are patents. In China the state pushes for own hardware and they dont care about patents.

Reason077 6y ago

> "Intel is pretty much dead as is US tech innovation on this scale" The US still has Apple, Nvidia, Tesla, etc. All doing world-leading stuff. I would say US tech is far from dead.

deleted 6y ago
[deleted]
keypusher 6y ago
Apple does research, design and software but all the manufacturing and assembly is done in China by Chinese companies. Mostly Samsung and Foxconn. Nvidia is the same but the chips are fabbed by TSMC (Taiwan Semiconductor).
- bruckie 6y ago
  Samsung is Korean.
- simonh 6y ago
  Very few iPhone components are actually manufactured in China even now, it's just where all the parts are assembled, but the value contribution of assembly is only a few dollars per device[0]. Back in the day as much as about 40% of the components by value were manufactured in the USA, including the early Samsung CPUs made in a fab in Texas, and Gorilla Glass made by Corning in New York state. That was actually the case at the height of the furore about iPhones being made in China around 2010-2012, although few commentators bothered finding that out. Nowadays the countries of origin are more diverse, and the proportion made in the USA has fallen. The biggest single change though was moving from US made Samsung CPUs to TSMC chips from Taiwan. I believe some of the more sophisticated assembly and QA test equipment is US made, or at least used to be but can't find a reference for that online. [0]https://www.lifewire.com/where-is-the-iphone-made-1999503 https://www.lifewire.com/where-is-the-iphone-made-1999503
  - tooltalk 6y ago
    China accounts for only about 5% of global semi sales, according to SIAC's 2019 annual report. The US still dominates in logic and analog sub-product categories by a wide margin. > Back in the day as much as about 40%... 40% sounds too high -- I think 18% at max is more realistic. Apple's A chip cost was estimated between $12-$20 or about 7%-8% of total BOM. Aside from Apple's A chips fabbed by Samsung and baseband/RF/sensors by Qualcomm/Skyworks, I can't think of any other significant US components in Apple's mobile product. The most valuable components in the iPhones in those days were DRAM/NAND flash storage (about 30% of BOM) and displays and they came from either Japan or South Korea. Micron wasn't an significant supplier until Apple's relationship with Samsung soured. Sure, who can forget Tim Apple's rare CBS interview where he proudly declared the engines of their portable devices were made in the US, after which Apple promptly outsourced it to TSMC in Taiwan. I suspect that that was a calculated move to make the final defense of their outsourcing practices before moving that out of the US as well.

mobilio 6y ago

Same happens to Boeing too.

ChuckNorris89 6y ago
Except Boeing will be bailed out eternally since it's the US's only civil aircraft manufacturer and has lots of defense contracts.
- Cullinet 6y ago
  Mike Milken's first junk bond pitch was a case study of the corruption at Lockheed in the 70s, and how much he made buying their "fallen angel" debt, secure on his knowledge of congressional forgiveness. The enabler of present day Boeing is the market has long since made implicit guarantees part of their overt modeling and client analysis. The sickly results include a management insulated from even catastrophic mistakes.
- bryanlarsen 6y ago
  The bailout can and should be after they declare Chapter 11 bankruptcy. Save the factories and the jobs, but there is no need to bail out the shareholders or bondholders.
  - ChuckNorris89 6y ago
    Letting Bieing get to chapter 11 means letting Airbus eat their lunches and the US would never let that happen.
    - bryanlarsen 6y ago
      Why? Chapter 11 doesn't mean they stop making or selling planes. The biggest problem would be uncertainty, and that can be dealt with by announcing the intention of bailout immediately after the chapter 11 announcement. For example GM went through chapter 11 in 2009. This helped their sales rather than hurt it.

mathattack 6y ago

It’s natural for large tech companies to enter the harvesting business when they can’t innovate anymore. Look at IBM. They just can’t innovate, so they do all kinds of financial engineering on the back of a robust customer audit program. Eventually that money gets recycled into funding earlier stage companies. (If a company buys back stock, the old investors have to put the money somewhere)

dragontamer 6y ago
IBM's chips seem pretty innovative to me. A large amount of IBM's software is stagnant though. OpenCAPI, SMT4... and POWER10 has those GDDR modules coming for ~1000GBps memory bandwidths.
sitkack 6y ago
IBM has a full hardware/software stack, cloud computing and consulting services. What is your basis the claim?
- TedDoesntTalk 6y ago
  Have you seen their customers vs their competitors’ customers? And Watson is a joke.
- mathattack 6y ago
  Too much time working with them as a partner and vendor.
TedDoesntTalk 6y ago
> Look at IBM. They just can’t innovate Indeed. But they shot themselves in the foot when they replaced their experienced, expensive staff with low-wage Indian workers (not to pick specifically on Indians... there are certainly Pakistanis and other Asian cultures represented in that cohort).
- moneywoes 6y ago
  Was it their development team?

yourapostasy 6y ago

The challenge even when "VCs do what China does and start pouring money into hard stuff, not just fluffy software" is that like Feynman's There's Plenty of Room at the Bottom observation, there is plenty of innovation room in the intricacies of "low-end", "low-margin" manufacturing. Divorcing that operational, get-your-hands-dirty aspect from your business closes off insights that arise from the ongoing software-eats-the-world wave still building up steam around the world. The more you cram together the people networks, culture, knowledge, tooling and practices of how to create all this stuff into a single ecosystem, the more they start making Burke-like Connections. Thinking you can Jira-innovate your way to dominance on an ever-narrowing technology stack is architecture astronaut'ing on a strategic corporate scale. If Amazon had outsourced their IT operations to an IBM, would their internal culture still have de novo evolved the nascent devops principles back then into AWS? It isn't what Intel gives up now by selling this business that will hurt their innovation. It is the options that suddenly get a lot more expensive to investigate in the future for future innovation. Technology innovation is evolution: extremely messy, more dead ends than successful adaptations, enormously energy-intensive from lots of majority-repetition, and highly organic. You can certainly optimize around the edges to make it slightly less jagged-edge, but innovation sparks at the tiny interstices, usually not at the top.

tharne 6y ago
It's amazing that pretty much every economist, journalist, business school professor and overpaid McKinsey consultant miss this critical point about how innovation works.
- yourapostasy 6y ago
  Indeed. And it is even more amazing that "staunch free market advocates" among this leadership cadre mostly do not see the parallels between evolution and capitalism. And they blithely praise the innovative superiority of capitalism in one meeting, then create elaborate narratives how selling off "non-core" capabilities shrinking their innovation Petri dish agar surface area increases innovation in the next meeting. Somehow the innovation spurred by capitalism from the freewheeling, chaotic free market is suddenly amenable when it crosses the corporate threshold to sprints, top-down grand corporate architectural visions, and five-year plans. I wish as much as anyone innovation wasn't such a massively, messily, wasteful, organic process. But after decades of experience bashing my head against the wall with everyone else trying the top-down, bottle-it-up-and-sell-it hopeium, I've been pleasantly surprised with "letting go" and letting the "floor" mix it up, take input from it, feed back into it, and create a constantly-boiling stew of ideas. The finance management part in me has to be locked away in the padded cell here and there for their own good, but they and I can't argue with the results.

fnord77 6y ago

> until VCs... start pouring money into hard stuff this is pretty unlikely. big government projects (.mil, .nasa) are better at kick starting the hard stuff. america has gotten so fragmented though that I doubt we'll ever have a moon-shot scale project ever again.