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> This is why Intel needs to be split in two. Yes, integrating design and manufacturing was the foundation of Intel’s moat for decades, but that integration has

> This is why Intel needs to be split in two. Yes, integrating design and manufacturing was the foundation of Intel’s moat for decades, but that integration has become a straight-jacket for both sides of the business. Intel’s designs are held back by the company’s struggles in manufacturing, while its manufacturing has an incentive problem. The only comparable data point says that this is a terrible idea. AMD spun out GlobalFoundries after a deep slide in their valuation, and the stock (as well as the company's reputation) remained in the doldrums for several years after that. Chipmaking is a big business and there are many advantages to vertical integration when both sides of the company function appropriately. If you own the fabs and there is a surge in demand (as we see now at the less extreme end of the lithography spectrum), your designs get preferential treatment. Intel's problem isn't the structure of the company, it's the execution. Swan was not originally intended as the permanent replacement to Krzanich[0], and it's a bit strange to draw conclusions about whether the company can steer away from the rocks when the new captain isn't even going to take the helm until the middle of next month. People are viewing Intel's suggestion that it may use TSMC's fabs for some products as a negative for Intel, but I just see it as a way to exert pressure on AMD's gross margin by putting some market demand pressure on the extreme end of the lithography spectrum (despite sustained demand in TSMC's HPC segment, TSMC's 7nm+ and 5nm are not the main driver of current semiconductor shortages). [0] https://www.engadget.com/2019-01-31-intel-gives-interim-ceo-robert-swan-the-full-time-job.html https://www.engadget.com/2019-01-31-intel-gives-interim-ceo-...

garaetjjte 6y ago
>The only comparable data point says that this is a terrible idea. Huh, I would say completely opposite thing. AMD wouldn't have survived if it kept trying to improve their own process instead of going to TSMC.
- ZeroCool2u 6y ago
  The problem here is not the success of AMD after splitting, but the complete retreat of Global Foundries from the SOTA process node. If this happens again with an Intel split then we have only TSMC left, off the coast of mainland China in Taiwan, in the middle of a game of thermonuclear tug of war between the West and China. While Capitalism will likely be part of the solution, through subsidizes for Intel or some other form, it must take a back seat to preventing the scenario described above from becoming reality. We are on the brink of this happening already with so many people suggesting such a split and ignoring what happened to AMD and GF. The geopolitical ramifications of completely centralizing the only leading process node in such a sensitive area between the world's super powers cannot be understated. Full disclosure: I'm a shareholder in Intel, TSMC, and AMD.
  - morganw 6y ago
    Let's just hope that if Intel's position is protected because of its strategic importance in the tug of war, it doesn't become another Boeing.
    - totalZero 6y ago
      This is a bizarre comparison. Boeing made an entire line of planes that could randomly dive into the ground, and insisted that there be no additional training required for the uptake of those planes. Intel, in contrast, was over-ambitious with 10nm and didn't wait a few more months to incorporate EUV into that process node. The government hasn't banned the use of Intel chips, but the 737 Max 8 was grounded for 20 months. While the pandemic slammed air travel, it has been a major tailwind for the PC and server markets alike.
      - rjmunro 6y ago
        I thought Boeing had many issues pre-covid, not just the 737 Max. Starliner immediately springs to mind.
      - morganw 6y ago
        besides commercial aviation, Boeing (which swallowed Douglas and McDonnell Aircraft, Rocketdyne, etc.) is the second largest defense contractor in the world. It's too critical to be allowed to fail. Intel and Global Foundries have the only nearly state-of-the-art foundries far from China.
  - renewiltord 6y ago
    I feel like that disclosure isn't warranted since like two of them are in the S&P 500 and everyone here probably has some exposure to that.
    - ZeroCool2u 6y ago
      Fair enough.
  - 6y ago
twblalock 6y ago
AMD had to go through that in order to become a competitive business again. Look at them now! Maybe Intel's chip design business needs to go through the same thing. Maybe there is a way for Intel to open up its fab business to other customers and make it more independent, without splitting it off into another company. However, it seems like that would require a change in direction that goes against decades of company culture. It might be easier to achieve that by actually splitting the fab business off.
- totalZero 6y ago
  Self-immolation is only a path to growth if you're a magical bird -- it's not a reasonable strategy for a healthy public company. AMD went through seven years of pain and humiliation between that spinoff and its 2015 glow-up. I understand that sometimes the optimal solution involves a short-term hit, but you don't just sell your organs on a lark (nor because some finance bros at Third Point said so). There are obvious strategic reasons to remain an IDM, and AMD would never have gone fabless if the company hadn't been in an existential crisis. Intel is nowhere near that kind of crisis; it may have some egg on its face but the company still dominates market share in its core businesses and is making profits hand over fist. > Maybe there is a way for Intel to open up its fab business to other customers and make it more independent, without splitting it off into another company. Intel Custom Foundry. They have several years of experience doing exactly what you describe, and that's how their relationship with Altera (which they later acquired) began. I see AMD's subsequent bid for Xilinx as a copycat acquisition that demonstrates one of the competitive advantages of Intel's position as an IDM: information.
  - twblalock 6y ago
    > Intel is nowhere near that kind of crisis; it may have some egg on its face but the company still dominates market share in its core businesses and is making profits hand over fist. Years from now, people looking back will be amazed at how fast that changed. The time to react to disruption is now, when the company still has the ability to do so.
    - 6y ago

garaetjjte 6y ago

>The only comparable data point says that this is a terrible idea. Huh, I would say completely opposite thing. AMD wouldn't have survived if it kept trying to improve their own process instead of going to TSMC.

ZeroCool2u 6y ago
The problem here is not the success of AMD after splitting, but the complete retreat of Global Foundries from the SOTA process node. If this happens again with an Intel split then we have only TSMC left, off the coast of mainland China in Taiwan, in the middle of a game of thermonuclear tug of war between the West and China. While Capitalism will likely be part of the solution, through subsidizes for Intel or some other form, it must take a back seat to preventing the scenario described above from becoming reality. We are on the brink of this happening already with so many people suggesting such a split and ignoring what happened to AMD and GF. The geopolitical ramifications of completely centralizing the only leading process node in such a sensitive area between the world's super powers cannot be understated. Full disclosure: I'm a shareholder in Intel, TSMC, and AMD.
- morganw 6y ago
  Let's just hope that if Intel's position is protected because of its strategic importance in the tug of war, it doesn't become another Boeing.
  - totalZero 6y ago
    This is a bizarre comparison. Boeing made an entire line of planes that could randomly dive into the ground, and insisted that there be no additional training required for the uptake of those planes. Intel, in contrast, was over-ambitious with 10nm and didn't wait a few more months to incorporate EUV into that process node. The government hasn't banned the use of Intel chips, but the 737 Max 8 was grounded for 20 months. While the pandemic slammed air travel, it has been a major tailwind for the PC and server markets alike.
    - rjmunro 6y ago
      I thought Boeing had many issues pre-covid, not just the 737 Max. Starliner immediately springs to mind.
    - morganw 6y ago
      besides commercial aviation, Boeing (which swallowed Douglas and McDonnell Aircraft, Rocketdyne, etc.) is the second largest defense contractor in the world. It's too critical to be allowed to fail. Intel and Global Foundries have the only nearly state-of-the-art foundries far from China.
- renewiltord 6y ago
  I feel like that disclosure isn't warranted since like two of them are in the S&P 500 and everyone here probably has some exposure to that.
  - ZeroCool2u 6y ago
    Fair enough.
- 6y ago

twblalock 6y ago

AMD had to go through that in order to become a competitive business again. Look at them now! Maybe Intel's chip design business needs to go through the same thing. Maybe there is a way for Intel to open up its fab business to other customers and make it more independent, without splitting it off into another company. However, it seems like that would require a change in direction that goes against decades of company culture. It might be easier to achieve that by actually splitting the fab business off.

totalZero 6y ago
Self-immolation is only a path to growth if you're a magical bird -- it's not a reasonable strategy for a healthy public company. AMD went through seven years of pain and humiliation between that spinoff and its 2015 glow-up. I understand that sometimes the optimal solution involves a short-term hit, but you don't just sell your organs on a lark (nor because some finance bros at Third Point said so). There are obvious strategic reasons to remain an IDM, and AMD would never have gone fabless if the company hadn't been in an existential crisis. Intel is nowhere near that kind of crisis; it may have some egg on its face but the company still dominates market share in its core businesses and is making profits hand over fist. > Maybe there is a way for Intel to open up its fab business to other customers and make it more independent, without splitting it off into another company. Intel Custom Foundry. They have several years of experience doing exactly what you describe, and that's how their relationship with Altera (which they later acquired) began. I see AMD's subsequent bid for Xilinx as a copycat acquisition that demonstrates one of the competitive advantages of Intel's position as an IDM: information.
- twblalock 6y ago
  > Intel is nowhere near that kind of crisis; it may have some egg on its face but the company still dominates market share in its core businesses and is making profits hand over fist. Years from now, people looking back will be amazed at how fast that changed. The time to react to disruption is now, when the company still has the ability to do so.
  - 6y ago