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Reading between the lines, it sounds like they are supplying chips domestically to remove a dependence on a foreign, unpredictable supply chain, and are able to

Reading between the lines, it sounds like they are supplying chips domestically to remove a dependence on a foreign, unpredictable supply chain, and are able to use fabs that are losing relevance for server chips in a way that doesn't matter to the car manufacturers. Sounds like a win-win, but I'm guessing the next thing we will hear is a pitch for federal subsidy for this under a national security banner.

Ericson2314 6y ago
Yes, much state capitalism all around here.
luxuryballs 6y ago
Might as well unfortunately, if they aren’t going to cut all the regulations that drive up the cost of employment and manufacturing. At this point it feels like another hit of economic heroin is the only thing staving off fatal withdrawals.
defaultname 6y ago
Intel has a number of advanced foundries around the world, and they're jockeying for business as their cash cow sees a bit of threat. Every wafer-for-hire foundry is running at >100% utilization so it's basically printing money at this point, especially if you have a slightly older foundries that aren't up to par for creating the cutting edge of chip, but they're perfectly adequate for making most automotive electronics (e.g. 28nm).
blihp 6y ago
tl;dr version: there's nothing unpredictable about the supply chain if you don't cancel your orders. That's the narrative (re: dependence on foreign chips), but it's not what actually happened. Last year the auto manufacturers anticipated a slowdown in demand and cut back on inventory orders. This made sense at the time (to reduce orders) given the uncertainty but it sounds like they pretty much cancelled them. They likely figured that their suppliers would be happy for the business when they returned.[1] The semi companies just put other customers in line ahead of them and now the autos are screwed since they are facing incredibly long lead times for chips and don't have the inventory to bridge the gap to make the number of vehicles they need. This benefits Intel because the line of customers looking for 14nm chips at the prices Intel probably wants to charge likely isn't very long. However, they've found a perfect (i.e. desperate) customer in the autos. So it's actually a win-win for the time being. [1] This actually works if you're a supplier exclusively to one company/industry. It doesn't work so well if you have other options.
- totalZero 6y ago
  > there's nothing unpredictable about the supply chain if you don't cancel your orders Unless there's a fire at an AKM plant. Or a fire at a Renesas plant. Or a drought in Taiwan. Or blackouts in Texas. When you're running at low utilization, lead times are shorter and the market is more forgiving of order alterations and incorrect predictions of demand. But that's not the case right now, and there have been several exogenous setbacks for the sector.
  - blihp 6y ago
    Fair points re: disruptions... but you will have those issues anywhere in factories run by any company. I was responding to the implication that there's anything inherently unpredictable in the chip companies being foreign. My point was that the autos are uniquely screwed vs. many other customers of the chip companies due to their own decisions and actions. Regarding utilization rates, that's probably where most of my snarkiness was coming from: the autos knew demand was high before they cancelled their orders and they chose to do so anyways. I'm sure they had every right to do what they did (contractual language allowing for cancellations etc), but when you step out of line for whatever reason it should come as no surprise that when you decide that you want to be in line after all that you're going to now be at the back of it. This has nothing to do with an unpredictable supply chain and everything to do with an unpredictable customer who didn't plan properly. Yet the story gets played up as the failure of a brittle supply chain.
gumby 6y ago
> I'm guessing the next thing we will hear is a pitch for federal subsidy for this under a national security banner. Just open your ears and you'll hear it already: "Intel CEO calls for "moonshot" to boost U.S. role in chipmaking" https://www.axios.com/intel-ceo-gelsinger-chipmaking-moonshot-boost-us-6d30b6eb-824d-4cbd-90c8-42150386d545.html https://www.axios.com/intel-ceo-gelsinger-chipmaking-moonsho... Nom nom!
delfinom 6y ago
Hilariously one of the backlogs I know of are PMICs from TI. TI produces most of these ICs domestically already, it's just car manufacturers fucked everything with their incompetence at supply chain forecasting.

Ericson2314 6y ago

Yes, much state capitalism all around here.

luxuryballs 6y ago

Might as well unfortunately, if they aren’t going to cut all the regulations that drive up the cost of employment and manufacturing. At this point it feels like another hit of economic heroin is the only thing staving off fatal withdrawals.

defaultname 6y ago

Intel has a number of advanced foundries around the world, and they're jockeying for business as their cash cow sees a bit of threat. Every wafer-for-hire foundry is running at >100% utilization so it's basically printing money at this point, especially if you have a slightly older foundries that aren't up to par for creating the cutting edge of chip, but they're perfectly adequate for making most automotive electronics (e.g. 28nm).

blihp 6y ago

tl;dr version: there's nothing unpredictable about the supply chain if you don't cancel your orders. That's the narrative (re: dependence on foreign chips), but it's not what actually happened. Last year the auto manufacturers anticipated a slowdown in demand and cut back on inventory orders. This made sense at the time (to reduce orders) given the uncertainty but it sounds like they pretty much cancelled them. They likely figured that their suppliers would be happy for the business when they returned.[1] The semi companies just put other customers in line ahead of them and now the autos are screwed since they are facing incredibly long lead times for chips and don't have the inventory to bridge the gap to make the number of vehicles they need. This benefits Intel because the line of customers looking for 14nm chips at the prices Intel probably wants to charge likely isn't very long. However, they've found a perfect (i.e. desperate) customer in the autos. So it's actually a win-win for the time being. [1] This actually works if you're a supplier exclusively to one company/industry. It doesn't work so well if you have other options.

totalZero 6y ago
> there's nothing unpredictable about the supply chain if you don't cancel your orders Unless there's a fire at an AKM plant. Or a fire at a Renesas plant. Or a drought in Taiwan. Or blackouts in Texas. When you're running at low utilization, lead times are shorter and the market is more forgiving of order alterations and incorrect predictions of demand. But that's not the case right now, and there have been several exogenous setbacks for the sector.
- blihp 6y ago
  Fair points re: disruptions... but you will have those issues anywhere in factories run by any company. I was responding to the implication that there's anything inherently unpredictable in the chip companies being foreign. My point was that the autos are uniquely screwed vs. many other customers of the chip companies due to their own decisions and actions. Regarding utilization rates, that's probably where most of my snarkiness was coming from: the autos knew demand was high before they cancelled their orders and they chose to do so anyways. I'm sure they had every right to do what they did (contractual language allowing for cancellations etc), but when you step out of line for whatever reason it should come as no surprise that when you decide that you want to be in line after all that you're going to now be at the back of it. This has nothing to do with an unpredictable supply chain and everything to do with an unpredictable customer who didn't plan properly. Yet the story gets played up as the failure of a brittle supply chain.

gumby 6y ago

> I'm guessing the next thing we will hear is a pitch for federal subsidy for this under a national security banner. Just open your ears and you'll hear it already: "Intel CEO calls for "moonshot" to boost U.S. role in chipmaking" https://www.axios.com/intel-ceo-gelsinger-chipmaking-moonshot-boost-us-6d30b6eb-824d-4cbd-90c8-42150386d545.html https://www.axios.com/intel-ceo-gelsinger-chipmaking-moonsho... Nom nom!

delfinom 6y ago

Hilariously one of the backlogs I know of are PMICs from TI. TI produces most of these ICs domestically already, it's just car manufacturers fucked everything with their incompetence at supply chain forecasting.