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This take totally misses the mark on the realities of the situation. Intel made a bad bet on tech and wasn’t able to shrink the node. TSMC got the right choice

This take totally misses the mark on the realities of the situation. Intel made a bad bet on tech and wasn’t able to shrink the node. TSMC got the right choice. TSMC was therefore able to make better tech in the short term. Intel designs are not directly related to that shortcoming. TSMC makes way more chips than intel. TSMC is therefore able to buy the fabs, equipment, engineers, etc at a lower price per chip (since more chips). TSMC is therefore able to spend more on their fabs, and invest more in research. Intel can’t keep up on the manufacturing side even if they can on the design side. The only way to justify the research costs and fab costs is to amortize it across more chips which means they need to manufacture for more than just intel. It’s basically the AWS model - you can be your best customer, but you can drive prices down for yourself with extra customers. Amazon didn’t abandon the revolutionary 2 day shipping when they became a data center provider. Assuming intel still has good designers left, they won’t abandon their own chips.

dtech 5y ago
Multiple reports over the years indicate that it's not just a single bad bet that got Intel into this, but a corporate culture where engineers have less and less influence and MBAs more and more, leading to worse and worse tech. Similar to Boeing.
- onepointsixC 5y ago
  Yet Intel is still competitive to AMD, and now has an engineer in charge. Intel's problems feel pretty over stated their products are still good, they're launching new ones which will bring new competition to the GPU space.
  - matthewfcarlson 5y ago
    I’m personally quite excited for what intel has planned and I work on M1 chips (opinions are my own). I think there’s a decent chance they’ll have a comeback in the next few years. Yes, AMD is doing awesome and ARM is bigger than ever. We’re definitely headed into a very interesting time for processors as consumers.
LegitShady 5y ago
>. The only way to justify the research costs and fab costs is to amortize it across more chips or make more money per chip, which is what intel does, since lets say compared to an AMD chip TSMC manufacturers, TSMC takes a cut of the chip for manufacturing and then AMD takes the rest, while intel collects both portions.
- klelatti 5y ago
  In return it also has two sets of R&D to support and two sets of risks - architecture and manufacturing. If it falls behind on either of these it starts to lose. TSMC for example can solely focus on manufacturing assured that it will fill it’s fabs if it keeps pace. Maybe Intel made super profits when x86 was the only game in town but that’s not the case any more.
  - LegitShady 5y ago
    >If it falls behind on either of these it starts to lose. If TMSC falls behind in one of these they lose, and they don't have the other. Is that an advantage as you seem to put it? If they make a wrong choice like intel did for 10nm they're going to be immediately a non-entity with no 'other' business. Having two sets of money make businesses puts intel at a big advantage in terms of financing and owning their own platforms. If TSMC falls behind a node all of their orders will disappear to whoever has a more advanced node. They don't have another business. Instead of two risks, they have one risk thats identical to intel's, and their entire business depends on it. That's a lot less anti fragile. Intel has two sets of risks and in exchange on many many fewer chips they basically made the same amount of money last year, when they were behind on CPUs at almost every metric. That's resilient. People talking about the fall of intel are talking about something that intel is actively maneuvering ahead of. TSMC has no chip design risks much lower per chip profits in exchange.
    - klelatti 5y ago
      Vertical integration is great if it generates synergies. It’s really bad if the tie into the internal customer hinders the development of each part of the business. Intel is not remotely robust as it’s almost completely dependent on x86 and needs to catch up with TSMC. It lost smartphones in part because of x86. Now it’s fallen behind AMD because of manufacturing weaknesses. Hence a P/E ratio of 9 vs c20 for TSMC. TSMC on the other hand has a huge variety of customers at a wide variety of nodes.
imwillofficial 5y ago
“This take totally misses the mark on the realities of the situation.” No, this comment misses the mark. Intel’s largest issues are not economic or technological. It’s the bloated bureaucracy that squanders the best and brightest money can buy.

dtech 5y ago

Multiple reports over the years indicate that it's not just a single bad bet that got Intel into this, but a corporate culture where engineers have less and less influence and MBAs more and more, leading to worse and worse tech. Similar to Boeing.

onepointsixC 5y ago
Yet Intel is still competitive to AMD, and now has an engineer in charge. Intel's problems feel pretty over stated their products are still good, they're launching new ones which will bring new competition to the GPU space.
- matthewfcarlson 5y ago
  I’m personally quite excited for what intel has planned and I work on M1 chips (opinions are my own). I think there’s a decent chance they’ll have a comeback in the next few years. Yes, AMD is doing awesome and ARM is bigger than ever. We’re definitely headed into a very interesting time for processors as consumers.

LegitShady 5y ago

>. The only way to justify the research costs and fab costs is to amortize it across more chips or make more money per chip, which is what intel does, since lets say compared to an AMD chip TSMC manufacturers, TSMC takes a cut of the chip for manufacturing and then AMD takes the rest, while intel collects both portions.

klelatti 5y ago
In return it also has two sets of R&D to support and two sets of risks - architecture and manufacturing. If it falls behind on either of these it starts to lose. TSMC for example can solely focus on manufacturing assured that it will fill it’s fabs if it keeps pace. Maybe Intel made super profits when x86 was the only game in town but that’s not the case any more.
- LegitShady 5y ago
  >If it falls behind on either of these it starts to lose. If TMSC falls behind in one of these they lose, and they don't have the other. Is that an advantage as you seem to put it? If they make a wrong choice like intel did for 10nm they're going to be immediately a non-entity with no 'other' business. Having two sets of money make businesses puts intel at a big advantage in terms of financing and owning their own platforms. If TSMC falls behind a node all of their orders will disappear to whoever has a more advanced node. They don't have another business. Instead of two risks, they have one risk thats identical to intel's, and their entire business depends on it. That's a lot less anti fragile. Intel has two sets of risks and in exchange on many many fewer chips they basically made the same amount of money last year, when they were behind on CPUs at almost every metric. That's resilient. People talking about the fall of intel are talking about something that intel is actively maneuvering ahead of. TSMC has no chip design risks much lower per chip profits in exchange.
  - klelatti 5y ago
    Vertical integration is great if it generates synergies. It’s really bad if the tie into the internal customer hinders the development of each part of the business. Intel is not remotely robust as it’s almost completely dependent on x86 and needs to catch up with TSMC. It lost smartphones in part because of x86. Now it’s fallen behind AMD because of manufacturing weaknesses. Hence a P/E ratio of 9 vs c20 for TSMC. TSMC on the other hand has a huge variety of customers at a wide variety of nodes.

imwillofficial 5y ago

“This take totally misses the mark on the realities of the situation.” No, this comment misses the mark. Intel’s largest issues are not economic or technological. It’s the bloated bureaucracy that squanders the best and brightest money can buy.