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Intel can’t grow profits in a global chip shortage

83 points by mellosouls 4y ago

namelessoracle 4y ago
Intel got MBA'ed just like most American companies. Will be interesting if/when it will happen to Apple.
- xadhominemx 4y ago
  Intel’s woes were caused by poor engineering decisions. Apple has been run by MBAs for 10 years and is more successful than ever.
  - MichaelZuo 4y ago
    No, Apple's top leadership are all operations people or engineers, plus general counsel. The fact that some spent 2 years at an mba school doesn't make them forget their 4 years of industrial engineering/operations/supply chain undergrad. Way different from most people who get MBAs.
    - xadhominemx 4y ago
      42% of the most recent HBS class have science or engineering undergraduate degrees https://www.hbs.edu/mba/admissions/class-profile/Pages/default.aspx https://www.hbs.edu/mba/admissions/class-profile/Pages/defau...
      - MichaelZuo 4y ago
        If HBS only manages 42% I imagine it's even less elsewhere. And that number includes life sciences, etc., that is way different.
sylware 4y ago
This is stategic. Making money out of it is optional (like defence).
- ska 4y ago
  It's arguably strategic to have domestic capacity, sure. It doesn't have to be Intel. Giving a company even the vague belief, let alone the certainty, that it won't be allowed to fail is a stunningly bad idea.
  - lacker 4y ago
    Who else can it be besides Intel? I don't think it even needs to be "domestic", per se, it just needs to be in a country that isn't extremely likely to be invaded by China.
    - Symmetry 4y ago
      IBM had bleeding edge fabs not too long ago and is still involved in the research if not the mass production side.
    - bee_rider 4y ago
      Hmm. I think it depends on the application. Defense isn't HPC, right? They can probably get by on 22nm or so for most applications, so GlobalFoundries might be able to handle it. Or, heck, Texas Instruments might be able to handle some chips (obviously they aren't cutting edge on the digital logic process node side, but they so all the funky analog stuff and they'll keep making a design for, like, a bazillion years, which may be appealing to the military).
deleted 4y ago
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whatshisface 4y ago
These analyses always focus on M&A, outsourcing, and that kind of business stuff while completely ignoring the decades of disgruntled engineers that left Intel to its present fate. Intel engineering was mismanaged for years and now they are paying the price.
- pjmlp 4y ago
  Because that is what matters when it comes down to money, and Intel has plenty of it to burn, and pattents, regardless of ARM and AMD groupies wish for.
- duped 4y ago
  > ignoring the decades of disgruntled engineers that left Intel to its present fate Not to mention the layoffs of thousands of the most senior and experienced staff. Talk about cutting off your nose to spite your face.
  - booi 4y ago
    A lot of people look at R&D and investment in things like fabs and process as the way forward but I feel like what you mentioned is the main problem. Intel has been leaking and practically ejecting their best and most experienced talent to "maintain profitability". The brain drain will be their biggest problem and courting the best talent takes a lot of time and isn't something you can necessarily throw a bunch of money at.
    - duped 4y ago
      Anecdotally they are deepening their bench right now, but it's hard to make up for the mistakes of the past decade. Recruiting however is great for a company like Intel today, because of the ongoing tech crash it's getting really hard to get good people to join riskier companies. Intel is big, stable, rich, and too big to fail.
      - whatshisface 4y ago
        Intel also has a reputation for translating its success in good times to layoffs for individual engineers... so what does that imply about your risks at Intel in bad times?
UncleOxidant 4y ago
Isn't this because Intel under-invested in R&D over the last several years and Gelsinger is (rightly, it seems) saying he needs to invest a bunch of money to catch up?
- ldiracdelta 4y ago
  I don't think they under-invested with sheer magnitude of money. The money is plentiful at Intel. It seems like they need better leadership, which hopefully they have in Gelsinger.
- mfer 4y ago
  It's not just R&D. They are opening their chip making facilities to the designs of others and increasing their ability to produce chips. All of that takes capital investments and it's a new line of business. Much of this isn't R&D but about building out capacity and processes for this new area.
- Traster 4y ago
  It wasn't under-investment, it was lack of focus. They spent their time running after new growth opportunities at the cost of their core business. They wanted to do IoT (low power they're not particularly good at and the margins are awful), 5G (they had some success here) and autonomous driving (some success but still comparatively tiny). Meanwhile their core business started to fail.
carlycue 4y ago
Intel is done. Gelsinger can do his best to rally the troops but it's too late to catch up with Apple Silicon. The M1 came out in 2020 and Intel is still unable to match it. The M2 is coming this year, leaving Intel ever further behind.
- ejb999 4y ago
  then again, not everyone runs on a mac, and won't be anytime soon.
  - xwdv 4y ago
    Doesn’t matter.
    - ejb999 4y ago
      right, because the millions of computers in corporate America running windows are all just going to be thrown out and converted to m1/m2 macs. I prefer mac, and use them everyday, but the prediction of the death of intel are premature. They don't need to be faster than M1s or M2s, they just need to be at least as fast, or faster than what people need them to be to surf the web, create spreadsheets and power points and run all that legacy enterprise software that only runs on windows. Macs are better, but they are much more expensive on average; were I work (mega-corp), I can order a new windows machine whenever I want - if I need to get or upgrade my mac, it needs to be justified and approved two levels up from me, and really only developers and some graphics folks ever get approval - and my company probably buys/replaces 30K-40K machines every year 99% of which are running windows on intel.
      - deleted 4y ago
        [deleted]
- Remnant44 4y ago
  It's extremely possible for a product to be strictly dominated by another on technical merits and still be successful. "Intel is done" because Apple produced a great chip focuses on only one small (albeit very important!) part of the puzzle.
thunderbird120 4y ago
I swear HN's discussions on anything Intel related are always bottom of the barrel. They've been very clear about their messaging over the past few years. They are currently spending large amounts of money on capital expenditures to ensure future competitiveness and that eats into profits. The lack of increased profits during this current chip shortage is not a surprise to anyone paying attention nor is it indicative of anything particularly catastrophic for Intel. From Reuters >Intel Corp expects its profit margin to drop this year and then be steady for several years as it invests in new technologies and factories to meet rising chip demand, but added it forecasts climbs from 2025.
- jchw 4y ago
  Not seeing the bottom of the barrel discussion you’re referring to, in fact someone else already pointed this out. However, I really feel like this viewpoint is too charitable still. Sure, they are definitely investing in R&D to stay competitive, and that has eaten into profits. What exactly does that say about their corporate strategy before recently? If you really put two and two together, it’s hard to come up with anything but the most cynical answer: they cut R&D too short and maximized short term profits like crazy. I don’t feel like it’s any more reasonable to take Intel’s own rhetoric at face value any more than NVIDIA or AMDs. They’re all trying to paint the best picture for investors. Plus, none of this really discounts the valid points from the article either…
  - thunderbird120 4y ago
    >What exactly does that say about their corporate strategy before recently? I get the impression that people think that Intel's stagnation after 14nm was due to complacency and the desire to avoid taking risks. That is literally the exact opposite of the truth because almost all of their problems with the 10nm node stemmed from it being far too ambitious. It incorporated a large number of extremely cutting edge technologies which were leaps ahead of anything else being attempted at the time. This over-ambition lead to nearly half a decade being wasted because, as it turns out, they were a bridge too far. If Intel had been able to pull off what they originally intended with 10nm when they intended it they would have been absurdly far ahead of all of their competition but unfortunately that choice actually resulted in them falling behind.
lacker 4y ago
The big question in semiconductors is what will happen to the China-Taiwan situation. China has repeatedly stated that they intend to reunify with Taiwan by 2049 for the 100th anniversary of their communist party. I think they will probably try. If there's fighting then there's a good chance that TSMC ends up destroyed. Refugees can flee, physical plants can be destroyed. So if TSMC is destroyed, what happens to everyone downstream who depends on semiconductors? We probably end up both delaying products for years and giving Intel boatloads of money thinking "I sure hope they can scale up their only-three-years-behind technology quickly." So we should subsidize Intel to keep improving their currently-uncompetitive technology. This isn't the same as most "we should make things in America" complaints, it's a contingency plan for a specific, reasonably likely intense disruption to the world of technology.
- User23 4y ago
  > This isn't the same as most "we should make things in America" complaints How is it any different? There is a strategic argument for onshoring pretty much anything that isn’t utterly frivolous like fidget spinners and such. Look how effectively Europe’s need for energy has undermined the Russia sanctions. The Ruble is stronger than it was before the invasion! It’s nice not to be vulnerable to foreign embargoes of food or energy, just to name a couple important strategically important things besides semiconductors.
  - bsder 4y ago
    > There is a strategic argument for onshoring pretty much anything that isn’t utterly frivolous I would probably adjust that to "onshore anything that takes longer than <insert number of years> to spin up". You can spin up funiture factories in a year or less. You probably don't need them onshored. A steel mill probably takes 3-5 years. You probably should have a local alternative. You can't spin up ASML in less than 10 years. There definitely should be a local ASML alternative.
  - mywittyname 4y ago
    > anything that isn’t utterly frivolous like fidget spinners and such. This frivolity is exactly what countries need to do if they want to manufacture at the level China is. Fidget spinners were built as a way of scaling up the manufacturing of very high-tolerance bearings, and selling them in the USA for $5 helped ensure that every American involved in manufacturing understood just how adept China had become.
incomingpain 4y ago
Haven't checked Intel's stock in quite some time. I am familiar with their RISC-V moves and big future plays. Market Cap 180 billion sounds great. PE ratio of 7.3... WOW. People are heavily predicting major crash on intel. Very nice dividend as well... so they aren't attracting people? 15 billion/year into R&D is pretty comfy. Gain on Sale of Security 6,823million Good and increasing EPS, consistently beating estimates. total assets are going up very well. total debt is going up and is a bit high. Their financials look good. I dont see why their PE ratio would be sooooooo low. 0.06% % of Shares Held by All Insider Oh. Intel is probably just skittering by, and it's really the everything bubble that's the problem? Might make sense. I think the bigger reality? They label their assets as 168 billion and their market cap is 180 billion? Can we talk about bankruptcy?
- mywittyname 4y ago
  Intel isn't successful in the fields that "the market" thinks are the future. ARM is slowly chiseling away at their market share on the general purpose end of the spectrum. It's pretty clear that Apple intends to move completely away from Intel as some point in the near future. Nvidia has heavily outpaced them in the AI computing space. Data centers are filling up with racks of five-figure Nvidia cards. Intel was never competitive in the gaming sector, so there's no evidence to suggest they could ever catch up. Even in their home turf of legacy PC chips, there is strong competition from AMD. I can see why people aren't expecting huge growth from Intel in the future. There isn't an obvious growth market that they are primed to take.
- specialp 4y ago
  It is the same reason companies predicted to have large growth have higher PE multiples. A PE of 6 indicates that the market does not believe Intel will be able to keep this level of earnings in the future. Here are some of the factors: * Getting beat in manufacturing by TSMC * Competition in X86 infrastructure from AMD * Centralization of the lucrative server market into a few very large players that are fabricating their own ARM based chips (IE AWS gravitron) * X86 no longer having the same moat as ARM mobile domination has made many major libraries,languages and frameworks work just as well with ARM. * Recent track record of failing to respond to such challenges in a competitive way Of course they could turn this around and keep making insane profits, but that is what the market is thinking at the moment.
lvl102 4y ago
I was bullish on Intel all of last year but I think it’s effectively dead money until 2024-25. Between AMD and Apple, Intel is so far behind. Their GPU launch is also an indication that they are very disorganized.
- Melatonic 4y ago
  Profits are still decently high and they have the capital to basically subsidize their own chips (as they have done in the past) to keep their market up.
- ksec 4y ago
  >Their GPU launch is also an indication that they are very disorganized May be something not Intel related but cough the head of their GPU unit.
hristov 4y ago
It is amazing how much incorrect analysis this global chip shortage has brought about. The situation with intel is complex but I will bring out the simplest error in this analysis. Chips are not like oil, or steel or wheat. A chip shortage is a very different beast than an oil or wheat or iron ore or copper shortage. Lets say that there are 500 different chips in a device. This is not an exaggeration. If you are short of chip #203 you cannot throw an extra couple of pieces of chip #205 instead. These chips are different and the exact ones are needed. Furthermore, many of these chips are made using different processes in different fabs, so you cannot slow down manufacture of chip #205 to make some extra ones of chip #203. So that is the first thing to keep in mind in terms of the chip shortage. Currently the chips that are in shortage are mostly things intel does not make. To the best of my knowledge chips in shortage are power electronics, power discrete, power management ics, networking ics and industrial/auto/medical grade microcontrollers. If someone had updates to this list, please comment below. The thing about the chip shortage is, that if there is a shortage in something you do not make, it is not necessarily a good thing. That may mean that your client will make fewer devices because they do not have that chip #203, and you will be able to sell them fewer of your chip #205. Of course intel has some very serious issues but this chip shortage argument is just wrong.
- bobajeff 4y ago
  The chips used Raspberry Pi's.
  - hristov 4y ago
    The great rasppberry pi shortage is probably caused by shortages of power electronics and networking chips.
    - karmicthreat 4y ago
      If that was the case the compute modules would be unaffected. You can't get even those right now either.
      - 4y ago
jonplackett 4y ago
Question: why is it that Intel can’t just poach a bunch of the best TSMC engineers and catch up that way? Is it a lack of knowledge how to do this manufacturing? Or is it more like a skills shortage of engineers to do the actual manufacturing? Where exactly is it in the process that they can’t compete, and why is it so hard to catch up, given their virtually infinite R&D budget.
- ksec 4y ago
  These questions tends to come from software side, especially web developers where deployment and distribution lead time is practically zero. Even if Intel knew, the exact method to catch up, the time required to build Fabs, even if it was perfectly planned both internally ( as in Staff, Operation, recruitment ) and externally, everything from Land, Water, Electricity supply, equipment all readily available would still take 8 months to build and 1 year to operation. That is the fastest record to date to bring up a Fab by Apple and TSMC with lots of help from Government ( in terms of Regulation and infrastructure approval ). And if you include the planning prior to it that is more like 2 years. And it is already consider an astonishing achievement because most other players ( including TSMC themselves ) need 3-5 years. And right now, ASML has a backlog of orders to fill, assuming they cant increase their rate of production both due to the complexity and chip shortage, they are talking about 2024 if not 2025 orders. That is ignoring other part of the supply chain like Tokyo Electron which are also running extremely tight. ( Or Applied Materials if you want to look it up ) Again, all of that is assuming you knew exactly what to do to catch up to leading node.
  - jonplackett 4y ago
    Hey thanks for the reply (and yeah, software dev here!) Follow up question: does anyone know what it is they don’t know? Because while that does sound like a long time, they’ve been faffing around for years now trying to make 10nm work. Even on that time scale they should have been able to build a new fab - intel should really know how to do that anyway. If there is something they don’t know, why can’t they just buy it in. That’s the thing I don’t get. They have so much money still.
midislack 4y ago
Top three reply chains are transparently Intel damage control. It slides the topic but doesn't add anything to the discussion. Fact is Intel flopped on the tick tock cycle and is going the TSMC route to try to move to a smaller process and this is essentially what's been going on with them in the past few years. Moreover we learned through Spectre and Meltdown that Intel took a lot of shortcuts for decades, Theo De Raadt famously called out the CORE microarchitecture as being dramatically flawed and he ended up being correct[1]. Profits are important as a publicly held company but Intel needs a new from-scratch improved microarchitecture which isn't based on the venerable Pentium Pro, which is basically what we're all running a riced up version of even today. [1]https://linuxreviews.org/Theo_de_Raadt_on_the_Intel_Core_2_Jun_27,_2007 https://linuxreviews.org/Theo_de_Raadt_on_the_Intel_Core_2_J...
- TMWNN 4y ago
  >Profits are important as a publicly held company but Intel needs a new from-scratch improved microarchitecture which isn't based on the venerable Pentium Pro, which is basically what we're all running a riced up version of even today. Indeed. In the one market Intel dominates, what saved the company 15 years ago amid Itanic and Pentium 4 was 1) AMD Thunderbird being just as inefficient as Pentium 4 and, more importantly, 2) an Intel Israel skunk works project to improve on the Pentium 3. There is no such out-of-the-blue miracle this time. Meanwhile, Intel has failed, or at least failed to distinguish itself, in every single market it has entered since IBM chose the 8088 forty years ago: Every non-x86 instructional set CPU, flash memory, antivirus (still perhaps the most mystifying move in Intel history), servers/motherboards, and GPUs come to mind. The most successful non-x86 business for Intel is ... Ethernet cards? Meanwhile, it's embarrassed itself with discrete GPUs at least three separate times. A few years ago buying Nvidia would have been a savvy move; now it can no longer do so, and it's not impossible to imagine Nvidia buying Intel in the future.
  - midislack 4y ago
    Intel's made a bet on RISC-V so let's see how that turns out. It's a bit of a signal that maybe x86/x64 is dying. Might be apparent in a couple years but at this point it was enough to make me prick my ears up.
Shadonototra 4y ago
They should ask Nvidia how they did it, or they could peek, they got the data after all

83 points by mellosouls 4y ago

namelessoracle 4y ago

Intel got MBA'ed just like most American companies. Will be interesting if/when it will happen to Apple.

xadhominemx 4y ago
Intel’s woes were caused by poor engineering decisions. Apple has been run by MBAs for 10 years and is more successful than ever.
- MichaelZuo 4y ago
  No, Apple's top leadership are all operations people or engineers, plus general counsel. The fact that some spent 2 years at an mba school doesn't make them forget their 4 years of industrial engineering/operations/supply chain undergrad. Way different from most people who get MBAs.
  - xadhominemx 4y ago
    42% of the most recent HBS class have science or engineering undergraduate degrees https://www.hbs.edu/mba/admissions/class-profile/Pages/default.aspx https://www.hbs.edu/mba/admissions/class-profile/Pages/defau...
    - MichaelZuo 4y ago
      If HBS only manages 42% I imagine it's even less elsewhere. And that number includes life sciences, etc., that is way different.

sylware 4y ago

This is stategic. Making money out of it is optional (like defence).

ska 4y ago
It's arguably strategic to have domestic capacity, sure. It doesn't have to be Intel. Giving a company even the vague belief, let alone the certainty, that it won't be allowed to fail is a stunningly bad idea.
- lacker 4y ago
  Who else can it be besides Intel? I don't think it even needs to be "domestic", per se, it just needs to be in a country that isn't extremely likely to be invaded by China.
  - Symmetry 4y ago
    IBM had bleeding edge fabs not too long ago and is still involved in the research if not the mass production side.
  - bee_rider 4y ago
    Hmm. I think it depends on the application. Defense isn't HPC, right? They can probably get by on 22nm or so for most applications, so GlobalFoundries might be able to handle it. Or, heck, Texas Instruments might be able to handle some chips (obviously they aren't cutting edge on the digital logic process node side, but they so all the funky analog stuff and they'll keep making a design for, like, a bazillion years, which may be appealing to the military).

deleted 4y ago

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whatshisface 4y ago

These analyses always focus on M&A, outsourcing, and that kind of business stuff while completely ignoring the decades of disgruntled engineers that left Intel to its present fate. Intel engineering was mismanaged for years and now they are paying the price.

pjmlp 4y ago
Because that is what matters when it comes down to money, and Intel has plenty of it to burn, and pattents, regardless of ARM and AMD groupies wish for.
duped 4y ago
> ignoring the decades of disgruntled engineers that left Intel to its present fate Not to mention the layoffs of thousands of the most senior and experienced staff. Talk about cutting off your nose to spite your face.
- booi 4y ago
  A lot of people look at R&D and investment in things like fabs and process as the way forward but I feel like what you mentioned is the main problem. Intel has been leaking and practically ejecting their best and most experienced talent to "maintain profitability". The brain drain will be their biggest problem and courting the best talent takes a lot of time and isn't something you can necessarily throw a bunch of money at.
  - duped 4y ago
    Anecdotally they are deepening their bench right now, but it's hard to make up for the mistakes of the past decade. Recruiting however is great for a company like Intel today, because of the ongoing tech crash it's getting really hard to get good people to join riskier companies. Intel is big, stable, rich, and too big to fail.
    - whatshisface 4y ago
      Intel also has a reputation for translating its success in good times to layoffs for individual engineers... so what does that imply about your risks at Intel in bad times?

UncleOxidant 4y ago

Isn't this because Intel under-invested in R&D over the last several years and Gelsinger is (rightly, it seems) saying he needs to invest a bunch of money to catch up?

ldiracdelta 4y ago
I don't think they under-invested with sheer magnitude of money. The money is plentiful at Intel. It seems like they need better leadership, which hopefully they have in Gelsinger.
mfer 4y ago
It's not just R&D. They are opening their chip making facilities to the designs of others and increasing their ability to produce chips. All of that takes capital investments and it's a new line of business. Much of this isn't R&D but about building out capacity and processes for this new area.
Traster 4y ago
It wasn't under-investment, it was lack of focus. They spent their time running after new growth opportunities at the cost of their core business. They wanted to do IoT (low power they're not particularly good at and the margins are awful), 5G (they had some success here) and autonomous driving (some success but still comparatively tiny). Meanwhile their core business started to fail.

carlycue 4y ago

Intel is done. Gelsinger can do his best to rally the troops but it's too late to catch up with Apple Silicon. The M1 came out in 2020 and Intel is still unable to match it. The M2 is coming this year, leaving Intel ever further behind.

ejb999 4y ago
then again, not everyone runs on a mac, and won't be anytime soon.
- xwdv 4y ago
  Doesn’t matter.
  - ejb999 4y ago
    right, because the millions of computers in corporate America running windows are all just going to be thrown out and converted to m1/m2 macs. I prefer mac, and use them everyday, but the prediction of the death of intel are premature. They don't need to be faster than M1s or M2s, they just need to be at least as fast, or faster than what people need them to be to surf the web, create spreadsheets and power points and run all that legacy enterprise software that only runs on windows. Macs are better, but they are much more expensive on average; were I work (mega-corp), I can order a new windows machine whenever I want - if I need to get or upgrade my mac, it needs to be justified and approved two levels up from me, and really only developers and some graphics folks ever get approval - and my company probably buys/replaces 30K-40K machines every year 99% of which are running windows on intel.
    - deleted 4y ago
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Remnant44 4y ago
It's extremely possible for a product to be strictly dominated by another on technical merits and still be successful. "Intel is done" because Apple produced a great chip focuses on only one small (albeit very important!) part of the puzzle.

thunderbird120 4y ago

I swear HN's discussions on anything Intel related are always bottom of the barrel. They've been very clear about their messaging over the past few years. They are currently spending large amounts of money on capital expenditures to ensure future competitiveness and that eats into profits. The lack of increased profits during this current chip shortage is not a surprise to anyone paying attention nor is it indicative of anything particularly catastrophic for Intel. From Reuters >Intel Corp expects its profit margin to drop this year and then be steady for several years as it invests in new technologies and factories to meet rising chip demand, but added it forecasts climbs from 2025.

jchw 4y ago
Not seeing the bottom of the barrel discussion you’re referring to, in fact someone else already pointed this out. However, I really feel like this viewpoint is too charitable still. Sure, they are definitely investing in R&D to stay competitive, and that has eaten into profits. What exactly does that say about their corporate strategy before recently? If you really put two and two together, it’s hard to come up with anything but the most cynical answer: they cut R&D too short and maximized short term profits like crazy. I don’t feel like it’s any more reasonable to take Intel’s own rhetoric at face value any more than NVIDIA or AMDs. They’re all trying to paint the best picture for investors. Plus, none of this really discounts the valid points from the article either…
- thunderbird120 4y ago
  >What exactly does that say about their corporate strategy before recently? I get the impression that people think that Intel's stagnation after 14nm was due to complacency and the desire to avoid taking risks. That is literally the exact opposite of the truth because almost all of their problems with the 10nm node stemmed from it being far too ambitious. It incorporated a large number of extremely cutting edge technologies which were leaps ahead of anything else being attempted at the time. This over-ambition lead to nearly half a decade being wasted because, as it turns out, they were a bridge too far. If Intel had been able to pull off what they originally intended with 10nm when they intended it they would have been absurdly far ahead of all of their competition but unfortunately that choice actually resulted in them falling behind.

lacker 4y ago

The big question in semiconductors is what will happen to the China-Taiwan situation. China has repeatedly stated that they intend to reunify with Taiwan by 2049 for the 100th anniversary of their communist party. I think they will probably try. If there's fighting then there's a good chance that TSMC ends up destroyed. Refugees can flee, physical plants can be destroyed. So if TSMC is destroyed, what happens to everyone downstream who depends on semiconductors? We probably end up both delaying products for years and giving Intel boatloads of money thinking "I sure hope they can scale up their only-three-years-behind technology quickly." So we should subsidize Intel to keep improving their currently-uncompetitive technology. This isn't the same as most "we should make things in America" complaints, it's a contingency plan for a specific, reasonably likely intense disruption to the world of technology.

User23 4y ago
> This isn't the same as most "we should make things in America" complaints How is it any different? There is a strategic argument for onshoring pretty much anything that isn’t utterly frivolous like fidget spinners and such. Look how effectively Europe’s need for energy has undermined the Russia sanctions. The Ruble is stronger than it was before the invasion! It’s nice not to be vulnerable to foreign embargoes of food or energy, just to name a couple important strategically important things besides semiconductors.
- bsder 4y ago
  > There is a strategic argument for onshoring pretty much anything that isn’t utterly frivolous I would probably adjust that to "onshore anything that takes longer than <insert number of years> to spin up". You can spin up funiture factories in a year or less. You probably don't need them onshored. A steel mill probably takes 3-5 years. You probably should have a local alternative. You can't spin up ASML in less than 10 years. There definitely should be a local ASML alternative.
- mywittyname 4y ago
  > anything that isn’t utterly frivolous like fidget spinners and such. This frivolity is exactly what countries need to do if they want to manufacture at the level China is. Fidget spinners were built as a way of scaling up the manufacturing of very high-tolerance bearings, and selling them in the USA for $5 helped ensure that every American involved in manufacturing understood just how adept China had become.

incomingpain 4y ago

Haven't checked Intel's stock in quite some time. I am familiar with their RISC-V moves and big future plays. Market Cap 180 billion sounds great. PE ratio of 7.3... WOW. People are heavily predicting major crash on intel. Very nice dividend as well... so they aren't attracting people? 15 billion/year into R&D is pretty comfy. Gain on Sale of Security 6,823million Good and increasing EPS, consistently beating estimates. total assets are going up very well. total debt is going up and is a bit high. Their financials look good. I dont see why their PE ratio would be sooooooo low. 0.06% % of Shares Held by All Insider Oh. Intel is probably just skittering by, and it's really the everything bubble that's the problem? Might make sense. I think the bigger reality? They label their assets as 168 billion and their market cap is 180 billion? Can we talk about bankruptcy?

mywittyname 4y ago
Intel isn't successful in the fields that "the market" thinks are the future. ARM is slowly chiseling away at their market share on the general purpose end of the spectrum. It's pretty clear that Apple intends to move completely away from Intel as some point in the near future. Nvidia has heavily outpaced them in the AI computing space. Data centers are filling up with racks of five-figure Nvidia cards. Intel was never competitive in the gaming sector, so there's no evidence to suggest they could ever catch up. Even in their home turf of legacy PC chips, there is strong competition from AMD. I can see why people aren't expecting huge growth from Intel in the future. There isn't an obvious growth market that they are primed to take.
specialp 4y ago
It is the same reason companies predicted to have large growth have higher PE multiples. A PE of 6 indicates that the market does not believe Intel will be able to keep this level of earnings in the future. Here are some of the factors: * Getting beat in manufacturing by TSMC * Competition in X86 infrastructure from AMD * Centralization of the lucrative server market into a few very large players that are fabricating their own ARM based chips (IE AWS gravitron) * X86 no longer having the same moat as ARM mobile domination has made many major libraries,languages and frameworks work just as well with ARM. * Recent track record of failing to respond to such challenges in a competitive way Of course they could turn this around and keep making insane profits, but that is what the market is thinking at the moment.

lvl102 4y ago

I was bullish on Intel all of last year but I think it’s effectively dead money until 2024-25. Between AMD and Apple, Intel is so far behind. Their GPU launch is also an indication that they are very disorganized.

Melatonic 4y ago
Profits are still decently high and they have the capital to basically subsidize their own chips (as they have done in the past) to keep their market up.
ksec 4y ago
>Their GPU launch is also an indication that they are very disorganized May be something not Intel related but cough the head of their GPU unit.

hristov 4y ago

It is amazing how much incorrect analysis this global chip shortage has brought about. The situation with intel is complex but I will bring out the simplest error in this analysis. Chips are not like oil, or steel or wheat. A chip shortage is a very different beast than an oil or wheat or iron ore or copper shortage. Lets say that there are 500 different chips in a device. This is not an exaggeration. If you are short of chip #203 you cannot throw an extra couple of pieces of chip #205 instead. These chips are different and the exact ones are needed. Furthermore, many of these chips are made using different processes in different fabs, so you cannot slow down manufacture of chip #205 to make some extra ones of chip #203. So that is the first thing to keep in mind in terms of the chip shortage. Currently the chips that are in shortage are mostly things intel does not make. To the best of my knowledge chips in shortage are power electronics, power discrete, power management ics, networking ics and industrial/auto/medical grade microcontrollers. If someone had updates to this list, please comment below. The thing about the chip shortage is, that if there is a shortage in something you do not make, it is not necessarily a good thing. That may mean that your client will make fewer devices because they do not have that chip #203, and you will be able to sell them fewer of your chip #205. Of course intel has some very serious issues but this chip shortage argument is just wrong.

bobajeff 4y ago
The chips used Raspberry Pi's.
- hristov 4y ago
  The great rasppberry pi shortage is probably caused by shortages of power electronics and networking chips.
  - karmicthreat 4y ago
    If that was the case the compute modules would be unaffected. You can't get even those right now either.
    - 4y ago

jonplackett 4y ago

Question: why is it that Intel can’t just poach a bunch of the best TSMC engineers and catch up that way? Is it a lack of knowledge how to do this manufacturing? Or is it more like a skills shortage of engineers to do the actual manufacturing? Where exactly is it in the process that they can’t compete, and why is it so hard to catch up, given their virtually infinite R&D budget.

ksec 4y ago
These questions tends to come from software side, especially web developers where deployment and distribution lead time is practically zero. Even if Intel knew, the exact method to catch up, the time required to build Fabs, even if it was perfectly planned both internally ( as in Staff, Operation, recruitment ) and externally, everything from Land, Water, Electricity supply, equipment all readily available would still take 8 months to build and 1 year to operation. That is the fastest record to date to bring up a Fab by Apple and TSMC with lots of help from Government ( in terms of Regulation and infrastructure approval ). And if you include the planning prior to it that is more like 2 years. And it is already consider an astonishing achievement because most other players ( including TSMC themselves ) need 3-5 years. And right now, ASML has a backlog of orders to fill, assuming they cant increase their rate of production both due to the complexity and chip shortage, they are talking about 2024 if not 2025 orders. That is ignoring other part of the supply chain like Tokyo Electron which are also running extremely tight. ( Or Applied Materials if you want to look it up ) Again, all of that is assuming you knew exactly what to do to catch up to leading node.
- jonplackett 4y ago
  Hey thanks for the reply (and yeah, software dev here!) Follow up question: does anyone know what it is they don’t know? Because while that does sound like a long time, they’ve been faffing around for years now trying to make 10nm work. Even on that time scale they should have been able to build a new fab - intel should really know how to do that anyway. If there is something they don’t know, why can’t they just buy it in. That’s the thing I don’t get. They have so much money still.

midislack 4y ago

Top three reply chains are transparently Intel damage control. It slides the topic but doesn't add anything to the discussion. Fact is Intel flopped on the tick tock cycle and is going the TSMC route to try to move to a smaller process and this is essentially what's been going on with them in the past few years. Moreover we learned through Spectre and Meltdown that Intel took a lot of shortcuts for decades, Theo De Raadt famously called out the CORE microarchitecture as being dramatically flawed and he ended up being correct[1]. Profits are important as a publicly held company but Intel needs a new from-scratch improved microarchitecture which isn't based on the venerable Pentium Pro, which is basically what we're all running a riced up version of even today. [1]https://linuxreviews.org/Theo_de_Raadt_on_the_Intel_Core_2_Jun_27,_2007 https://linuxreviews.org/Theo_de_Raadt_on_the_Intel_Core_2_J...

TMWNN 4y ago
>Profits are important as a publicly held company but Intel needs a new from-scratch improved microarchitecture which isn't based on the venerable Pentium Pro, which is basically what we're all running a riced up version of even today. Indeed. In the one market Intel dominates, what saved the company 15 years ago amid Itanic and Pentium 4 was 1) AMD Thunderbird being just as inefficient as Pentium 4 and, more importantly, 2) an Intel Israel skunk works project to improve on the Pentium 3. There is no such out-of-the-blue miracle this time. Meanwhile, Intel has failed, or at least failed to distinguish itself, in every single market it has entered since IBM chose the 8088 forty years ago: Every non-x86 instructional set CPU, flash memory, antivirus (still perhaps the most mystifying move in Intel history), servers/motherboards, and GPUs come to mind. The most successful non-x86 business for Intel is ... Ethernet cards? Meanwhile, it's embarrassed itself with discrete GPUs at least three separate times. A few years ago buying Nvidia would have been a savvy move; now it can no longer do so, and it's not impossible to imagine Nvidia buying Intel in the future.
- midislack 4y ago
  Intel's made a bet on RISC-V so let's see how that turns out. It's a bit of a signal that maybe x86/x64 is dying. Might be apparent in a couple years but at this point it was enough to make me prick my ears up.

Shadonototra 4y ago

They should ask Nvidia how they did it, or they could peek, they got the data after all