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Full disclosure: I worked for AMD for about a decade. I agree with the bottom line here (we should spend gov't $$ to make sure significant amounts of chip manu

Full disclosure: I worked for AMD for about a decade. I agree with the bottom line here (we should spend gov't $$ to make sure significant amounts of chip manufacturing still get made in the US, and Intel has to be a big part of that). However, it misses the real reason for Intel's decline. For most of it's existence, if Intel had missed a manufacturing node in Moore's Law, it would have been rightly recognized as an existential threat, and it would have become the #1 focus of the CEO and the rest of the company. Intel fell behind Moore's Law for years in its manufacturing, and it never caused them to appropriately panic until that hit the bottom line. This is a problem of an executive suite too focused on this quarter's results, and not focused enough on the engineering that drives those results. Previous generations of Intel executives understood that. It is likely that the current CEO, brought in once the board saw problems in their stock price, realizes it. If they had been run by executives who cared more about the underlying engineering, they would have had a 5-year head start in fixing the situation.

deehouie 4y ago
I heard this so many times. These goddamn CEOs are so myopic; all they care is next quarter's earnings. After the fall of every megacap, tech or otherwise (recently GE), someone always blames them for short sightedness. Is that really? Well, many CEOs of many huge corporations just plan for the next quarter, and they seem to be doing just fine.
- dmix 4y ago
  The average large corporation is typically in a stable/stagnant industry that is nowhere near as competitive as chips, where the stakes are 100x higher. They get by being the largest kid on the block and few young companies chomping at the bit, and a series of B/C-tier competitors even dumber and poorly run that they can't even do the next quarter effectively. Countless mega-corps are just floating by with the ebbs and flows of a market, burning off some early moment of success. Staying at the top longer than a decade or two (usually the timeframe where other market entrants take notice of your weakness) is the real test. Otherwise just being a decent manager/leader that keeps the existing established business model chugging along and hiring slightly above average executives to put out fires is good enough.
- rossdavidh 4y ago
  Well not all CEOs are so myopic; Andy Grove of Intel was not, for example. Whether or not a next-quarter focus works, probably depends on the industry. In semiconductors, especially high-performance semiconductors, the R&D on manufacturing this year determines whether the design several years from now is able to be competitive, so there is a need to be more forward looking.
eru 4y ago
> we should spend gov't $$ to make sure significant amounts of chip manufacturing still get made in the US, [...] Why? And would your rationale apply to other countries as well?
- Thorrez 4y ago
  Regarding your first question: >The reason this matters is because chips matter for many use cases outside of PCs and servers — Intel’s focus — which is to say that TSMC matters. Nearly every piece of equipment these days, military or otherwise, has a processor inside. Some of these don’t require particularly high performance, and can be manufactured by fabs built years ago all over the U.S. and across the world; others, though, require the most advanced processes, which means they must be manufactured in Taiwan by TSMC. >This is a big problem if you are a U.S. military planner. Your job is not to figure out if there will ever be a war between the U.S. and China, but to plan for an eventuality you hope never occurs. And in that planning the fact that TSMC’s foundries — and Samsung’s — are within easy reach of Chinese missiles is a major issue. Regarding your second question, what companies and countries do you have in mind?
  - eru 4y ago
    For the second question I meant: if everyone is trying to build chips at home, at best we get an expensive and inefficient arms-race for subsidies. At worst we get trade-wars or actual wars.
- dash2 4y ago
  Because you can't make war without chips. During war, global supply chains are cut off. And if you can't make war, then you can't have a global order on your terms. Instead, you have a global order on the terms of the Chinese. They become powerful and rich. You (and your allies) become weak and poor. You make chips in the US for the same reason you make nukes in the US. It applies to other countries only insofar as they want to be independent. Most Western countries can shelter under the US umbrella. Again, same as with nukes.
  - 4y ago
mhh__ 4y ago
Intel's engineers apparently got too ambitious rather than got lazy.
amelius 4y ago
Sounds similar to Boeing. You begin to wonder when these kind of lessons start entering management textbooks.
- jimkleiber 4y ago
  I was just gonna say that the Intel case may fit well in this book called Obliquity[0], which ironically discusses Boeing. I believe it said that Boeing was less profitable when it focused on increasing profits and more profitable when it focused on improving engineering. [0]: https://www.johnkay.com/product/obliquity/ https://www.johnkay.com/product/obliquity/
  - spamizbad 4y ago
    I've noticed a pattern of how executives approach this: 1) When looking for more profits/revenue at a technology company, they'll often either try to push an R&D "big bet" to market half-baked, in hopes of it pulling in new revenue OR put the screws to product and engineering to churn out some "quick wins" to give them some momentum. 2) When focusing more on engineering, it's often because they're either distracted by other challenges faced by the organization outside of engineering OR they are up against an existential threat that mandates engineering investment and letting them steer the strategy somewhat.
- alexashka 4y ago
  They can't. It'd undermine the very existence of the ruling elite class that doesn't know how to do anything, besides 'managing' by following a magic formula taught at Harvard, Stanford, etc. The problem is the existence of a business management layer as an idea - it's an attempt to get back to the good old days of feudalism, whose chief characteristics are nepotism, stagnation, corruption and nihilism, now that we've gotten rid of the mental pacifier of 'heaven' for the oppressed and hell for the ruling elites (religion).
  - jjtheblunt 4y ago
    this is the most resonant comment I've seen in months, as it entirely fits my experiences in engineering inside Apple, and later Amazon and Facebook. the inner sanctum of very flat Apple was as far from feudalism as could be, for my several years, and it functioned like a very performant ecosystem of engineering. This diametrically contrasts precisely with Amazon engineering, where I saw all the horrors of feudalism and generalized nepotism (racism for example, sexism promoting incapable people to fit quotas, and flagrant corruption). Facebook was somewhere more like Apple but not in its DNA...just in the imitation is flattery sense.
mandevil 4y ago
In general I don't believe that being an engineer is necessary to run a technology business (some of my best leaders were not), but I have come around to believing that Intel and Boeing are exceptions: the nature of their business requires new massive bets- not quite 'bet the company' but definitely 'bet the next 10 years of company performance' every so often (new fabs and new planes), and that one decision really needs to be made by an experienced engineer, due to the nature of the underlying evaluation. If not, then people who think they can bafflegab mother nature the same way they can auditors will make the decisions.
- neuronexmachina 4y ago
  An interesting example is Dennis Muilenberg, who was Boeing CEO from 2015-2019, during the 737 Max debacle: https://en.wikipedia.org/wiki/Dennis_Muilenburg https://en.wikipedia.org/wiki/Dennis_Muilenburg He started at Boeing in 1985 as an engineering intern, earned a masters in Aeronautics, and worked his way through management and engineering positions until he became CEO. I have no idea how much of the 737 Max issues could be placed on him directly, but he was CEO during its launch and the crashes.
  - nickff 4y ago
    Dennis Muilenberg also featured in the NOVA documentary "War of the X-Planes", around the middle of his career, where he appeared to be a risk-taking, forward-thinking engineering manager. Of note, I believe that a significant portion of his career was spent on the 'defense' side of Boeing, which some have blamed for the company's problems. I personally place more blame on Muilenberg's predecessor, James McNerney, a former Proctor & Gamble, and 3M executive.
  - mandevil 4y ago
    The key 737 Max decisions were made circa 2011-2013, while James McNerney was the CEO (2005-2015). That was when the design objective of no simulator training required was set for the plane (and Boeing released marketing information promising that) while also promising to do it with engines that were too big for the wings. That decision was what led to everything else, and was loudly announced and marketed while Muilenburg was over on the Integrated Defense side of the company. James McNerney was a Harvard MBA who spent time at McKinsey before going to the Jack Welch clown show at GE, where he ran the aircraft engine business for a long time. When he lost out to Immelt to be CEO there, he went to 3M for a few years then bounced to Boeing. Now, Muilenburg has to bear the mistakes he made: pushing an unsafe plane through certification, not listening to the right people, not investigating the Lion Air crash sufficiently, etc. But the evidence I think strongly shows that someone who was not an engineer was making the final decisions on the "bet the company for the next 10 years" choice to go forward with the 737Max rather than a clean-sheet design, back in 2011.
formerkrogemp 4y ago
You could apply this with slightly different specifics to many US national and multinational corporations. The efficient market rewards inefficient stock buybacks, record debt fueled dividends, years of underinvestment, low wages, and most of all no strings attached bailouts. They may be a loser, but we'll pay for their loss. Socialize the losses/costs and privatize the gains.
- lotsofpulp 4y ago
  Based on the performance of publicly listed companies in the last 15 years, the stock market has rewarded companies with great cash flow, high profits, and relatively rosy outlooks. Of course there is an underlying assumption the government will bail out simultaneous/systemic big failures, but it does not seem accurate to assume any random business will be bailed out. Edit : fixed typo
  - PaulDavisThe1st 4y ago
    > but it does it [sic] seem accurate to assume any random business will be bailed out. Precisely the issue. It's not "any random business". It's any business with the appropriate properties and connections. If it was truly just random business, perhaps the bail outs would not create such a level of moral hazard. But it's not, and businesses know that.
    - megaman821 4y ago
      I don't like the bailout but I understand they were necessary. I just wish they came with harsher deterrents. Like if the shareholders vote to take a bailout, the Board, C-Suite, and VP's all get let go and any financial packages can be litigated in special bailout courts.
georgeecollins 4y ago
I think this is a result of the problem of financializaton. I don't think that an engineer has to run a company like Intel, Boeing or Apple. But if the growth of steady profits becomes a higher priority than what you actually produce, you are likely to milk the business at the expense of its long term prospects.
- sanxiyn 4y ago
  I mostly disagree with this line of reasoning. Yes, financialization is bad, but Intel would have been fine if its process went fine. We probably will never know what exactly went wrong, but I think the current best guess is this: Intel set minimum metal pitch target for its 10 nm process at 36 nm, while TSMC set minimum metal pitch target for its 7 nm process (equivalent to Intel 10 nm process) at 40 nm. These processes were the last before EUV, pushing DUV to its limit. It turned out that you can do 40 nm but not 36 nm. That's it. It was an extremely technical issue, with justifications on both sides, and Intel's decision wasn't obviously mistaken, even in retrospect. 36 nm was usual scaling to Moore's law. It was 40 nm that was unusual, TSMC underscaled metal relative to fin and gate. Why 40 nm? Because it was the limit of DUV double patterning. But Intel also knew that! That's why Intel went with quadruple patterning. It was a conservative choice to underscale metal to the limit of double patterning, but quadruple patterning wasn't crazy either. Everyone was using quadruple patterning for fin at this point, so it wasn't thought that risky. Should Intel have reconsidered this once they encountered yield issues? Yes, but that's hindsight. All processes experience yield issues. Intel probably thought they can be solved, faster than going back to drawing board and doing everything again. Unfortunately they couldn't. (Above analysis was informed by lots of reading on this topic I did over the years, but https://semiwiki.com/semiconductor-manufacturers/intel/7433-intel-10nm-yield-issues/ https://semiwiki.com/semiconductor-manufacturers/intel/7433-... in particular.)
  - georgeecollins 4y ago
    That's a better explanation for what went wrong at Intel. But I would also point to many other companies: Boeing, General Motors etc. that had really excellent products once upon a time and then faltered. Every case is very complicated and has many reasons.
throwaway4good 4y ago
For an example of a broken company: https://twitter.com/dylan522p/status/1554889887630761985 https://twitter.com/dylan522p/status/1554889887630761985 Intel with a bunch of Optane related presentations at #FlashMemorySummit Some the Intel folks I spoke to about this (not pictured) had no clue it was going to be cancelled until they read it on an article from Toms Hardware.
- fomine3 4y ago
  Could it be opposite? Intel gave up Optane products so they release their research to community without worrying competitors catch up. No disclosure is due to pre-IR compliance.
  - throwaway4good 4y ago
    There is a way of telling your own people what is going on without breaking the rules of being a public traded company. This is just bad form.
lr1970 4y ago
> For most of it's existence, if Intel had missed a manufacturing node in Moore's Law, it would have been rightly recognized as an existential threat, and it would have become the #1 focus of the CEO and the rest of the company. Former Intel-er here. You hit it on the nail. Andy Grove used to say "Only paranoid survive" and acted accordingly. But when Paul Otellini became the CEO it was downhill ever since.
- midoridensha 4y ago
  No, it was going downhill when Craig Barrett was CEO. He made lots of stupid mistakes, getting involved in too many risky and unnecessary ventures (like consumer products: remember the Intel keyboard and mouse? Or music player? Or worse, microscope?). The big one was tying the P4 processor to RAMBUS memory.
  - lr1970 4y ago
    Yes, it started with Barrett but became painfully obvious under Otellini. When Steve Jobs asked Intel to build a chip for future iPhone Otellini said no -- one of the biggest strategic blunders. Also in 2005 Intel paid Dell not to use superior AMD offering instead of putting all hands on deck fixing their own (they did achieve parity eventually).

deehouie 4y ago

I heard this so many times. These goddamn CEOs are so myopic; all they care is next quarter's earnings. After the fall of every megacap, tech or otherwise (recently GE), someone always blames them for short sightedness. Is that really? Well, many CEOs of many huge corporations just plan for the next quarter, and they seem to be doing just fine.

dmix 4y ago
The average large corporation is typically in a stable/stagnant industry that is nowhere near as competitive as chips, where the stakes are 100x higher. They get by being the largest kid on the block and few young companies chomping at the bit, and a series of B/C-tier competitors even dumber and poorly run that they can't even do the next quarter effectively. Countless mega-corps are just floating by with the ebbs and flows of a market, burning off some early moment of success. Staying at the top longer than a decade or two (usually the timeframe where other market entrants take notice of your weakness) is the real test. Otherwise just being a decent manager/leader that keeps the existing established business model chugging along and hiring slightly above average executives to put out fires is good enough.
rossdavidh 4y ago
Well not all CEOs are so myopic; Andy Grove of Intel was not, for example. Whether or not a next-quarter focus works, probably depends on the industry. In semiconductors, especially high-performance semiconductors, the R&D on manufacturing this year determines whether the design several years from now is able to be competitive, so there is a need to be more forward looking.

eru 4y ago

> we should spend gov't $$ to make sure significant amounts of chip manufacturing still get made in the US, [...] Why? And would your rationale apply to other countries as well?

Thorrez 4y ago
Regarding your first question: >The reason this matters is because chips matter for many use cases outside of PCs and servers — Intel’s focus — which is to say that TSMC matters. Nearly every piece of equipment these days, military or otherwise, has a processor inside. Some of these don’t require particularly high performance, and can be manufactured by fabs built years ago all over the U.S. and across the world; others, though, require the most advanced processes, which means they must be manufactured in Taiwan by TSMC. >This is a big problem if you are a U.S. military planner. Your job is not to figure out if there will ever be a war between the U.S. and China, but to plan for an eventuality you hope never occurs. And in that planning the fact that TSMC’s foundries — and Samsung’s — are within easy reach of Chinese missiles is a major issue. Regarding your second question, what companies and countries do you have in mind?
- eru 4y ago
  For the second question I meant: if everyone is trying to build chips at home, at best we get an expensive and inefficient arms-race for subsidies. At worst we get trade-wars or actual wars.
dash2 4y ago
Because you can't make war without chips. During war, global supply chains are cut off. And if you can't make war, then you can't have a global order on your terms. Instead, you have a global order on the terms of the Chinese. They become powerful and rich. You (and your allies) become weak and poor. You make chips in the US for the same reason you make nukes in the US. It applies to other countries only insofar as they want to be independent. Most Western countries can shelter under the US umbrella. Again, same as with nukes.
- 4y ago

mhh__ 4y ago

Intel's engineers apparently got too ambitious rather than got lazy.

amelius 4y ago

Sounds similar to Boeing. You begin to wonder when these kind of lessons start entering management textbooks.

jimkleiber 4y ago
I was just gonna say that the Intel case may fit well in this book called Obliquity[0], which ironically discusses Boeing. I believe it said that Boeing was less profitable when it focused on increasing profits and more profitable when it focused on improving engineering. [0]: https://www.johnkay.com/product/obliquity/ https://www.johnkay.com/product/obliquity/
- spamizbad 4y ago
  I've noticed a pattern of how executives approach this: 1) When looking for more profits/revenue at a technology company, they'll often either try to push an R&D "big bet" to market half-baked, in hopes of it pulling in new revenue OR put the screws to product and engineering to churn out some "quick wins" to give them some momentum. 2) When focusing more on engineering, it's often because they're either distracted by other challenges faced by the organization outside of engineering OR they are up against an existential threat that mandates engineering investment and letting them steer the strategy somewhat.
alexashka 4y ago
They can't. It'd undermine the very existence of the ruling elite class that doesn't know how to do anything, besides 'managing' by following a magic formula taught at Harvard, Stanford, etc. The problem is the existence of a business management layer as an idea - it's an attempt to get back to the good old days of feudalism, whose chief characteristics are nepotism, stagnation, corruption and nihilism, now that we've gotten rid of the mental pacifier of 'heaven' for the oppressed and hell for the ruling elites (religion).
- jjtheblunt 4y ago
  this is the most resonant comment I've seen in months, as it entirely fits my experiences in engineering inside Apple, and later Amazon and Facebook. the inner sanctum of very flat Apple was as far from feudalism as could be, for my several years, and it functioned like a very performant ecosystem of engineering. This diametrically contrasts precisely with Amazon engineering, where I saw all the horrors of feudalism and generalized nepotism (racism for example, sexism promoting incapable people to fit quotas, and flagrant corruption). Facebook was somewhere more like Apple but not in its DNA...just in the imitation is flattery sense.

mandevil 4y ago

In general I don't believe that being an engineer is necessary to run a technology business (some of my best leaders were not), but I have come around to believing that Intel and Boeing are exceptions: the nature of their business requires new massive bets- not quite 'bet the company' but definitely 'bet the next 10 years of company performance' every so often (new fabs and new planes), and that one decision really needs to be made by an experienced engineer, due to the nature of the underlying evaluation. If not, then people who think they can bafflegab mother nature the same way they can auditors will make the decisions.

neuronexmachina 4y ago
An interesting example is Dennis Muilenberg, who was Boeing CEO from 2015-2019, during the 737 Max debacle: https://en.wikipedia.org/wiki/Dennis_Muilenburg https://en.wikipedia.org/wiki/Dennis_Muilenburg He started at Boeing in 1985 as an engineering intern, earned a masters in Aeronautics, and worked his way through management and engineering positions until he became CEO. I have no idea how much of the 737 Max issues could be placed on him directly, but he was CEO during its launch and the crashes.
- nickff 4y ago
  Dennis Muilenberg also featured in the NOVA documentary "War of the X-Planes", around the middle of his career, where he appeared to be a risk-taking, forward-thinking engineering manager. Of note, I believe that a significant portion of his career was spent on the 'defense' side of Boeing, which some have blamed for the company's problems. I personally place more blame on Muilenberg's predecessor, James McNerney, a former Proctor & Gamble, and 3M executive.
- mandevil 4y ago
  The key 737 Max decisions were made circa 2011-2013, while James McNerney was the CEO (2005-2015). That was when the design objective of no simulator training required was set for the plane (and Boeing released marketing information promising that) while also promising to do it with engines that were too big for the wings. That decision was what led to everything else, and was loudly announced and marketed while Muilenburg was over on the Integrated Defense side of the company. James McNerney was a Harvard MBA who spent time at McKinsey before going to the Jack Welch clown show at GE, where he ran the aircraft engine business for a long time. When he lost out to Immelt to be CEO there, he went to 3M for a few years then bounced to Boeing. Now, Muilenburg has to bear the mistakes he made: pushing an unsafe plane through certification, not listening to the right people, not investigating the Lion Air crash sufficiently, etc. But the evidence I think strongly shows that someone who was not an engineer was making the final decisions on the "bet the company for the next 10 years" choice to go forward with the 737Max rather than a clean-sheet design, back in 2011.

formerkrogemp 4y ago

You could apply this with slightly different specifics to many US national and multinational corporations. The efficient market rewards inefficient stock buybacks, record debt fueled dividends, years of underinvestment, low wages, and most of all no strings attached bailouts. They may be a loser, but we'll pay for their loss. Socialize the losses/costs and privatize the gains.

lotsofpulp 4y ago
Based on the performance of publicly listed companies in the last 15 years, the stock market has rewarded companies with great cash flow, high profits, and relatively rosy outlooks. Of course there is an underlying assumption the government will bail out simultaneous/systemic big failures, but it does not seem accurate to assume any random business will be bailed out. Edit : fixed typo
- PaulDavisThe1st 4y ago
  > but it does it [sic] seem accurate to assume any random business will be bailed out. Precisely the issue. It's not "any random business". It's any business with the appropriate properties and connections. If it was truly just random business, perhaps the bail outs would not create such a level of moral hazard. But it's not, and businesses know that.
  - megaman821 4y ago
    I don't like the bailout but I understand they were necessary. I just wish they came with harsher deterrents. Like if the shareholders vote to take a bailout, the Board, C-Suite, and VP's all get let go and any financial packages can be litigated in special bailout courts.

georgeecollins 4y ago

I think this is a result of the problem of financializaton. I don't think that an engineer has to run a company like Intel, Boeing or Apple. But if the growth of steady profits becomes a higher priority than what you actually produce, you are likely to milk the business at the expense of its long term prospects.

sanxiyn 4y ago
I mostly disagree with this line of reasoning. Yes, financialization is bad, but Intel would have been fine if its process went fine. We probably will never know what exactly went wrong, but I think the current best guess is this: Intel set minimum metal pitch target for its 10 nm process at 36 nm, while TSMC set minimum metal pitch target for its 7 nm process (equivalent to Intel 10 nm process) at 40 nm. These processes were the last before EUV, pushing DUV to its limit. It turned out that you can do 40 nm but not 36 nm. That's it. It was an extremely technical issue, with justifications on both sides, and Intel's decision wasn't obviously mistaken, even in retrospect. 36 nm was usual scaling to Moore's law. It was 40 nm that was unusual, TSMC underscaled metal relative to fin and gate. Why 40 nm? Because it was the limit of DUV double patterning. But Intel also knew that! That's why Intel went with quadruple patterning. It was a conservative choice to underscale metal to the limit of double patterning, but quadruple patterning wasn't crazy either. Everyone was using quadruple patterning for fin at this point, so it wasn't thought that risky. Should Intel have reconsidered this once they encountered yield issues? Yes, but that's hindsight. All processes experience yield issues. Intel probably thought they can be solved, faster than going back to drawing board and doing everything again. Unfortunately they couldn't. (Above analysis was informed by lots of reading on this topic I did over the years, but https://semiwiki.com/semiconductor-manufacturers/intel/7433-intel-10nm-yield-issues/ https://semiwiki.com/semiconductor-manufacturers/intel/7433-... in particular.)
- georgeecollins 4y ago
  That's a better explanation for what went wrong at Intel. But I would also point to many other companies: Boeing, General Motors etc. that had really excellent products once upon a time and then faltered. Every case is very complicated and has many reasons.

throwaway4good 4y ago

For an example of a broken company: https://twitter.com/dylan522p/status/1554889887630761985 https://twitter.com/dylan522p/status/1554889887630761985 Intel with a bunch of Optane related presentations at #FlashMemorySummit Some the Intel folks I spoke to about this (not pictured) had no clue it was going to be cancelled until they read it on an article from Toms Hardware.

fomine3 4y ago
Could it be opposite? Intel gave up Optane products so they release their research to community without worrying competitors catch up. No disclosure is due to pre-IR compliance.
- throwaway4good 4y ago
  There is a way of telling your own people what is going on without breaking the rules of being a public traded company. This is just bad form.

lr1970 4y ago

> For most of it's existence, if Intel had missed a manufacturing node in Moore's Law, it would have been rightly recognized as an existential threat, and it would have become the #1 focus of the CEO and the rest of the company. Former Intel-er here. You hit it on the nail. Andy Grove used to say "Only paranoid survive" and acted accordingly. But when Paul Otellini became the CEO it was downhill ever since.

midoridensha 4y ago
No, it was going downhill when Craig Barrett was CEO. He made lots of stupid mistakes, getting involved in too many risky and unnecessary ventures (like consumer products: remember the Intel keyboard and mouse? Or music player? Or worse, microscope?). The big one was tying the P4 processor to RAMBUS memory.
- lr1970 4y ago
  Yes, it started with Barrett but became painfully obvious under Otellini. When Steve Jobs asked Intel to build a chip for future iPhone Otellini said no -- one of the biggest strategic blunders. Also in 2005 Intel paid Dell not to use superior AMD offering instead of putting all hands on deck fixing their own (they did achieve parity eventually).