7 ms·

Intel could have funded this themselves many times over if they'd reinvested their profits instead of paying huge buybacks and dividends.

lenerdenator 3y ago
The goal of a corporation is to generate value for shareholders, and we don't give any incentives for them to do otherwise.
- gamepsys 3y ago
  Corporations should only return cash to investors (via dividend or stock buyback) if they do not have a high yield way to invest the money internally. A large stock buyback is the corporation admitting they do not have good uses for the cash. If Intel would take these grants, tax credits, and low interest loans and turn around and increase their dividend or do a large stock buyback then this would be a simple wealth transfer from the US to Intel stock owners. Even without this cash flow, these large grants feels like this unfairly benefits Intel shareholders at the expense of US Tax payers. Intel's last stock buyback was in Q1 2021, which was $2.4B. There were $14B in buybacks in 2020 [0]. [0] https://www.intc.com/stock-info/dividends-and-buybacks https://www.intc.com/stock-info/dividends-and-buybacks
  - s1artibartfast 3y ago
    I'm not sure if this was your intent, but it sounds like you're describing the world as it actually works. Companies execute stock BuyBacks when they don't have better internal Investments, and that's a good thing! Intel doesn't care about more us-based Fabs, nor are they high yield. This is why the US government has to pay them if the US government wants those things to exist.
    - gamepsys 3y ago
      > I'm not sure if this was your intent, but it sounds like you're describing the world as it actually works. This was in fact my intent. I would just like to highlight there are alternative ways besides grants to encourage Intel to open US based manufacturing. Ultimately it's the tax payer that is funding this grant, so it's important they feel like they are getting a good deal. I think it's also telling that Intel didn't invest the $8.5B themselves when they clearly had the cash just a few years ago.
      - s1artibartfast 3y ago
        I'm curious what you think it is telling? What are the alternative incentives?
        gamepsys 3y ago
        1. It's telling because if Intel thought this was a good investment then they would have made it without the grants. The stock buybacks show they had the cash to do it recently. 2. Alternatives to giving grants: Tax credits, low interest loans, import duty, law, executive action, threaten anti-trust lawsuit, purchasing shares, leverage intelligence agencies, nationalize. The most straightforward way would be to extend the regulations around exporting critical technologies to make it unfeasible for new chips to be manufactured overseas. There's pros/cons for all choices.
        s1artibartfast 3y ago
        Re 1,thanks for clarification. I wasn't sure if you thought it was a point contrary I. E. "something, something, greedy" Re 2, it's worth noting that the majority of Chips does come in the form of tax breaks and loans
        BobbyTables2 3y ago
        Or Intel figured they could do stock buybacks with their own money knowing they could use someone else’s money for domestic manufacturing development? A multinational needn’t be concerned with the long term prospects of any one country… Oldest game in the book! Have you ever seen a consulting company tell a client, “you don’t have to pay us to do your R&D, we have enough money to do it ourselves!!!”
    - BobbyTables2 3y ago
      To me, unless a company is Nvidia, a stock buyback screams “we have no vision for the company’s long-term growth, let’s just prop up our options/shares for short term personal gain”. That said, I’m not a fan of pointless acquisitions either… Would executives actually do buybacks if they didn’t have company shares? I suspect not! At the same time, a company shouldn’t get to underpay employees, do layoffs, and stock buybacks all in the same year…
      - JonChesterfield 3y ago
        Tech companies pay their staff in RSUs. I.e. stock in their company. That means either issuing more or buying some from the market. Issuing more should upset shareholders and decrease the price as they've been diluted. Thus I expect a key driver of stock buybacks is balancing the outflow of stock to employees.
  - ramblenode 3y ago
    > Corporations should only return cash to investors (via dividend or stock buyback) if they do not have a high yield way to invest the money internally. *It should be noted that this is true due to the tax code rather than some underlying economic principle. Dividends are taxable whereas reinvesting is a tax deduction.
- btbuildem 3y ago
  I ask again, who are these "shareholders" and why do we continue to play along with this monumental scam?
  - timmg 3y ago
    How do you think companies should work? If they all re-invested all their earnings into growth, wouldn't that mean that every company is growing un-sustainably? And what is the incentive for investors to fund these companies that never return anything to the investors?
    - randerson 3y ago
      Reinvesting in growth seems more sustainable than extracting all value until the company can't even keep up with its newer competitors. There's surely a middle ground where a company should return _excess_ profits to shareholders when they're doing well. Intel was too busy paying out hundreds of billions to notice that Apple/TSMC/ARM/AMD/NVIDIA were eating their lunch.
      - s1artibartfast 3y ago
        That doesn't mean that lack of funing was the problem. If the company leadership can't find a way to get a return on the money, why not take it somewhere else? Intel investors sell and become Nvidia investors. It seems like people have the blind assumption RnD investment always has profitable returns and is the limiting factor. There are real institutional differences and limitations to what money can do. You can't drop a billion dollars on a turd and come back the next day and collect 2 billion dollars. When a company pays a dividend, it is saying that it can't put that money to better use.
        btbuildem 3y ago
        The perspective is the problem here. Looking from the angle of "investor" (ie, someone with capital) twists everything into a horrific hellscape. For example: Suppose I own you, my slave. I can work you for ten years, collecting the profits off your labour - or I can sell your kidneys, liver, eyes and heart for a large up-front profit. One approach is long-term sustainable, the other is not. But looking at it this way entirely disregards your perspective on the situation. Perhaps you would like to have a say in some of the decision making? Perhaps the owner's profits aren't the be-all-end-all of things? You can pretend to have a billion dollars and show great concern about how to turn it into two. Or you can accept that for 99.999% of people this is an exploitative system that destroys everything of true value, in the end leaving the one biggest capitalist with a giant bag of money and nothing left to buy with it.
- hackable_sand 3y ago
  [dead]
tgma 3y ago
Intel could have (and has) funded building fabs themselves, but if we are advocating for a free market solution, why would they build it in the US vs somewhere cheaper? Forcing their hand to do it inside the US does not seem like a fair free market solution either. There has to be either a carrot (subsidy), or a stick (tarriffs and embargoes) to nudge them to bring it back home; neither is a clean free-market solution. The additional money is to bridge the gap and cover the unfavorable conditions for conducting the business in the US.
- randerson 3y ago
  I just question whether the government is backing the right horse. Intel has been losing market share in every segment for years despite once having everything in their favor: a head start, a strong brand, mountains of cash. They failed to capture the mobile phone and tablet market altogether. And the govt thinks Intel can make AI chips that compete with Nvidia?
  - s1artibartfast 3y ago
    I don't think the goal is even to compete, even though maybe it's being sold that way. The goal is to have a domestically controlled source of relatively high tech chips. It doesn't matter if they're subpar
    - JonChesterfield 3y ago
      Global foundries seems like a better bet than intel for that objective.
      - s1artibartfast 3y ago
        Global foundries doesn't have enough money. Intel is investing 75b in the deal. Founries is only worth 25B as a company.
stock_toaster 3y ago
I'm fine with dividends, but less ok with stock buybacks. I feel like buybacks lead to perverse incentives and even _greater_ levels of short-term thinking.
demondemidi 3y ago
They DID reinvest. Intel built D1X and it took forever to get working and even longer to become profitable (if it even is yet). It was a 10 year 10 billion dollar project. D1X was like their entire capex budget. They just flew too close to the sun and imploded with too many technical challenges.

lenerdenator 3y ago

The goal of a corporation is to generate value for shareholders, and we don't give any incentives for them to do otherwise.

gamepsys 3y ago
Corporations should only return cash to investors (via dividend or stock buyback) if they do not have a high yield way to invest the money internally. A large stock buyback is the corporation admitting they do not have good uses for the cash. If Intel would take these grants, tax credits, and low interest loans and turn around and increase their dividend or do a large stock buyback then this would be a simple wealth transfer from the US to Intel stock owners. Even without this cash flow, these large grants feels like this unfairly benefits Intel shareholders at the expense of US Tax payers. Intel's last stock buyback was in Q1 2021, which was $2.4B. There were $14B in buybacks in 2020 [0]. [0] https://www.intc.com/stock-info/dividends-and-buybacks https://www.intc.com/stock-info/dividends-and-buybacks
- s1artibartfast 3y ago
  I'm not sure if this was your intent, but it sounds like you're describing the world as it actually works. Companies execute stock BuyBacks when they don't have better internal Investments, and that's a good thing! Intel doesn't care about more us-based Fabs, nor are they high yield. This is why the US government has to pay them if the US government wants those things to exist.
  - gamepsys 3y ago
    > I'm not sure if this was your intent, but it sounds like you're describing the world as it actually works. This was in fact my intent. I would just like to highlight there are alternative ways besides grants to encourage Intel to open US based manufacturing. Ultimately it's the tax payer that is funding this grant, so it's important they feel like they are getting a good deal. I think it's also telling that Intel didn't invest the $8.5B themselves when they clearly had the cash just a few years ago.
    - s1artibartfast 3y ago
      I'm curious what you think it is telling? What are the alternative incentives?
      - gamepsys 3y ago
        1. It's telling because if Intel thought this was a good investment then they would have made it without the grants. The stock buybacks show they had the cash to do it recently. 2. Alternatives to giving grants: Tax credits, low interest loans, import duty, law, executive action, threaten anti-trust lawsuit, purchasing shares, leverage intelligence agencies, nationalize. The most straightforward way would be to extend the regulations around exporting critical technologies to make it unfeasible for new chips to be manufactured overseas. There's pros/cons for all choices.
        s1artibartfast 3y ago
        Re 1,thanks for clarification. I wasn't sure if you thought it was a point contrary I. E. "something, something, greedy" Re 2, it's worth noting that the majority of Chips does come in the form of tax breaks and loans
        BobbyTables2 3y ago
        Or Intel figured they could do stock buybacks with their own money knowing they could use someone else’s money for domestic manufacturing development? A multinational needn’t be concerned with the long term prospects of any one country… Oldest game in the book! Have you ever seen a consulting company tell a client, “you don’t have to pay us to do your R&D, we have enough money to do it ourselves!!!”
  - BobbyTables2 3y ago
    To me, unless a company is Nvidia, a stock buyback screams “we have no vision for the company’s long-term growth, let’s just prop up our options/shares for short term personal gain”. That said, I’m not a fan of pointless acquisitions either… Would executives actually do buybacks if they didn’t have company shares? I suspect not! At the same time, a company shouldn’t get to underpay employees, do layoffs, and stock buybacks all in the same year…
    - JonChesterfield 3y ago
      Tech companies pay their staff in RSUs. I.e. stock in their company. That means either issuing more or buying some from the market. Issuing more should upset shareholders and decrease the price as they've been diluted. Thus I expect a key driver of stock buybacks is balancing the outflow of stock to employees.
- ramblenode 3y ago
  > Corporations should only return cash to investors (via dividend or stock buyback) if they do not have a high yield way to invest the money internally. *It should be noted that this is true due to the tax code rather than some underlying economic principle. Dividends are taxable whereas reinvesting is a tax deduction.
btbuildem 3y ago
I ask again, who are these "shareholders" and why do we continue to play along with this monumental scam?
- timmg 3y ago
  How do you think companies should work? If they all re-invested all their earnings into growth, wouldn't that mean that every company is growing un-sustainably? And what is the incentive for investors to fund these companies that never return anything to the investors?
  - randerson 3y ago
    Reinvesting in growth seems more sustainable than extracting all value until the company can't even keep up with its newer competitors. There's surely a middle ground where a company should return _excess_ profits to shareholders when they're doing well. Intel was too busy paying out hundreds of billions to notice that Apple/TSMC/ARM/AMD/NVIDIA were eating their lunch.
    - s1artibartfast 3y ago
      That doesn't mean that lack of funing was the problem. If the company leadership can't find a way to get a return on the money, why not take it somewhere else? Intel investors sell and become Nvidia investors. It seems like people have the blind assumption RnD investment always has profitable returns and is the limiting factor. There are real institutional differences and limitations to what money can do. You can't drop a billion dollars on a turd and come back the next day and collect 2 billion dollars. When a company pays a dividend, it is saying that it can't put that money to better use.
      - btbuildem 3y ago
        The perspective is the problem here. Looking from the angle of "investor" (ie, someone with capital) twists everything into a horrific hellscape. For example: Suppose I own you, my slave. I can work you for ten years, collecting the profits off your labour - or I can sell your kidneys, liver, eyes and heart for a large up-front profit. One approach is long-term sustainable, the other is not. But looking at it this way entirely disregards your perspective on the situation. Perhaps you would like to have a say in some of the decision making? Perhaps the owner's profits aren't the be-all-end-all of things? You can pretend to have a billion dollars and show great concern about how to turn it into two. Or you can accept that for 99.999% of people this is an exploitative system that destroys everything of true value, in the end leaving the one biggest capitalist with a giant bag of money and nothing left to buy with it.
hackable_sand 3y ago
[dead]

tgma 3y ago

Intel could have (and has) funded building fabs themselves, but if we are advocating for a free market solution, why would they build it in the US vs somewhere cheaper? Forcing their hand to do it inside the US does not seem like a fair free market solution either. There has to be either a carrot (subsidy), or a stick (tarriffs and embargoes) to nudge them to bring it back home; neither is a clean free-market solution. The additional money is to bridge the gap and cover the unfavorable conditions for conducting the business in the US.

randerson 3y ago
I just question whether the government is backing the right horse. Intel has been losing market share in every segment for years despite once having everything in their favor: a head start, a strong brand, mountains of cash. They failed to capture the mobile phone and tablet market altogether. And the govt thinks Intel can make AI chips that compete with Nvidia?
- s1artibartfast 3y ago
  I don't think the goal is even to compete, even though maybe it's being sold that way. The goal is to have a domestically controlled source of relatively high tech chips. It doesn't matter if they're subpar
  - JonChesterfield 3y ago
    Global foundries seems like a better bet than intel for that objective.
    - s1artibartfast 3y ago
      Global foundries doesn't have enough money. Intel is investing 75b in the deal. Founries is only worth 25B as a company.

stock_toaster 3y ago

I'm fine with dividends, but less ok with stock buybacks. I feel like buybacks lead to perverse incentives and even _greater_ levels of short-term thinking.

demondemidi 3y ago

They DID reinvest. Intel built D1X and it took forever to get working and even longer to become profitable (if it even is yet). It was a 10 year 10 billion dollar project. D1X was like their entire capex budget. They just flew too close to the sun and imploded with too many technical challenges.