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This is way bigger than trade policies. Intel was the world leader in chip-making until fairly recently. Steve Jobs wanted them to build the iPhone chips becaus

This is way bigger than trade policies. Intel was the world leader in chip-making until fairly recently. Steve Jobs wanted them to build the iPhone chips because they were a generation or two ahead of any other fab in the world. Today, Intel is no longer leading the world in chip fab process. Intel at the time wasn't interested in fabing ARM chips, and the rest is history. Intel and American fabs fell behind for a number of reasons. Some of it is tied to our education system and the kinds of people we are training. Some of it is probably related to Intel turning their nose up at the iPhone chip making, losing billions upon billions of money they could have put into R&D. Some of it is a story of American corporate culture not innovating enough.

smallmancontrov 3y ago
> the kinds of people we are training I was a physics student who took a nanofab class, fell in love, and desperately wanted to go down this path... until I learned about how complete and utter dogshit the wages were. I kept in touch with two classmates who stuck with it a bit longer. The free market had to beat them over the head a bit longer to get them to let go, but it eventually succeeded. Intel was absolutely printing money for investors the whole time, of course, and now that the material consequences of their poor management have come home to roost they are getting bailouts. Yay, capitalism! Our education system over-produces qualified scientists, but if semiconductors are a road to not having a house or family and if it pays 5x better to sell ads or stocks... you get what you pay for. I hope this has changed but I wouldn't bet on it.
rhelz 3y ago
> Intel at the time wasn't interested in fabing ARM chips, and the rest is history. Fun fact, in the late 90's, Intel was the biggest manufacturer of ARM chips. I was there at the time, and I wrote lots of software to aid in their design. What happened to Intel was twofold: The first problem was that Robert Noyce, Andy Grove, And Gordon Moore died. Each one was a once-in-century intellect, and it took Intel a while to be able to find somebody who could remotely fill those shoes. The second problem was Intel was making so much money on x86 chips, that dedicating any fab capacity to anything else--including chips for Apple's iPhone, would for years have had such a huge opportunity cost, that the shareholders would have sued, and with cause. Because literally (not metaphorically) anything they would have manufactured instead would have had a drastically lower profit margin, and the stock would have tanked. I suspect that the only reason Intel made a foray into ARM chips in the first place was to head off anti-trust accusations, and once the political heat was off, they dropped them like they were hot. By the time the market shifted, almost a generation of mediocre management had left Intel less paranoid, and therefore, less likely to survive.
- markhahn 3y ago
  It's also interesting that Intel made some specific bad technical choices. (ie, not investing in EUV, assuming SAQP would work forever, ignoring the consequences of everything being power-limited...) This kind of decision is hard, because it's a technical-economic tradeoff, and the latter is more voodoo than math. And that's not even addressing whether you get surprised by things like the LLM boom...
  - rhelz 3y ago
    You say: > It's also interesting that Intel made some specific bad technical choices. That's like saying Saudi Arabia made some bad policy decisions. If you are in Saudi Arabia, nothing has a higher return on investment than petroleum. If you invest in anything else, you are leaving money---A LOT of money--on the table. The result is that capital is drained out of any other business, and the country gets so dependent on just one industry that when the oil runs out, it is a major crisis. Put yourself in the place of an Intel CEO. You've just invested $4 Billion in a fab. People will by absolutely every single x86 chip that fab will make ~$40 billion over the course of the technology node's life time. Or, you could make chips for the iPhone, which maybe, perhaps would be a hit? And even if Apple's wildest projections come true, you'll make $8 billion instead of $40 billion, because Apple is not going to pay for Intel to pocket a 90% profit margin, when it could just go to TSMC. So you are a CEO, and wondering how on the next earnings call you are going to justify turning an asset worth $40 Billion into one worth $8 billion....
    - andyferris 3y ago
      Was it not possible to build two fabs and make $48 billion?
      - rhelz 3y ago
        What would you do? Build two fabs and make $48 billion, or build two fabs and make $80 billion? It might be hard to remember now, but Intel was in the position NVIDIA is today: they could sell absolutely every x86 processor they could make, at pretty much any price they cared to name. So even if Intel could have built another fab (which, btw, it couldn't, the world only graduates so many solid-state physics Ph.D.'s per year) but even if they could, they would STILL have used it to make x86 chips. Literally (not metaphorically or hyperbolically) nothing else they could manufacture would have as high a return on investment as making x86 chips did.
jjtheblunt 3y ago
to your point, right around the time of the iPhone (roughly) https://en.wikipedia.org/wiki/XScale#Sale_of_PXA_processor_line https://en.wikipedia.org/wiki/XScale#Sale_of_PXA_processor_l...
edgyquant 3y ago
The same with auto manufacturing: lack of real competition bred complacency and then real competition came along.

smallmancontrov 3y ago

> the kinds of people we are training I was a physics student who took a nanofab class, fell in love, and desperately wanted to go down this path... until I learned about how complete and utter dogshit the wages were. I kept in touch with two classmates who stuck with it a bit longer. The free market had to beat them over the head a bit longer to get them to let go, but it eventually succeeded. Intel was absolutely printing money for investors the whole time, of course, and now that the material consequences of their poor management have come home to roost they are getting bailouts. Yay, capitalism! Our education system over-produces qualified scientists, but if semiconductors are a road to not having a house or family and if it pays 5x better to sell ads or stocks... you get what you pay for. I hope this has changed but I wouldn't bet on it.

rhelz 3y ago

> Intel at the time wasn't interested in fabing ARM chips, and the rest is history. Fun fact, in the late 90's, Intel was the biggest manufacturer of ARM chips. I was there at the time, and I wrote lots of software to aid in their design. What happened to Intel was twofold: The first problem was that Robert Noyce, Andy Grove, And Gordon Moore died. Each one was a once-in-century intellect, and it took Intel a while to be able to find somebody who could remotely fill those shoes. The second problem was Intel was making so much money on x86 chips, that dedicating any fab capacity to anything else--including chips for Apple's iPhone, would for years have had such a huge opportunity cost, that the shareholders would have sued, and with cause. Because literally (not metaphorically) anything they would have manufactured instead would have had a drastically lower profit margin, and the stock would have tanked. I suspect that the only reason Intel made a foray into ARM chips in the first place was to head off anti-trust accusations, and once the political heat was off, they dropped them like they were hot. By the time the market shifted, almost a generation of mediocre management had left Intel less paranoid, and therefore, less likely to survive.

markhahn 3y ago
It's also interesting that Intel made some specific bad technical choices. (ie, not investing in EUV, assuming SAQP would work forever, ignoring the consequences of everything being power-limited...) This kind of decision is hard, because it's a technical-economic tradeoff, and the latter is more voodoo than math. And that's not even addressing whether you get surprised by things like the LLM boom...
- rhelz 3y ago
  You say: > It's also interesting that Intel made some specific bad technical choices. That's like saying Saudi Arabia made some bad policy decisions. If you are in Saudi Arabia, nothing has a higher return on investment than petroleum. If you invest in anything else, you are leaving money---A LOT of money--on the table. The result is that capital is drained out of any other business, and the country gets so dependent on just one industry that when the oil runs out, it is a major crisis. Put yourself in the place of an Intel CEO. You've just invested $4 Billion in a fab. People will by absolutely every single x86 chip that fab will make ~$40 billion over the course of the technology node's life time. Or, you could make chips for the iPhone, which maybe, perhaps would be a hit? And even if Apple's wildest projections come true, you'll make $8 billion instead of $40 billion, because Apple is not going to pay for Intel to pocket a 90% profit margin, when it could just go to TSMC. So you are a CEO, and wondering how on the next earnings call you are going to justify turning an asset worth $40 Billion into one worth $8 billion....
  - andyferris 3y ago
    Was it not possible to build two fabs and make $48 billion?
    - rhelz 3y ago
      What would you do? Build two fabs and make $48 billion, or build two fabs and make $80 billion? It might be hard to remember now, but Intel was in the position NVIDIA is today: they could sell absolutely every x86 processor they could make, at pretty much any price they cared to name. So even if Intel could have built another fab (which, btw, it couldn't, the world only graduates so many solid-state physics Ph.D.'s per year) but even if they could, they would STILL have used it to make x86 chips. Literally (not metaphorically or hyperbolically) nothing else they could manufacture would have as high a return on investment as making x86 chips did.

jjtheblunt 3y ago

to your point, right around the time of the iPhone (roughly) https://en.wikipedia.org/wiki/XScale#Sale_of_PXA_processor_line https://en.wikipedia.org/wiki/XScale#Sale_of_PXA_processor_l...

edgyquant 3y ago

The same with auto manufacturing: lack of real competition bred complacency and then real competition came along.