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If Intel is so important to national security, it should be nationalized. If Intel is not willing to willingly invest into U.S. manufacturing, it can be targete

If Intel is so important to national security, it should be nationalized. If Intel is not willing to willingly invest into U.S. manufacturing, it can be targeted with tariffs. A corporate handout by the taxpayer is not what should happen, though. And yes, stock buybacks are a form of market manipulation. That's why they were banned before Reagan. Funnily enough, SEC unbanned stock buybacks by using the Chevron deference, which is currently being challenged in courts. EPA being unable to regulate climate change might be offsetted by a minor win of making SEC not ignore law anymore by asserting its legitimacy.

prepend 3y ago
Nationalizing is unlikely to increase productivity and innovation. There’s multiple competing goals here and we need to think about how to achieve them. If we think that Intel is fixed and unlikely to need to change, perhaps nationalize and then just operate it as it slowly declines. But that’s also going to make other chip companies less likely to invest in the US as few investors want their investments nationalized. The purpose of these economic investments isn’t primarily moral justice (although I think that should be part of the calculation). The purpose is to increase US chip production. It seems quite silly to think that nationalizing Intel would lead to greater US chip production.
- shortsunblack 3y ago
  China is banning Intel and AMD chips from their gov't use. When they catch up with tsmc in 7nm, they'll likely make an import ban on all U.S. chips. Who then will AMD and Intel sell to? Aging European population? Africa as it develops? Africans are likely to buy Chinese chips, seeing for all the material infrastructure China invests in. Intel and AMD will only sell to American-alligned countries, which are declining. Seizing the company and milking till it runs dry is the right move. Intel had all the capital it needed to innovate. It did not. The company is unable, despite all the cash it has on hand. It's a lost cause. One hopes AMD continues innovating.
  - constantcrying 3y ago
    This is completely delusional. China isn't the entire world and trashing your own manufacturing because one market might somewhat soon see increased competition is a legitimately insane policy proposal. Also Intel did innovate, very clearly so and they don't compete with AMD when it comes to manufacturing at all.
    - shortsunblack 3y ago
      AMD has 1.5x larger market cap than Intel. All in 7 or so years where it was near bankruptcy. During AMD's weakness, Intel had near monopoly position on chips. It racked up all the cash it could. It hasn't innovated ever since. Chiplets came from AMD, 6 cores as minimum standard came from AMD (Intel sold 4 core entry CPUs well into Zen era because that's all you need!). Affordable motherboards (together with partners) and strong commitment to socket longevity came from AMD (AM4 is still supported and new products with 5600x3d are still released). In reference, Intel before AMD's Zen would release a new socket for each yearly release. And in fabs, Intel just isn't nowhere close. How's the 12nm++++++++++++ going? China is 5.2B of AMD's sales (2022). That's 65% of U.S.' with enormous growth potential as Chinese middle class gets richer. Europe is 1.77B of AMD's revenue. How does the capex investment equation play out when your 5.5B of sales just disappears into thin air?
      - constantcrying 3y ago
        Market caps are literally made up by how investors feel. Intel and AMD aren't competitors in manufacturing semiconductors, as in they literally do not compete in that market. AMD isn't manufacturing, they are totally irrelevant when it comes to the discussion. >It hasn't innovated ever since. What are you on about? This is ridiculous. Do you know anything at all about this subject.
nabla9 3y ago
> And yes, stock buybacks are a form of market manipulation. Stock buybacks are not different from dividends, except for tax reasons.
- gmm1990 3y ago
  they reduce the supply of stock available, that is a difference. If its material is a different question, I'd argue it is but don't have data to back that up. If a company has to buy back 10 billion in stock over a fixed time period market participates should be able to drive up the stock price knowing they will have a buyer (the company) to sell to later.
  - nabla9 3y ago
    Lets go this trough: Before: I own 100 stocks worth $100 each. =$10000. Option 1: 2% dividend. I have 100 stocks worth $98 each + $200 =$10000. Stock value drops immediately. Option 2: equal sized buyback: I have 100 stocks worth of $100 each = $1000. Buyback does not increase the stock value immediately. Company pays $200 for those who sell, but owns the stocks (or shareholders 'own them') so it's net neutral. This reduces the number of shares outstanding, thereby inflating (positive) future earnings per share. This typically leads to the value increasing.
- maxerickson 3y ago
  Being taxed differently is pretty significant. Kind of weird to impose a tax and then also have an easy way around it.
  - nabla9 3y ago
    It just delays taxation. It's more important for small investors in the US, because in the US even index funds must pay tax for dividends. Here in EU we can buy US index funds not available for US citizens where dividends are reinvested without tax. For us it does not matter that much.
    - 3y ago
wakawaka28 3y ago
It would be unfair to only put tariffs on Intel. Maybe tariffs could be part of the solution to retain essential production capacity in the US though. It should have been done before production left, though. Right now there is very little production left in the US for anything.
sloowm 3y ago
The main problem of course is that the US government is so dependent on a single company because they allowed the instruction set to be protected IP since forever, allowed imports from countries without demanding they provide the same labor and environmental protections and they didn't invest in a well educated population that would allow for new advancements to be homegrown. If the buybacks are undesirable they should tax them. If Intel is trying to divest they should start working towards alternatives and put the government contracts towards companies that do not create these issues.
- Workaccount2 3y ago
  The instruction set has nothing to do with semiconductor fabrication... The reason Intel is the only one is because cutting-edge chip making is arguably the most capital intensive and challenging industry in the world. There are literally only three companies on Earth who do it.
  - sloowm 3y ago
    For general computing in desktops and servers x86 has had close to a monopoly for the last 20 years. Arguing that this does not influence the semiconductor industry is a more bold take than arguing that it does...
paxys 3y ago
If we ban stock buybacks then should we ban companies from issuing new shares as well? Why is one manipulation but not the other?

prepend 3y ago

Nationalizing is unlikely to increase productivity and innovation. There’s multiple competing goals here and we need to think about how to achieve them. If we think that Intel is fixed and unlikely to need to change, perhaps nationalize and then just operate it as it slowly declines. But that’s also going to make other chip companies less likely to invest in the US as few investors want their investments nationalized. The purpose of these economic investments isn’t primarily moral justice (although I think that should be part of the calculation). The purpose is to increase US chip production. It seems quite silly to think that nationalizing Intel would lead to greater US chip production.

shortsunblack 3y ago
China is banning Intel and AMD chips from their gov't use. When they catch up with tsmc in 7nm, they'll likely make an import ban on all U.S. chips. Who then will AMD and Intel sell to? Aging European population? Africa as it develops? Africans are likely to buy Chinese chips, seeing for all the material infrastructure China invests in. Intel and AMD will only sell to American-alligned countries, which are declining. Seizing the company and milking till it runs dry is the right move. Intel had all the capital it needed to innovate. It did not. The company is unable, despite all the cash it has on hand. It's a lost cause. One hopes AMD continues innovating.
- constantcrying 3y ago
  This is completely delusional. China isn't the entire world and trashing your own manufacturing because one market might somewhat soon see increased competition is a legitimately insane policy proposal. Also Intel did innovate, very clearly so and they don't compete with AMD when it comes to manufacturing at all.
  - shortsunblack 3y ago
    AMD has 1.5x larger market cap than Intel. All in 7 or so years where it was near bankruptcy. During AMD's weakness, Intel had near monopoly position on chips. It racked up all the cash it could. It hasn't innovated ever since. Chiplets came from AMD, 6 cores as minimum standard came from AMD (Intel sold 4 core entry CPUs well into Zen era because that's all you need!). Affordable motherboards (together with partners) and strong commitment to socket longevity came from AMD (AM4 is still supported and new products with 5600x3d are still released). In reference, Intel before AMD's Zen would release a new socket for each yearly release. And in fabs, Intel just isn't nowhere close. How's the 12nm++++++++++++ going? China is 5.2B of AMD's sales (2022). That's 65% of U.S.' with enormous growth potential as Chinese middle class gets richer. Europe is 1.77B of AMD's revenue. How does the capex investment equation play out when your 5.5B of sales just disappears into thin air?
    - constantcrying 3y ago
      Market caps are literally made up by how investors feel. Intel and AMD aren't competitors in manufacturing semiconductors, as in they literally do not compete in that market. AMD isn't manufacturing, they are totally irrelevant when it comes to the discussion. >It hasn't innovated ever since. What are you on about? This is ridiculous. Do you know anything at all about this subject.

nabla9 3y ago

> And yes, stock buybacks are a form of market manipulation. Stock buybacks are not different from dividends, except for tax reasons.

gmm1990 3y ago
they reduce the supply of stock available, that is a difference. If its material is a different question, I'd argue it is but don't have data to back that up. If a company has to buy back 10 billion in stock over a fixed time period market participates should be able to drive up the stock price knowing they will have a buyer (the company) to sell to later.
- nabla9 3y ago
  Lets go this trough: Before: I own 100 stocks worth $100 each. =$10000. Option 1: 2% dividend. I have 100 stocks worth $98 each + $200 =$10000. Stock value drops immediately. Option 2: equal sized buyback: I have 100 stocks worth of $100 each = $1000. Buyback does not increase the stock value immediately. Company pays $200 for those who sell, but owns the stocks (or shareholders 'own them') so it's net neutral. This reduces the number of shares outstanding, thereby inflating (positive) future earnings per share. This typically leads to the value increasing.
maxerickson 3y ago
Being taxed differently is pretty significant. Kind of weird to impose a tax and then also have an easy way around it.
- nabla9 3y ago
  It just delays taxation. It's more important for small investors in the US, because in the US even index funds must pay tax for dividends. Here in EU we can buy US index funds not available for US citizens where dividends are reinvested without tax. For us it does not matter that much.
  - 3y ago

wakawaka28 3y ago

It would be unfair to only put tariffs on Intel. Maybe tariffs could be part of the solution to retain essential production capacity in the US though. It should have been done before production left, though. Right now there is very little production left in the US for anything.

sloowm 3y ago

The main problem of course is that the US government is so dependent on a single company because they allowed the instruction set to be protected IP since forever, allowed imports from countries without demanding they provide the same labor and environmental protections and they didn't invest in a well educated population that would allow for new advancements to be homegrown. If the buybacks are undesirable they should tax them. If Intel is trying to divest they should start working towards alternatives and put the government contracts towards companies that do not create these issues.

Workaccount2 3y ago
The instruction set has nothing to do with semiconductor fabrication... The reason Intel is the only one is because cutting-edge chip making is arguably the most capital intensive and challenging industry in the world. There are literally only three companies on Earth who do it.
- sloowm 3y ago
  For general computing in desktops and servers x86 has had close to a monopoly for the last 20 years. Arguing that this does not influence the semiconductor industry is a more bold take than arguing that it does...

paxys 3y ago

If we ban stock buybacks then should we ban companies from issuing new shares as well? Why is one manipulation but not the other?