6 ms·

10 years from now, when the downfall of Intel is being taught at business schools, what are going to be the big takeways and now-obvious mistakes?

bgnn 2y ago
legacy. being over confident about their fab innovating faster than competition made their design side take the second seat and not innovate. There wasn't a real need for big design innovation although a lot of R&D spending happened on design. Plus they didn't diversify their product portfolio. They missed the whole mobile market because of this, likewise the GPU and accelerator market. When their fab hit a rock with 14nm and 10nm process tech advantage was more. This gave rhe edge to all other design companies and made it clear that how behind Intel was on design front.
osnium123 2y ago
Maybe they should have shut down the fabs and gone all on TSMC. Manufacturing in the US is a dead end due to costs and incompetence.
2OEH8eoCRo0 2y ago
Don't run your own fab? It makes business sense but I don't know if I like that answer. What if everyone did that? Should everyone just use TSMC? That's stupid IMO.
- softfalcon 2y ago
  This is what Boeing did for their manufacturing... look how it's playing out for them now.
- frognumber 2y ago
  Don't screw up running your own fab is the better lesson. * Intel foundry services were perhaps a decade or two too late. Running a fab needs scale. That had to come before they lost the technology edge. * Intel treatment and mismanagement of engineers was well-known in 2000, and you need the best and brightest. * Leadership needs to understand core business / technology. Bob Swan. Arguably Brian Krzanich. Paul Otellini. Just a lot of clueless at the top. Etc. The point is Intel wasn't "everyone." Intel was at the very top of the game a quarter-century ago. That was their position to lose, which they did in a spectacular fashion. I continue to hope for a Microsoft-style comeback, but it's becoming increasingly unlikely.
  - 2OEH8eoCRo0 2y ago
    Don't screw up? Sage advice! I agree they are mismanaged but it also takes luck to stay in the lead. I hope for a comeback too. My amateur worthless opinion is that Intel is struggling now but at least they have fabs. The fabless companies are going to be fucked in the long term- the fabs they contract to are all on shifting geopolitical sands!
    - bornfreddy 2y ago
      > The fabless companies are going to be fucked in the long term- the fabs they contract to are all on shifting geopolitical sands! The fabless companies will also have a problem if only TSMC is left. What is there to keep them from rising the prices? Right now TSMC is afraid of Samsung and Intel, but if Samsung falls behind and Intel folds, AMD / NVDA / ... will have a crisis on their hands.
    - hylaride 2y ago
      "but it also takes luck to stay in the lead." It's not luck if they were riding momentum that slowed because they shifted away from proper R&D. The fabless companies had nothing but R&D to live on and the costs of outsourcing the fab means the capital costs could be amortized over more customers (meaning intel should have probably split in two). Intel's fabs are a generation behind and now they're capital constrained. How do you get back ahead outside of China invading Taiwan?
      - WheatMillington 2y ago
        >they shifted away from proper R&D. Can you elaborate on this?
        hylaride 2y ago
        I should elaborate on the word "proper" in this context. Intel rarely had the best technology, but it was often "good enough, cheap enough, and available enough" to succeed in the marketplace - this is a lesson SO MANY people forget. Sun, DEC, etc arguably had better hardware, but it was expensive. What Intel was very good at was iterating on the technology it had and making it faster within a reasonable budget. Microsoft is another good example of where "good enough, cheap enough, and available enough" is what usually matters in the market. Where they started to stumble is when they got greedy. The whole RAMBUS debacle back in the day is a good example of where they took more expensive and worse RAM and tried to make it mandatory. Then there was the whole Itanium debacle, where politics succeeded over engineering and they ended up with a worse, more expensive product that failed in the market. AMD, which had recently acquired a lot of talent from DEC's alpha chip design, then went on and made 64-bit extensions to x86 that Intel had to play catch up to. Intel (for the most part) ignored the performance per watt aspect of CPU design, which mattered in embedded, mobile, and dense datacentre environments. The result is that ARM came from the bottom up and is now eating Intel's lunch from all angles. Intel's fabs couldn't compete with TSMC and to a lesser extent Samsung, both of whom could focus on the intense CAPEX (which due to cultural reasons people in Asian countries are willing to take longer term outlooks). CAPEX looks bad on an american GAAP spreadsheet. TSMC literally could take upfront money from apple to build new state of the art fabs and guarantee them a certain number of chips (and keep the money if the iphone had failed in the market). Intel couldn't do that. Intel spent most of the 2000s era doing $130B in stock buybacks and even if it was run by engineers, they lost sight of the market. Stock buybacks and dividends are fine if you have surplus cash, but chip design is a high CAPEX business.
- UncleOxidant 2y ago
  Somebody's gotta run fabs. And hopefully some US company can run fabs successfully, otherwise we seem to be kind of screwed.
  - mbajkowski 2y ago
    To get high yields and a reliable process at these process nodes you need high throughout in the fabs, even with sophisticated models and simulations is my guess. At one point in time Intel had high throughput compared to the world via internal demand, which then translated into an advantage for their designs. Internal tools were build around this feedback loop, until that loop was no longer true. The throughput at external fabs far exceeded the throughput at Intel. While external fabs were designed to be used by all, Intel flows and fabs were not. Rather than adjusting to new reality quickly, and competing on design while exposing the fabs to customers, it seems Intel is now struggling mightely on both fronts.
- honkycat 2y ago
  We never should have allowed the fabs to leave in the first place. Clearly it is both a security AND economic liability. The US leadership fucked the dog and decided cheap labor was more important than national security or a functioning economy. Everything is gone, it has been shipped overseas.
  - osnium123 2y ago
    For fabs to run efficiently and effectively, you need a competent workforce. I’m not sure you can get that kind of workforce here in the US. Just look at TSMC’s struggles in AZ.
  - no_exit 2y ago
    > decided cheap labor was more important than national security Organized labor is considered a threat to national security, it's no coincidence that deindustrialization followed a period of widespread labor militancy.
jandrese 2y ago
Probably not offering fab time to other companies when they were process leaders. TSMC ate their lunch and managed to leapfrog Intel due to their massive R&D efforts fueled by cell phone chips.
- threatripper 2y ago
  This one is an interesting take. In hindsight it's pretty obvious but if you are in that situation at that time it seems like you would be selling your crown jewels for pennies.
- MaxPock 2y ago
  Again ,the billions of mobile phones in the world would be running on Intel processors if they played their card well .
- computerdork 2y ago
  agreed. Stalling and then falling behind in fab to TSMC and Samsung is where they really lost the company. Still, Gelsinger sees this and they have bet the company on their 18A process. Will be interesting to see if they pull it off.
softfalcon 2y ago
In my opinion, one the most reliable signs is when companies stop repeatedly investing into their product innovation. The moment they start behaving like an established behemoth (monopoly/oligopoly) and you see repeated stock buybacks and frequent layoffs, the end is coming. This applies to most large, inefficient corporations that get too comfy with success and forget how to pivot fast, take risks, and fiercely fight for their place in the market. Eventually, any organization that falls into this state, slowly stagnates into oblivion.
- deleted 2y ago
  [deleted]
- phkahler 2y ago
  >> The moment they start behaving like an established behemoth (monopoly/oligopoly) and you see repeated stock buybacks and frequent layoffs, the end is coming. Add to that the suspension of the dividend, and the packaging of the FPGA business (getting ready to sell it?) and the reference to idle capacity - guess they can't even fill that with their foundry business. One thing I've noticed is that predicting timing is impossible. You can see a company showing signs of impending failure and somehow stock price still increases for a while, or the company decays slowly over a very long time. This might be a good thing since a company may save itself in some instances.
  - softfalcon 2y ago
    I am convinced that the decay is often very slow. There are signs of impending failure and it frequently drags out for many, many years. Then, eventually, you'll see a "straw that breaks the camel's back" and the hollow shell of the company will finally, fully implode.
    - kkert 2y ago
      [dead]
    - UncleOxidant 2y ago
      > I am convinced that the decay is often very slow. There are signs of impending failure and it frequently drags out for many, many years. When Jobs contacted Otellini about having Intel fab an ARM chip for them and Otellini said no... That's probably about the time their fate was sealed. And that would've been around 2006. Yes, there were plenty of signs prior to that. For example: AMD needed a lot less engineers to spin a new processor rev than Intel did and AFAIK that's still the case.
tedunangst 2y ago
Go back and read the answers to when somebody asked the same question ten years ago?
- nateglims 2y ago
  10 years ago the supposed lesson was probably don't operate in the US.
epolanski 2y ago
Big takeaways: in consumer tech you live and die by the performance of your latest product. That applies to both CPUs and foundry. Now-obvious mistakes: I'm not including the obvious mobile argument as it belongs to the previous point, but they slept too long on GPUs. Even though the biggest supercomputers in the planet started doing computations on GPUs a decade ago they missed the ultimate parallelization-hardware train.
- paulmd 2y ago
  they have been cooking on it for decades too - larrabee was 2009 after all. Xeon phi survived that collapse and continued for another decade. Honestly the problem is the same then as it was today - having good hardware isn’t enough. You need software penetration and organic usage/ecosystem. And the world can support maybe 2-3 of those right now - nvidia, apple, maybe one other. Everyone else gets the bullshit “we are the ones you need a cross-platform “adapter” ecosystems with effectively no real corporate moat etc. (amd, intel, the door to this room is locked… one of you will get an ecosystem and the other goes home in a box… the game begins now.) Like even just in gaming, AMD’s continued refusal to do the devrel has hurt them, it’s cost them revenue. It’s not even just “the drivers” or the constant deficit in features and functionality, but getting the people out into the studios to assist in development and tuning is how it has to be, nobody is going to tune for your hardware if you don’t do it yourself.
nateglims 2y ago
This move is what business school would suggest. Revenue is declining in their near monopoly position in the market. What's the obvious mistake that fixes that?
danielmarkbruce 2y ago
Thinking they were in a stable situation and going into max cashflow mode when there were in a death match. If you look at stock standard competitive theory (like, without any nuance) like Porter, you can see their situation getting really hairy starting 15 years ago. Customer concentration (public clouds), substitute products (arm in servers for standard workflows, various others in AI workloads etc), competition in their main product line couldn't go anywhere but worse (they were practically all by themselves). They had to fight like crazy but they thought they should print money.
- openrisk 2y ago
  > Customer concentration Interesting that oligopsony beats oligopoly :-)

bgnn 2y ago

legacy. being over confident about their fab innovating faster than competition made their design side take the second seat and not innovate. There wasn't a real need for big design innovation although a lot of R&D spending happened on design. Plus they didn't diversify their product portfolio. They missed the whole mobile market because of this, likewise the GPU and accelerator market. When their fab hit a rock with 14nm and 10nm process tech advantage was more. This gave rhe edge to all other design companies and made it clear that how behind Intel was on design front.

osnium123 2y ago

Maybe they should have shut down the fabs and gone all on TSMC. Manufacturing in the US is a dead end due to costs and incompetence.

2OEH8eoCRo0 2y ago

Don't run your own fab? It makes business sense but I don't know if I like that answer. What if everyone did that? Should everyone just use TSMC? That's stupid IMO.

softfalcon 2y ago
This is what Boeing did for their manufacturing... look how it's playing out for them now.
frognumber 2y ago
Don't screw up running your own fab is the better lesson. * Intel foundry services were perhaps a decade or two too late. Running a fab needs scale. That had to come before they lost the technology edge. * Intel treatment and mismanagement of engineers was well-known in 2000, and you need the best and brightest. * Leadership needs to understand core business / technology. Bob Swan. Arguably Brian Krzanich. Paul Otellini. Just a lot of clueless at the top. Etc. The point is Intel wasn't "everyone." Intel was at the very top of the game a quarter-century ago. That was their position to lose, which they did in a spectacular fashion. I continue to hope for a Microsoft-style comeback, but it's becoming increasingly unlikely.
- 2OEH8eoCRo0 2y ago
  Don't screw up? Sage advice! I agree they are mismanaged but it also takes luck to stay in the lead. I hope for a comeback too. My amateur worthless opinion is that Intel is struggling now but at least they have fabs. The fabless companies are going to be fucked in the long term- the fabs they contract to are all on shifting geopolitical sands!
  - bornfreddy 2y ago
    > The fabless companies are going to be fucked in the long term- the fabs they contract to are all on shifting geopolitical sands! The fabless companies will also have a problem if only TSMC is left. What is there to keep them from rising the prices? Right now TSMC is afraid of Samsung and Intel, but if Samsung falls behind and Intel folds, AMD / NVDA / ... will have a crisis on their hands.
  - hylaride 2y ago
    "but it also takes luck to stay in the lead." It's not luck if they were riding momentum that slowed because they shifted away from proper R&D. The fabless companies had nothing but R&D to live on and the costs of outsourcing the fab means the capital costs could be amortized over more customers (meaning intel should have probably split in two). Intel's fabs are a generation behind and now they're capital constrained. How do you get back ahead outside of China invading Taiwan?
    - WheatMillington 2y ago
      >they shifted away from proper R&D. Can you elaborate on this?
      - hylaride 2y ago
        I should elaborate on the word "proper" in this context. Intel rarely had the best technology, but it was often "good enough, cheap enough, and available enough" to succeed in the marketplace - this is a lesson SO MANY people forget. Sun, DEC, etc arguably had better hardware, but it was expensive. What Intel was very good at was iterating on the technology it had and making it faster within a reasonable budget. Microsoft is another good example of where "good enough, cheap enough, and available enough" is what usually matters in the market. Where they started to stumble is when they got greedy. The whole RAMBUS debacle back in the day is a good example of where they took more expensive and worse RAM and tried to make it mandatory. Then there was the whole Itanium debacle, where politics succeeded over engineering and they ended up with a worse, more expensive product that failed in the market. AMD, which had recently acquired a lot of talent from DEC's alpha chip design, then went on and made 64-bit extensions to x86 that Intel had to play catch up to. Intel (for the most part) ignored the performance per watt aspect of CPU design, which mattered in embedded, mobile, and dense datacentre environments. The result is that ARM came from the bottom up and is now eating Intel's lunch from all angles. Intel's fabs couldn't compete with TSMC and to a lesser extent Samsung, both of whom could focus on the intense CAPEX (which due to cultural reasons people in Asian countries are willing to take longer term outlooks). CAPEX looks bad on an american GAAP spreadsheet. TSMC literally could take upfront money from apple to build new state of the art fabs and guarantee them a certain number of chips (and keep the money if the iphone had failed in the market). Intel couldn't do that. Intel spent most of the 2000s era doing $130B in stock buybacks and even if it was run by engineers, they lost sight of the market. Stock buybacks and dividends are fine if you have surplus cash, but chip design is a high CAPEX business.
UncleOxidant 2y ago
Somebody's gotta run fabs. And hopefully some US company can run fabs successfully, otherwise we seem to be kind of screwed.
- mbajkowski 2y ago
  To get high yields and a reliable process at these process nodes you need high throughout in the fabs, even with sophisticated models and simulations is my guess. At one point in time Intel had high throughput compared to the world via internal demand, which then translated into an advantage for their designs. Internal tools were build around this feedback loop, until that loop was no longer true. The throughput at external fabs far exceeded the throughput at Intel. While external fabs were designed to be used by all, Intel flows and fabs were not. Rather than adjusting to new reality quickly, and competing on design while exposing the fabs to customers, it seems Intel is now struggling mightely on both fronts.
honkycat 2y ago
We never should have allowed the fabs to leave in the first place. Clearly it is both a security AND economic liability. The US leadership fucked the dog and decided cheap labor was more important than national security or a functioning economy. Everything is gone, it has been shipped overseas.
- osnium123 2y ago
  For fabs to run efficiently and effectively, you need a competent workforce. I’m not sure you can get that kind of workforce here in the US. Just look at TSMC’s struggles in AZ.
- no_exit 2y ago
  > decided cheap labor was more important than national security Organized labor is considered a threat to national security, it's no coincidence that deindustrialization followed a period of widespread labor militancy.

jandrese 2y ago

Probably not offering fab time to other companies when they were process leaders. TSMC ate their lunch and managed to leapfrog Intel due to their massive R&D efforts fueled by cell phone chips.

threatripper 2y ago
This one is an interesting take. In hindsight it's pretty obvious but if you are in that situation at that time it seems like you would be selling your crown jewels for pennies.
MaxPock 2y ago
Again ,the billions of mobile phones in the world would be running on Intel processors if they played their card well .
computerdork 2y ago
agreed. Stalling and then falling behind in fab to TSMC and Samsung is where they really lost the company. Still, Gelsinger sees this and they have bet the company on their 18A process. Will be interesting to see if they pull it off.

softfalcon 2y ago

In my opinion, one the most reliable signs is when companies stop repeatedly investing into their product innovation. The moment they start behaving like an established behemoth (monopoly/oligopoly) and you see repeated stock buybacks and frequent layoffs, the end is coming. This applies to most large, inefficient corporations that get too comfy with success and forget how to pivot fast, take risks, and fiercely fight for their place in the market. Eventually, any organization that falls into this state, slowly stagnates into oblivion.

deleted 2y ago
[deleted]
phkahler 2y ago
>> The moment they start behaving like an established behemoth (monopoly/oligopoly) and you see repeated stock buybacks and frequent layoffs, the end is coming. Add to that the suspension of the dividend, and the packaging of the FPGA business (getting ready to sell it?) and the reference to idle capacity - guess they can't even fill that with their foundry business. One thing I've noticed is that predicting timing is impossible. You can see a company showing signs of impending failure and somehow stock price still increases for a while, or the company decays slowly over a very long time. This might be a good thing since a company may save itself in some instances.
- softfalcon 2y ago
  I am convinced that the decay is often very slow. There are signs of impending failure and it frequently drags out for many, many years. Then, eventually, you'll see a "straw that breaks the camel's back" and the hollow shell of the company will finally, fully implode.
  - kkert 2y ago
    [dead]
  - UncleOxidant 2y ago
    > I am convinced that the decay is often very slow. There are signs of impending failure and it frequently drags out for many, many years. When Jobs contacted Otellini about having Intel fab an ARM chip for them and Otellini said no... That's probably about the time their fate was sealed. And that would've been around 2006. Yes, there were plenty of signs prior to that. For example: AMD needed a lot less engineers to spin a new processor rev than Intel did and AFAIK that's still the case.

tedunangst 2y ago

Go back and read the answers to when somebody asked the same question ten years ago?

nateglims 2y ago
10 years ago the supposed lesson was probably don't operate in the US.

epolanski 2y ago

Big takeaways: in consumer tech you live and die by the performance of your latest product. That applies to both CPUs and foundry. Now-obvious mistakes: I'm not including the obvious mobile argument as it belongs to the previous point, but they slept too long on GPUs. Even though the biggest supercomputers in the planet started doing computations on GPUs a decade ago they missed the ultimate parallelization-hardware train.

paulmd 2y ago
they have been cooking on it for decades too - larrabee was 2009 after all. Xeon phi survived that collapse and continued for another decade. Honestly the problem is the same then as it was today - having good hardware isn’t enough. You need software penetration and organic usage/ecosystem. And the world can support maybe 2-3 of those right now - nvidia, apple, maybe one other. Everyone else gets the bullshit “we are the ones you need a cross-platform “adapter” ecosystems with effectively no real corporate moat etc. (amd, intel, the door to this room is locked… one of you will get an ecosystem and the other goes home in a box… the game begins now.) Like even just in gaming, AMD’s continued refusal to do the devrel has hurt them, it’s cost them revenue. It’s not even just “the drivers” or the constant deficit in features and functionality, but getting the people out into the studios to assist in development and tuning is how it has to be, nobody is going to tune for your hardware if you don’t do it yourself.

nateglims 2y ago

This move is what business school would suggest. Revenue is declining in their near monopoly position in the market. What's the obvious mistake that fixes that?

danielmarkbruce 2y ago

Thinking they were in a stable situation and going into max cashflow mode when there were in a death match. If you look at stock standard competitive theory (like, without any nuance) like Porter, you can see their situation getting really hairy starting 15 years ago. Customer concentration (public clouds), substitute products (arm in servers for standard workflows, various others in AI workloads etc), competition in their main product line couldn't go anywhere but worse (they were practically all by themselves). They had to fight like crazy but they thought they should print money.

openrisk 2y ago
> Customer concentration Interesting that oligopsony beats oligopoly :-)