14 ms·

Intel Solidifies $3.5B Deal to Make Chips for Military

172 points by mfiguiere 2y ago

pmkary 2y ago
It's a very uneducated feeling, but it feels as a new low for them. Given the ARM/AMD races that seem to have put a shadow on Intel in the past few years. Intel used to be a source of inspiration at least for me, and this makes me sad seeing them become defense contractors.
- dijit 2y ago
  I find it hard to imagine that they weren’t before- to be honest. Compared to AMD, Intel is distinctly a “US” corporation, outside of that image they have large R&D centre's in Israel. US corporations that deal with the military very often have a similar setup. Lots of talk about Intel running their own fabs is taken with a “National Security” mindset, and, isn't it the large “too big to fail” corporations that end up very close to government anyway, even if they are very removed from being the best? Oracle comes to mind.
  - sentinalien 2y ago
    Why is Intel more American than AMD?
    - dijit 2y ago
      Mostly marketing/branding, but also that AMD is using TSMC of course. If you asked someone not in tech "which one is american" out of AMD and Intel, they would say Intel; despite the "A" in AMD literally standing for "American"...
    - Der_Einzige 2y ago
      American CEO instead of Taiwanese American Consider that most people born outside of the USA are not eligible for military clearances despite being US Citizens In this respect, the DoD would likely prefer the most “American” company possible, I.e with buy America provisions.
deleted 2y ago
[deleted]
ThinkBeat 2y ago
Another too big to fail handout by the US government. This on top of all the too big to fail money for them to prove once again that they dont know how to build modern fabs. (Unless Taiwan does most of the work)
freeqaz 2y ago
As much as we all love to dunk on Intel, it's good to have competition. Even if it's via the support of the military industrial complex, we still all benefit when there are more companies making chips (especially at home for those in the US).
- cced 2y ago
  We don’t all benefit when the MIC gets more chips..
  - golergka 2y ago
    [flagged]
    - cced 2y ago
      > We do. Pax Americana is unprecedented time in world history. Unless you’re high up in one of the MIC companies I need to disagree. Who’s the “we”? Countries on the receiving end of “foreign ‘aid’”? Americans receiving improvements to their standards and quality of life because government expenditures are made on infrastructure and services instead of warring? Wasn’t 1.6B just approved to fund anti-CN disinformation/propaganda? I guess if a large part of the world’s population, domestic and international, doesn’t fall within your definition of “we” then sure.
      - shepherdjerred 2y ago
        What period of time would you rather live in?
        marricks 2y ago
        There were these ancient Ukranian mega cities 6-4k years ago that stood for thousands of years. They had gardens, and what appeared to be a complex social life. Notably, they had no walls, meaning there was nothing to protect themselves from. Peace. So yeah, there sounds a lot better. No walls to stop friends from coming, or you from leaving if you happen to not like it. Just because we lack imagination doesn't mean a better world can't exist and didn't exist somewhere in the past.
kens 2y ago
Intel left the military business in 1997 because making chips for the military is kind of awful. The volume is small and if a military plane gets canceled, the volume can suddenly become zero. (See the F-22 and Comanche.) Moreover, the military wants parts for decades, so you're stuck building obsolete parts on an obsolete process. link: https://www.militaryaerospace.com/computers/article/16710194/intel-set-to-quit-military-business https://www.militaryaerospace.com/computers/article/16710194...
- timnetworks 2y ago
  Between ASIC and FPGA it's cheap enough to do for any (large competent) company, but choosing an enterprise is a guarantee they'll be around to ship too. Or a separate fab can be set up (or purchased from another company) to run batches of "obsolete" chips that then can be resold for washing machines and ink printer carts etc.
- elihu 2y ago
  The article makes it sound like a sort of special deal, but Intel does run a foundry service now, so in theory that means that they aren't picking and choosing who their customers are -- anyone with money can buy manufacturing capacity. It wasn't clear from what was said before the paywall whether Intel would be manufacturing products designed by the government or another third party, or if these are going to be Intel-designed products. (It's not all too out-of-the-ordinary for Intel or any other chip designer to make a variant of a product with certain application-specific tweaks for certain customers.) If Intel is designing the product, then that's a lot more than ordinary foundry services.
- kukkamario 2y ago
  > The volume is small That is changing with the drone warfare becoming large part of the future wars. US military (and pretty much everyone else) will make drones major focus of advancement and there is definitely lot of money to be made by supplying chips for those.
- heyflyguy 2y ago
  I can't read the article, and so it probably mentions this but I think this is a big case of "the past was prologue". DOD is making a big bet that anything chip and silicon is going to be really hard to acquire past 2027. This may be a great big gravy train for Intel.
wslh 2y ago
Do you always need the most advanced chips for the military or could use an older technology generation like in industrial machines? For example, the F35 uses older chip generations.
- CamperBob2 2y ago
  The elephant in this particular room is probably autonomous or semi-autonomous weapons that need edge AI acceleration. Using older chips won't be an option for next-generation weapons, I suspect.
  - wslh 2y ago
    Yes, the advanced requirements are clear but I don't think that covers all the military needs (e.g. tanks). The bottom line of my question is if this is a great business opportunity for Intel because you can use legacy chips to cover the deal which are much less expensive to produce than advanced ones. Basically, higher ROI.
- Jtsummers 2y ago
  It's mixed. But even if you stick to older generation chips, someone has to supply them which means someone has to make them. Foreign manufacturing and sourcing is a political and security headache even if you go through the hoops to show a secure supply chain and address all their concerns. I had "cybersecurity" people refuse open source project use because someone in France (an ally) had a commit. Don't let them look at the Linux kernel commits... I wouldn't want to deal with that for hardware. Also F-35 is not something anyone should aspire to. That system, its software in particular, was a project management disaster. LM went to shifts to try to address being late to complete the software. They literally thought they could double or triple their staff to catch up, idiots had never read The Mythical Man Month apparently.
- anigbrowl 2y ago
  Performance is a key metric of course, but reliability would seem to be an even bigger consideration. I imagine it's similar to the challenge faced by designers of equipment designed to go into space.
ghostpepper 2y ago
> The secretive program, called Secure Enclave Not to be confused with Apple's Secure Enclave, which is also chip-related. They could have picked a more unique name I think.
- 1oooqooq 2y ago
  Apple running with the generic term was kinda silly. Secure enclave was literally the academic term to describe things like sgx.
- pushupentry1219 2y ago
  The program could've been named Secure Enclave before apple named their thing Secure Enclave, due to the program's "secretive" nature.
milleramp 2y ago
Feels a bit like moving back to Mom and Dad's house.
- osnium123 2y ago
  When you are facing bankruptcy and/or flunked out of school because fellow students like TSMC and Samsung blew you out of the water, moving back to Mom’s house is better than dying on the streets.
- bjornsing 2y ago
  Sure. But in some situations that can be a wise decision.
bornfreddy 2y ago
Ok I guess, but the survival of Intel Foundry still depends on whether their node process is competitive with TSMC. Do we know the progress on "5 nodes in 4 years" plan, is it being executed well?
- beng-nl 2y ago
  (Disclaimer, I work for Intel but have no non public information about this and naturally don’t speak for them. I am a little more biased towards wishing them be successful than the average person perhaps.) Yes, by all accounts the latest node (Intel 18a, which ought to be competitive with the latest tsmc node) is healthy and on schedule. Very Recent pronouncements by the cfo support this (I think it’s extra significant that it’s the cfo because he knows like nobody else how much hot water he’d be in if he were misrepresenting the likelihood of success). That’s one thing I don’t understand about the Intel negativity; the whole world is lining up for tsmc (rightfully so). Either directly if you’re one of the major customers who can’t produce products fast enough to sell them (nvidia) or indirectly (if you want to buy nvidia). but the only realistic near-future competitor to tsmc isn’t seen as such, despite the great need (ie worth the time to investigate and worth the risk to try as a fab). If the current stock price is to believed, Intel should be bought for its assets, which makes absolutely no sense to me personally. As far as I’m concerned its the only possible short term path to breaking open the silicon supply chain gridlock, exacerbated by the ai hype.
  - bgentry 2y ago
    Ben Thompson has been covering Intel’s precarious position for over a decade (well before the market finally realized it) and the latest update is not looking good: Intel’s is technically on pace to achieve the five nodes in four years Gelsinger promised (in truth two of those nodes were iterations), but they haven’t truly scaled any of them; the first attempt to do so, with Intel 3, destroyed their margins. This isn’t a surprise: the reason why it is hard to skip steps is not just because technology advances, but because you have to actually learn on the line how to implement new technology at scale, with sustainable yield. Go back to Intel’s 10nm failure: the company could technically make a 10nm chip, they just couldn’t do so economically; there are now open questions about Intel 3, much less next year’s promised 18A. https://stratechery.com/2024/intel-honesty/ https://stratechery.com/2024/intel-honesty/
BillLumbergh 2y ago
A great deal for Intel, who undoubtedly lost huge business from Apple when they adapted ARM/Silicon a few years back.
kristopolous 2y ago
I'm not recommending anything but I've been investing in $INTC for a while now. Your doubt and dismissal of it is exactly why the price is down. 10 years ago, I bought $AMD at $2.50 on the same hunches. Do with this information what thou whilst.
- bjornsing 2y ago
  I’m in the same boat. The only thing that worries me are reports about a dysfunctional engineering culture here on Hacker News. I’ve seen big companies succumb to this and never recover. Any thoughts on this aspect / risk?
  - kristopolous 2y ago
    I agree. These red flags have been at Intel for 15 years. It's why I shorted them a few times. Basically their chips don't suck, they're still selling them in large volumes, they still own the market, amd has had supply issues ... Intel is not in the same places that Sun, DEC, and Yahoo were. I mean look: https://www.pcgamer.com/hardware/processors/intel-is-still-top-dog-ships-3x-more-cpus-than-amd-and-apple-combined/ https://www.pcgamer.com/hardware/processors/intel-is-still-t... Intel is 78% of the market, AMD is 13% but AMD has a marketcap of over 3x on Intel?! Hrmm. Sounds like some correction is going to happen soon and it's probably with the one trading at $19. I know they bombed on mobile, but so did Microsoft. I know RISC V, loongson and ARM are vying for marketshare, but various architectures to unseat Intel's dominance have come and gone for 40 years. Seeing a 3x return on intc in the next 24 months is fiscally more possible than it is for securities like the $3TB market capped NVIDIA. But yes, crystal balls are impossible and my name is not Warren Buffet.
    - dboreham 2y ago
      AMD market cap is (probably mistakenly) based on AI not legacy x86 CPU sales.
      - Der_Einzige 2y ago
alecco 2y ago
I wonder how Intel engineers feel about this. Maybe this is the final push to seek greener pastures.
- simoncion 2y ago
  Some, sure. Most either won't care or will actively welcome it. Of those that stay, a minority will request to not work on DoD projects, which are requests that will almost certainly be granted. There are much, much larger reasons than that to leave the company. For example: their inability to say "Hey, we're going to be losing money for a while, so bear with us. Sorry that we can't prop up the share price with stock buybacks.", instead laying a bunch of people off and cutting penny-ante perks and not-penny-ante benefits to "right the ship".
csomar 2y ago
https://archive.is/XJTYt https://archive.is/XJTYt
openrisk 2y ago
> The deal also reflects a lack of other options for the Biden administration: Pentagon officials have insisted on sourcing cutting-edge semiconductors from an American company, and Intel is the only US maker of advanced processors. This is what failing to secure competition in a sector can lead to: Oligopolies are inherently risky. Good (mostly for a rent-extracting few) while the sailing is good, but not resilient in turbulent weather While there are many factors at play when looking at the path of such a large and centrally placed corporate entity, a key aspect of Intel's decline must be the long stagnation of the Wintel era. Intel's missing out on both the mobile and numerical computing (dont call me "AI") revolutions share this in common: they did not fit the Microsoft dominated universe / cashcow of so many decades. Its a delicious twist plot that Microsoft seems to be escaping from that Wintel tomb of their own creation (or at least faking it well enough for a government job), while Intel needs to scrape the bottom of the barrel.
DrNosferatu 2y ago
Didn't they have a GPU card with 128GB of RAM? Pretty smart move for LLMs, if they can get the software stack working.

172 points by mfiguiere 2y ago

It's a very uneducated feeling, but it feels as a new low for them. Given the ARM/AMD races that seem to have put a shadow on Intel in the past few years. Intel used to be a source of inspiration at least for me, and this makes me sad seeing them become defense contractors.

dijit 2y ago
I find it hard to imagine that they weren’t before- to be honest. Compared to AMD, Intel is distinctly a “US” corporation, outside of that image they have large R&D centre's in Israel. US corporations that deal with the military very often have a similar setup. Lots of talk about Intel running their own fabs is taken with a “National Security” mindset, and, isn't it the large “too big to fail” corporations that end up very close to government anyway, even if they are very removed from being the best? Oracle comes to mind.
- sentinalien 2y ago
  Why is Intel more American than AMD?
  - dijit 2y ago
    Mostly marketing/branding, but also that AMD is using TSMC of course. If you asked someone not in tech "which one is american" out of AMD and Intel, they would say Intel; despite the "A" in AMD literally standing for "American"...
  - Der_Einzige 2y ago
    American CEO instead of Taiwanese American Consider that most people born outside of the USA are not eligible for military clearances despite being US Citizens In this respect, the DoD would likely prefer the most “American” company possible, I.e with buy America provisions.

deleted 2y ago

[deleted]

ThinkBeat 2y ago

Another too big to fail handout by the US government. This on top of all the too big to fail money for them to prove once again that they dont know how to build modern fabs. (Unless Taiwan does most of the work)

freeqaz 2y ago

As much as we all love to dunk on Intel, it's good to have competition. Even if it's via the support of the military industrial complex, we still all benefit when there are more companies making chips (especially at home for those in the US).

cced 2y ago
We don’t all benefit when the MIC gets more chips..
- golergka 2y ago
  [flagged]
  - cced 2y ago
    > We do. Pax Americana is unprecedented time in world history. Unless you’re high up in one of the MIC companies I need to disagree. Who’s the “we”? Countries on the receiving end of “foreign ‘aid’”? Americans receiving improvements to their standards and quality of life because government expenditures are made on infrastructure and services instead of warring? Wasn’t 1.6B just approved to fund anti-CN disinformation/propaganda? I guess if a large part of the world’s population, domestic and international, doesn’t fall within your definition of “we” then sure.
    - shepherdjerred 2y ago
      What period of time would you rather live in?
      - marricks 2y ago
        There were these ancient Ukranian mega cities 6-4k years ago that stood for thousands of years. They had gardens, and what appeared to be a complex social life. Notably, they had no walls, meaning there was nothing to protect themselves from. Peace. So yeah, there sounds a lot better. No walls to stop friends from coming, or you from leaving if you happen to not like it. Just because we lack imagination doesn't mean a better world can't exist and didn't exist somewhere in the past.

kens 2y ago

Intel left the military business in 1997 because making chips for the military is kind of awful. The volume is small and if a military plane gets canceled, the volume can suddenly become zero. (See the F-22 and Comanche.) Moreover, the military wants parts for decades, so you're stuck building obsolete parts on an obsolete process. link: https://www.militaryaerospace.com/computers/article/16710194/intel-set-to-quit-military-business https://www.militaryaerospace.com/computers/article/16710194...

timnetworks 2y ago
Between ASIC and FPGA it's cheap enough to do for any (large competent) company, but choosing an enterprise is a guarantee they'll be around to ship too. Or a separate fab can be set up (or purchased from another company) to run batches of "obsolete" chips that then can be resold for washing machines and ink printer carts etc.
elihu 2y ago
The article makes it sound like a sort of special deal, but Intel does run a foundry service now, so in theory that means that they aren't picking and choosing who their customers are -- anyone with money can buy manufacturing capacity. It wasn't clear from what was said before the paywall whether Intel would be manufacturing products designed by the government or another third party, or if these are going to be Intel-designed products. (It's not all too out-of-the-ordinary for Intel or any other chip designer to make a variant of a product with certain application-specific tweaks for certain customers.) If Intel is designing the product, then that's a lot more than ordinary foundry services.
kukkamario 2y ago
> The volume is small That is changing with the drone warfare becoming large part of the future wars. US military (and pretty much everyone else) will make drones major focus of advancement and there is definitely lot of money to be made by supplying chips for those.
heyflyguy 2y ago
I can't read the article, and so it probably mentions this but I think this is a big case of "the past was prologue". DOD is making a big bet that anything chip and silicon is going to be really hard to acquire past 2027. This may be a great big gravy train for Intel.

wslh 2y ago

Do you always need the most advanced chips for the military or could use an older technology generation like in industrial machines? For example, the F35 uses older chip generations.

CamperBob2 2y ago
The elephant in this particular room is probably autonomous or semi-autonomous weapons that need edge AI acceleration. Using older chips won't be an option for next-generation weapons, I suspect.
- wslh 2y ago
  Yes, the advanced requirements are clear but I don't think that covers all the military needs (e.g. tanks). The bottom line of my question is if this is a great business opportunity for Intel because you can use legacy chips to cover the deal which are much less expensive to produce than advanced ones. Basically, higher ROI.
Jtsummers 2y ago
It's mixed. But even if you stick to older generation chips, someone has to supply them which means someone has to make them. Foreign manufacturing and sourcing is a political and security headache even if you go through the hoops to show a secure supply chain and address all their concerns. I had "cybersecurity" people refuse open source project use because someone in France (an ally) had a commit. Don't let them look at the Linux kernel commits... I wouldn't want to deal with that for hardware. Also F-35 is not something anyone should aspire to. That system, its software in particular, was a project management disaster. LM went to shifts to try to address being late to complete the software. They literally thought they could double or triple their staff to catch up, idiots had never read The Mythical Man Month apparently.
anigbrowl 2y ago
Performance is a key metric of course, but reliability would seem to be an even bigger consideration. I imagine it's similar to the challenge faced by designers of equipment designed to go into space.

ghostpepper 2y ago

> The secretive program, called Secure Enclave Not to be confused with Apple's Secure Enclave, which is also chip-related. They could have picked a more unique name I think.

1oooqooq 2y ago
Apple running with the generic term was kinda silly. Secure enclave was literally the academic term to describe things like sgx.
pushupentry1219 2y ago
The program could've been named Secure Enclave before apple named their thing Secure Enclave, due to the program's "secretive" nature.

milleramp 2y ago

Feels a bit like moving back to Mom and Dad's house.

osnium123 2y ago
When you are facing bankruptcy and/or flunked out of school because fellow students like TSMC and Samsung blew you out of the water, moving back to Mom’s house is better than dying on the streets.
bjornsing 2y ago
Sure. But in some situations that can be a wise decision.

bornfreddy 2y ago

Ok I guess, but the survival of Intel Foundry still depends on whether their node process is competitive with TSMC. Do we know the progress on "5 nodes in 4 years" plan, is it being executed well?

beng-nl 2y ago
(Disclaimer, I work for Intel but have no non public information about this and naturally don’t speak for them. I am a little more biased towards wishing them be successful than the average person perhaps.) Yes, by all accounts the latest node (Intel 18a, which ought to be competitive with the latest tsmc node) is healthy and on schedule. Very Recent pronouncements by the cfo support this (I think it’s extra significant that it’s the cfo because he knows like nobody else how much hot water he’d be in if he were misrepresenting the likelihood of success). That’s one thing I don’t understand about the Intel negativity; the whole world is lining up for tsmc (rightfully so). Either directly if you’re one of the major customers who can’t produce products fast enough to sell them (nvidia) or indirectly (if you want to buy nvidia). but the only realistic near-future competitor to tsmc isn’t seen as such, despite the great need (ie worth the time to investigate and worth the risk to try as a fab). If the current stock price is to believed, Intel should be bought for its assets, which makes absolutely no sense to me personally. As far as I’m concerned its the only possible short term path to breaking open the silicon supply chain gridlock, exacerbated by the ai hype.
- bgentry 2y ago
  Ben Thompson has been covering Intel’s precarious position for over a decade (well before the market finally realized it) and the latest update is not looking good: Intel’s is technically on pace to achieve the five nodes in four years Gelsinger promised (in truth two of those nodes were iterations), but they haven’t truly scaled any of them; the first attempt to do so, with Intel 3, destroyed their margins. This isn’t a surprise: the reason why it is hard to skip steps is not just because technology advances, but because you have to actually learn on the line how to implement new technology at scale, with sustainable yield. Go back to Intel’s 10nm failure: the company could technically make a 10nm chip, they just couldn’t do so economically; there are now open questions about Intel 3, much less next year’s promised 18A. https://stratechery.com/2024/intel-honesty/ https://stratechery.com/2024/intel-honesty/

BillLumbergh 2y ago

A great deal for Intel, who undoubtedly lost huge business from Apple when they adapted ARM/Silicon a few years back.

kristopolous 2y ago

I'm not recommending anything but I've been investing in $INTC for a while now. Your doubt and dismissal of it is exactly why the price is down. 10 years ago, I bought $AMD at $2.50 on the same hunches. Do with this information what thou whilst.

bjornsing 2y ago
I’m in the same boat. The only thing that worries me are reports about a dysfunctional engineering culture here on Hacker News. I’ve seen big companies succumb to this and never recover. Any thoughts on this aspect / risk?
- kristopolous 2y ago
  I agree. These red flags have been at Intel for 15 years. It's why I shorted them a few times. Basically their chips don't suck, they're still selling them in large volumes, they still own the market, amd has had supply issues ... Intel is not in the same places that Sun, DEC, and Yahoo were. I mean look: https://www.pcgamer.com/hardware/processors/intel-is-still-top-dog-ships-3x-more-cpus-than-amd-and-apple-combined/ https://www.pcgamer.com/hardware/processors/intel-is-still-t... Intel is 78% of the market, AMD is 13% but AMD has a marketcap of over 3x on Intel?! Hrmm. Sounds like some correction is going to happen soon and it's probably with the one trading at $19. I know they bombed on mobile, but so did Microsoft. I know RISC V, loongson and ARM are vying for marketshare, but various architectures to unseat Intel's dominance have come and gone for 40 years. Seeing a 3x return on intc in the next 24 months is fiscally more possible than it is for securities like the $3TB market capped NVIDIA. But yes, crystal balls are impossible and my name is not Warren Buffet.
  - dboreham 2y ago
    AMD market cap is (probably mistakenly) based on AI not legacy x86 CPU sales.
    - Der_Einzige 2y ago

alecco 2y ago

I wonder how Intel engineers feel about this. Maybe this is the final push to seek greener pastures.

simoncion 2y ago
Some, sure. Most either won't care or will actively welcome it. Of those that stay, a minority will request to not work on DoD projects, which are requests that will almost certainly be granted. There are much, much larger reasons than that to leave the company. For example: their inability to say "Hey, we're going to be losing money for a while, so bear with us. Sorry that we can't prop up the share price with stock buybacks.", instead laying a bunch of people off and cutting penny-ante perks and not-penny-ante benefits to "right the ship".

csomar 2y ago

https://archive.is/XJTYt https://archive.is/XJTYt

openrisk 2y ago

> The deal also reflects a lack of other options for the Biden administration: Pentagon officials have insisted on sourcing cutting-edge semiconductors from an American company, and Intel is the only US maker of advanced processors. This is what failing to secure competition in a sector can lead to: Oligopolies are inherently risky. Good (mostly for a rent-extracting few) while the sailing is good, but not resilient in turbulent weather While there are many factors at play when looking at the path of such a large and centrally placed corporate entity, a key aspect of Intel's decline must be the long stagnation of the Wintel era. Intel's missing out on both the mobile and numerical computing (dont call me "AI") revolutions share this in common: they did not fit the Microsoft dominated universe / cashcow of so many decades. Its a delicious twist plot that Microsoft seems to be escaping from that Wintel tomb of their own creation (or at least faking it well enough for a government job), while Intel needs to scrape the bottom of the barrel.

DrNosferatu 2y ago

Didn't they have a GPU card with 128GB of RAM? Pretty smart move for LLMs, if they can get the software stack working.