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Can someone explain the logic behind the spin-off? In particular, 1) why an independent fab wouldn't end up exactly like GlobalFoundariess--i.e. no longer a con

by wahern 2y ago

Can someone explain the logic behind the spin-off? In particular, 1) why an independent fab wouldn't end up exactly like GlobalFoundariess--i.e. no longer a contender in the leading-edge fab space; and 2) how Intel, a company that dominated in high-end performance largely because of the synergy between its design and fab units, would continue to be a contender in high-performance computing? Intel as it currently exists may be destined to failure, but I don't see how splitting the company could do anything but seal its fate, if not hasten it. American MBAs have been hostile to vertical integration for over 50 years now, but TSMC is one of the few companies they can point to today as being dominate without embracing vertical integration. Most other dominant global industrial players, especially ones that aren't pure IP plays, are vertically integrated. Companies like SpaceX and Tesla that bucked the American trend and embraced vertical integration have done well precisely for that reason, whereas the story of those, like Boeing and countless others, that eschewed vertical integration continue to deteriorate. Now, in the grand scheme of things vertical integration may not be economically ideal in terms of overall social wealth maximization, but to pretend Intel can remain competitive at the leading edge by eschewing vertical integration seems implausible. Far more plausible is that disassembling Intel is a well proven path for shareholders to profit on the decline with minimal risk. But given the political environment they can't sell it as promoting efficiency like they used to. They have to sell it as if they're attempting to do the very opposite of what they intend and has happened countless times; namely, managed offshoring of labor and capital intensive industry. But maybe I'm being too cynical? What's the steel man argument that is sincere about preserving Intel's market leadership rather than a managed decline?

alephnerd 2y ago
> American MBAs have been hostile to vertical integration for over 50 years now I think you are misusing the term "vertical integration". Intel is vertically integrated already, as it is an OSAT, Foundry, and Chip Designer. TSMC is only a foundry. Furthermore, the major difference between the Taiwanese ecosystem and American ecosystem is state support and opposition to antitrust. The Taiwanese foundry ecosystem is split between TSMC and UMC, and both receive tens of billions of dollars a year in subsidized loans, land, and power from the Taiwanese government, as well as a blind eye to their overwork culture. The US on the other hand never subsidized the foundry industry until the CHIPS Act was signed, and M&A has become much harder nowadays due to ideological differences, meaning that American companies cannot leverage the economies of scale the same way TSMC, UMC, Samsung, and other foreign chip fabrication players can.

by wahern 2y ago

alephnerd 2y ago

> American MBAs have been hostile to vertical integration for over 50 years now I think you are misusing the term "vertical integration". Intel is vertically integrated already, as it is an OSAT, Foundry, and Chip Designer. TSMC is only a foundry. Furthermore, the major difference between the Taiwanese ecosystem and American ecosystem is state support and opposition to antitrust. The Taiwanese foundry ecosystem is split between TSMC and UMC, and both receive tens of billions of dollars a year in subsidized loans, land, and power from the Taiwanese government, as well as a blind eye to their overwork culture. The US on the other hand never subsidized the foundry industry until the CHIPS Act was signed, and M&A has become much harder nowadays due to ideological differences, meaning that American companies cannot leverage the economies of scale the same way TSMC, UMC, Samsung, and other foreign chip fabrication players can.