We probably will never know what exactly went wrong, but I think the current best guess is this: Intel set minimum metal pitch target for its 10 nm process at 36 nm, while TSMC set minimum metal pitch target for its 7 nm process (equivalent to Intel 10 nm process) at 40 nm. These processes were the last before EUV, pushing DUV to its limit. It turned out that you can do 40 nm but not 36 nm. That's it.
It was an extremely technical issue, with justifications on both sides, and Intel's decision wasn't obviously mistaken, even in retrospect. 36 nm was usual scaling to Moore's law. It was 40 nm that was unusual, TSMC underscaled metal relative to fin and gate. Why 40 nm? Because it was the limit of DUV double patterning. But Intel also knew that! That's why Intel went with quadruple patterning. It was a conservative choice to underscale metal to the limit of double patterning, but quadruple patterning wasn't crazy either. Everyone was using quadruple patterning for fin at this point, so it wasn't thought that risky.
Should Intel have reconsidered this once they encountered yield issues? Yes, but that's hindsight. All processes experience yield issues. Intel probably thought they can be solved, faster than going back to drawing board and doing everything again. Unfortunately they couldn't.
(Above analysis was informed by lots of reading on this topic I did over the years, but https://semiwiki.com/semiconductor-manufacturers/intel/7433-... in particular.)
Intel made a calculated bet, lost, and furthermore made a handful of other bad business decisions. We focus a lot on the latter part when in reality it's unlikely the "business" decisions were the primary reasons for failure... it very well may have been technical problems led by engineers in the first place.
I don't think Intel acted irrationally.
Last, this is the journey of almost all industries. The titans become too complacent, set for disruption by other smaller companies / outsiders. This is just the natural course of business due to inertia. Intel is hardly alone here.
EDIT: All that being said, the right man for the job is in the CEO chair. I personally believe he always should've had the role. We'll see how Gelsinger turns it around. I am optimistic.
Honestly, it's probably not so much that engineers should run companies, but that MBA/finance-types shouldn't (mainly because it seems their conventional wisdom has collected a lot of toxic ideas).
Engineers should run engineering companies? Yes, absolutely. The CEO is not the only position that "runs" the company - there should at the very least be a CTO that has equal political clout in terms of long term decision making.
He started at Boeing in 1985 as an engineering intern, earned a masters in Aeronautics, and worked his way through management and engineering positions until he became CEO. I have no idea how much of the 737 Max issues could be placed on him directly, but he was CEO during its launch and the crashes.
James McNerney was a Harvard MBA who spent time at McKinsey before going to the Jack Welch clown show at GE, where he ran the aircraft engine business for a long time. When he lost out to Immelt to be CEO there, he went to 3M for a few years then bounced to Boeing.
Now, Muilenburg has to bear the mistakes he made: pushing an unsafe plane through certification, not listening to the right people, not investigating the Lion Air crash sufficiently, etc. But the evidence I think strongly shows that someone who was not an engineer was making the final decisions on the "bet the company for the next 10 years" choice to go forward with the 737Max rather than a clean-sheet design, back in 2011.
The managers and executives turned consultants went out of their way to tell you about how they met Jack Welch or got screamed at by Jack Welch, etc. It was weird, and moreover, they almost without exception idiots.
"-with the right kind of eyes you can almost see the high water mark — that place where the wave finally broke, and rolled back" -HST
for his contributions to society, he made between 12-29m/year every year for the 10 years he was CEO.
ugh
I personally place more blame on Muilenberg's predecessor, James McNerney, a former Proctor & Gamble, and 3M executive.
(Obviously the A380 never killed anyone like the 737Max did, but it definitely was a massive, 25 billion dollar sinkhole for the company- some estimates are that Airbus never even turned a profit on the flyaway cost of the airplane, excluding development costs! If Boeing hadn't simultaneously had the 737Max actual disaster, it would have been much worse for Airbus. Intel has seen TSMC power ahead, which has made their problems more obvious.)
Former Intel-er here. You hit it on the nail. Andy Grove used to say "Only paranoid survive" and acted accordingly. But when Paul Otellini became the CEO it was downhill ever since.
https://twitter.com/dylan522p/status/1554889887630761985
Intel with a bunch of Optane related presentations at #FlashMemorySummit
Some the Intel folks I spoke to about this (not pictured) had no clue it was going to be cancelled until they read it on an article from Toms Hardware.
The problem is the existence of a business management layer as an idea - it's an attempt to get back to the good old days of feudalism, whose chief characteristics are nepotism, stagnation, corruption and nihilism, now that we've gotten rid of the mental pacifier of 'heaven' for the oppressed and hell for the ruling elites (religion).
the inner sanctum of very flat Apple was as far from feudalism as could be, for my several years, and it functioned like a very performant ecosystem of engineering. This diametrically contrasts precisely with Amazon engineering, where I saw all the horrors of feudalism and generalized nepotism (racism for example, sexism promoting incapable people to fit quotas, and flagrant corruption). Facebook was somewhere more like Apple but not in its DNA...just in the imitation is flattery sense.
I run into non stop issues when interacting with apple software as an app producer, from Xcode to iOS to App Store to App Store connect. Their apis are pretty horrible, both the reliability and the design.
As an end user of apple products, I regularly run into odd software problems with my MacBook and iPhone. Every CarPlay experience I have had is buggy, both from the actual CarPlay connectivity as well as apples own CarPlay enabled apps.
Apple Watch is a horrible nightmare to make anything more complicated than a simple remote display.
I could go on and on. However on the Amazon side of things I have never experienced a significant bug, aside from the audible app freezing on occasion when interacting with CarPlay. I blame apple though based off how their own apps work. I say this as an extensive consumer of Amazon products both as a business owner, developer, and SRE, as well as an extensive user of Amazon consumer products.
All this being said I don’t like amazon as a business, I can find flaws in their decisions, but they are business decision flaws not just straight buggy products.
>As an end user of apple products, I regularly run into odd software problems with my MacBook and iPhone. Every CarPlay experience I have had is buggy, both from the actual CarPlay connectivity as well as apples own CarPlay enabled apps.
>Apple Watch is a horrible nightmare to make anything more complicated than a simple remote display.
So why do you keep paying top dollar for Apple products? For work stuff, I can understand, but no one's forcing you to buy an Apple Watch.
Of course, many competitors to Apple products aren't perfect either, but they don't charge Apple prices either. I have some cheap Chinese fitness band and it doesn't work perfectly, but it was also only $35 so I really don't care as long as it mostly does what I want it to do, which it does.
I’m not here to debate why apple has the most popular platform, I’m just stating what feels to me like a fairly unequivocal observation - apple’s software is pretty bad compared to Amazon’s. For whatever reason the company that takes millions in App Store revenue from my company, certainly doesn’t use it to make their software better!
As I said before: "So why do you keep paying top dollar for Apple products? For work stuff, I can understand, but no one's forcing you to buy an Apple Watch."
Your work making you use an iPhone for testing does not mean you're required to own and use an iPhone as your personal device, or buy into other parts of the Apple ecosystem. If you really dislike Apple's software so much, why are you still using it outside of work? You complain endlessly about Apple, but you happily continue to send them your money. Multiply this by countless other Apple consumers and you have your answer about why they take millions in App Store revenue from your company and don't bother to improve their software: why should they? If I ran a company and people shoveled their hard-earned money to me no matter how lousy my product was, why would I bother making my product better?
Amazon makes the Fire, which is terrible, and the website, which isn't user-friendly.
AWS is pretty good.
I have witnessed this with other companies; and I am sorry they are never going to return to what they once were.
It is kind of obvious when you chat with all the sad employees: Why didn't you leave? And then you realise that the ones, who are left, are the ones who couldn't get a job elsewhere.
As an accountant, I would quibble with this aspersion and lay the blame with management and other, broader issues.
> It is kind of obvious when you chat with all the sad employees: Why didn't you leave? And then you realise that the ones, who are left, are the ones who couldn't get a job elsewhere.
This seems true of many companies. Many of us are just playing musical chairs with our careers and jobs trying to find that job that doesn't suck.
And you cannot have engineers running everything because then you will have a half-built Concorde and a bankrupt company.
But there is a balance. And if that balance tips for too long, you end up with the whole organisation content with just doing maintenance. And when that happens there is just no going back.
No worries. I didn't mean to sound angry. I appreciate the apology, didn't think it was necessary, and understand where you're coming from. I think you have valid points. I am very bad at reading and writing tone in quick comments online. I agree that having accountants and mba types in charge isn't a great idea most of the time or that accountants are necessarily the best people on average, but I am wee bit biased here against such blanket statements regarding my profession, as an accountant anyways.
It was originally created by Kelly but he managed to transmit the spirit to a successor, who wrote an interesting book about his time (80's and 90's) called 'stealth'. If you look on Google you can find the PDF.
Another book about organisations having to deal with ossification is 'the soul of a new machine'. It's written by a journalist that was embedded in a R&D department of a computer manufacturer in the 70's and 80's. The place is run by someone a lot like Kelly Johnson, and the author managed very well to get into his mind. Again, I believe you can find a PDF on Google.
The time period doesn't quite match up, but I found Skunk Works: A Personal Memoir of My Years at Lockheed by Ben R. Rich https://www.amazon.com/gp/product/0316743003/ to be quite interested if not quite as interesting as I'd hoped when I bought it.
It's quite like engineers taking over the marketing department.
I believe it said that Boeing was less profitable when it focused on increasing profits and more profitable when it focused on improving engineering.
1) When looking for more profits/revenue at a technology company, they'll often either try to push an R&D "big bet" to market half-baked, in hopes of it pulling in new revenue OR put the screws to product and engineering to churn out some "quick wins" to give them some momentum.
2) When focusing more on engineering, it's often because they're either distracted by other challenges faced by the organization outside of engineering OR they are up against an existential threat that mandates engineering investment and letting them steer the strategy somewhat.
That's stark raving mad. It is for example one of the clearest signs someone is running a Ponzi scheme. Which would seem to transfer over to this not quite as dishonest domain.
Reverence for GE, a company doing technical things that started stack ranking and firing their employees.... Plus eventually got first their fingers and then last time I checked their whole body burned by going into financial businesses, very much not a core competence.
Not really - I mean, if I run Toyota should I not be producing cars I can sell at a profit? And if my sales are falling, isn't that a bad thing?
Rising sales are good, of course - but not oscillating sales. If the rise is going to be followed by a sales slump in a few months time, do I want to take on extra staff who I'll then have to lay off, causing them untold strife and inconvenience? Do I want to build a new factory full of expensive machines, then have them stand idle while costing me interest and rent?
Industries like Software and IP licensing are, of course, often a different matter!
Yes to both. Maybe I'm misinterpreting the concept. "Steady" to me in this context means the same, thus financial shenanigans to make sure you don't report "excess" earnings in one period so you can have them in reserve for a future one where you have a slump.
"Regular" profits are ideal, but Toyota today is not a good example, it's a mature company in a country with a mature automobile industry. As a counter example, see the story sold to the investing community about Amazon, not that they would make a steady profit, but that they would become huge and then do something like that. Which they've delivered on (and I wouldn't judge them on anything in the COVID disruptive period 2020 to now).
Is that not true?
For traditional businesses, the metrics are profit and in particular profit margin (profit/revenue), so more revenue at same profit is bad. And other metrics like ROCE (Return on Capital Employed) and FCF (Free Cash Flow)... which incentivise lots of debt if you can borrow cheap but discourage capital investment. This is obviously antithesis of tech startups.
But they had never seen VCs like today and could never conceive companies that could go for years with no profits and maintain high stock valuation. The world changes. So there's your answer: sometimes!
I’m sure there are plenty of case studies in text books that management could read. Either they don’t read them or they take away the wrong message. Don’t forget the execs at these companies probably cashed in some big bonuses.
Whether or not a next-quarter focus works, probably depends on the industry. In semiconductors, especially high-performance semiconductors, the R&D on manufacturing this year determines whether the design several years from now is able to be competitive, so there is a need to be more forward looking.
They get by being the largest kid on the block and few young companies chomping at the bit, and a series of B/C-tier competitors even dumber and poorly run that they can't even do the next quarter effectively.
Countless mega-corps are just floating by with the ebbs and flows of a market, burning off some early moment of success. Staying at the top longer than a decade or two (usually the timeframe where other market entrants take notice of your weakness) is the real test.
Otherwise just being a decent manager/leader that keeps the existing established business model chugging along and hiring slightly above average executives to put out fires is good enough.
The efficient market rewards inefficient stock buybacks, record debt fueled dividends, years of underinvestment, low wages, and most of all no strings attached bailouts. They may be a loser, but we'll pay for their loss. Socialize the losses/costs and privatize the gains.
Of course there is an underlying assumption the government will bail out simultaneous/systemic big failures, but it does not seem accurate to assume any random business will be bailed out.
Edit : fixed typo
Precisely the issue. It's not "any random business". It's any business with the appropriate properties and connections. If it was truly just random business, perhaps the bail outs would not create such a level of moral hazard. But it's not, and businesses know that.
Why?
And would your rationale apply to other countries as well?
>The reason this matters is because chips matter for many use cases outside of PCs and servers — Intel’s focus — which is to say that TSMC matters. Nearly every piece of equipment these days, military or otherwise, has a processor inside. Some of these don’t require particularly high performance, and can be manufactured by fabs built years ago all over the U.S. and across the world; others, though, require the most advanced processes, which means they must be manufactured in Taiwan by TSMC.
>This is a big problem if you are a U.S. military planner. Your job is not to figure out if there will ever be a war between the U.S. and China, but to plan for an eventuality you hope never occurs. And in that planning the fact that TSMC’s foundries — and Samsung’s — are within easy reach of Chinese missiles is a major issue.
Regarding your second question, what companies and countries do you have in mind?
Lower-income countries like Brazil, South Africa, Argentina, India probably want to, but may have to work their way up to that; it's an expensive business to be in.
I notice that China has absolutely made it a top priority to try to get into this, despite having some difficulty doing so.
You make chips in the US for the same reason you make nukes in the US.
It applies to other countries only insofar as they want to be independent. Most Western countries can shelter under the US umbrella. Again, same as with nukes.
Free trade has been the proven way to become rich (and thus powerful).
I agree with the bottom line here (we should spend gov't $$ to make sure significant amounts of chip manufacturing still get made in the US, and Intel has to be a big part of that). However, it misses the real reason for Intel's decline.
For most of it's existence, if Intel had missed a manufacturing node in Moore's Law, it would have been rightly recognized as an existential threat, and it would have become the #1 focus of the CEO and the rest of the company. Intel fell behind Moore's Law for years in its manufacturing, and it never caused them to appropriately panic until that hit the bottom line. This is a problem of an executive suite too focused on this quarter's results, and not focused enough on the engineering that drives those results. Previous generations of Intel executives understood that. It is likely that the current CEO, brought in once the board saw problems in their stock price, realizes it. If they had been run by executives who cared more about the underlying engineering, they would have had a 5-year head start in fixing the situation.