By not pursuing protectionist public policies.
> the taxpayer is on the hook for $8.5B
$8.5B is a big price tag, but whether the government should spend it or not depends on whether or not the investment pays off.
Intel at the time wasn't interested in fabing ARM chips, and the rest is history.
Intel and American fabs fell behind for a number of reasons. Some of it is tied to our education system and the kinds of people we are training. Some of it is probably related to Intel turning their nose up at the iPhone chip making, losing billions upon billions of money they could have put into R&D. Some of it is a story of American corporate culture not innovating enough.
Fun fact, in the late 90's, Intel was the biggest manufacturer of ARM chips. I was there at the time, and I wrote lots of software to aid in their design.
What happened to Intel was twofold: The first problem was that Robert Noyce, Andy Grove, And Gordon Moore died. Each one was a once-in-century intellect, and it took Intel a while to be able to find somebody who could remotely fill those shoes.
The second problem was Intel was making so much money on x86 chips, that dedicating any fab capacity to anything else--including chips for Apple's iPhone, would for years have had such a huge opportunity cost, that the shareholders would have sued, and with cause. Because literally (not metaphorically) anything they would have manufactured instead would have had a drastically lower profit margin, and the stock would have tanked.
I suspect that the only reason Intel made a foray into ARM chips in the first place was to head off anti-trust accusations, and once the political heat was off, they dropped them like they were hot.
By the time the market shifted, almost a generation of mediocre management had left Intel less paranoid, and therefore, less likely to survive.
I've been considering the Intel issue (had family there) and the other post in the thread mention the decade of misses.
This actually seems like one of the most reasonable rationales that I don't hear mentioned very often. You might want to do something, yet your hands our tied, because the investors will sue for poor leadership.
(ie, not investing in EUV, assuming SAQP would work forever, ignoring the consequences of everything being power-limited...)
This kind of decision is hard, because it's a technical-economic tradeoff, and the latter is more voodoo than math. And that's not even addressing whether you get surprised by things like the LLM boom...
> It's also interesting that Intel made some specific bad technical choices.
That's like saying Saudi Arabia made some bad policy decisions. If you are in Saudi Arabia, nothing has a higher return on investment than petroleum. If you invest in anything else, you are leaving money---A LOT of money--on the table.
The result is that capital is drained out of any other business, and the country gets so dependent on just one industry that when the oil runs out, it is a major crisis.
Put yourself in the place of an Intel CEO. You've just invested $4 Billion in a fab. People will by absolutely every single x86 chip that fab will make ~$40 billion over the course of the technology node's life time.
Or, you could make chips for the iPhone, which maybe, perhaps would be a hit? And even if Apple's wildest projections come true, you'll make $8 billion instead of $40 billion, because Apple is not going to pay for Intel to pocket a 90% profit margin, when it could just go to TSMC.
So you are a CEO, and wondering how on the next earnings call you are going to justify turning an asset worth $40 Billion into one worth $8 billion....
It might be hard to remember now, but Intel was in the position NVIDIA is today: they could sell absolutely every x86 processor they could make, at pretty much any price they cared to name.
So even if Intel could have built another fab (which, btw, it couldn't, the world only graduates so many solid-state physics Ph.D.'s per year) but even if they could, they would STILL have used it to make x86 chips. Literally (not metaphorically or hyperbolically) nothing else they could manufacture would have as high a return on investment as making x86 chips did.
Of course the founders have majority voting shares, but that doesn’t prevent them from being sued. It only prevents them/their designated CEO from being fired.
1. Google really didn't know what to do with its excess money, which was why it was just stockpiling it and not using it to invest in its own business.
Intel, by contrast, always knew (at least in the Noyce/Grove era) what to do with its money.
2. Google's "side projects" were false-flags and smokescreens to make it look like it wasn't a monopoly. (Thiel says it much better himself in his article and speech titled "competition is for losers"-highly recommended).
Intel did a similar thing around the turn of the century, when it started making ARM chips--not because they were the most profitable thing they could be doing but because they didn't want to look like a monopoly.
And, of course, you really hit the nail on the thumb here:
> Of course the founders have majority voting shares
Yeah. The executives of google and facebook just don't face the same accountability from the shareholders that the execs of any honestly-governed public company does.
Its a two-edged sword: if google or facebook needs to spend a lot of money to pivot, they have the flexibility to do that in a way which other companies don't. However, the flip side implication is that, e.g. Zuckerberg can just spend $10 billion on a huge project, without being at all held accountable if it fails.
That said... my original point was that the shareholders don't sue in such situations. Rather, they just vote out the board (and hence CEO). If they could sue the board/CEO for not making as much profit as theoretically possible, they would have already sued Meta or Alphabet already despite having only minority shares. Proving to a court that the board/CEO isn't acting in the shareholder's best interest isn't as easy as comparing the projected returns of two mutually-exclusive deals -- they can argue that the ostensibly less profitable deal actually has great long term benefits.
cf. with the shareholder suit against Tesla. Why did they sue instead of firing the board of directors?
To vote out the board, you need >50% of the shareholders to back you. To sue the board, all you need is 1 disgruntled investor.
Good thing we aren’t even slightly close to ever running out.
- They missed the mobile market
- They missed the gaming market
- They missed the AI/ML market
- They got multiple generations behind TSMC and Samsung in the fab business
- They lost a whole bunch of market share to AMD, including datacenter
The NY Times article is paywalled, so I can't read it, but I have to wonder what kind of fabs they are meant to be building for our (taxpayers) $8.5B ? I wouldn't have any faith in them building a SOTA fab at this point.
Also, by gaming do you mean gaming consoles or gaming PCs? Because Intel is popular in gaming PCs also.
Is the problem that Intel saw themselves too narrowly as in the CPU business rather than as in the compute business? I've no idea - it'd be interesting to hear the inside story of how all these missed opportunities went down.
Which is exactly how they missed out on AI/ML. CPU is irrelevant in that market.
> Because Intel is popular in gaming PCs
All gaming consoles use AMD or Nvidia hardware.
Gaming PCs use AMD or Nvidia GPUs.
Any Steam hardware survey (the most relevant for gaming PC contexts) will show Intel handily beating AMD at around 66% to 33% for CPU[1], so your claim that Intel is somehow not popular is bunk.
Note the "G" followed by PU
Graphics Processing Unit
None of those are GPUs
Steam survey PC video card stats show 76.92% Nvidia, 15.09% AMD, and 7.59% Intel (graphics unit integrated with CPU)
I never said that Intel CPUs are not popular on gaming PCs. But Intel used to have 99% of that Market.
That is my point. Emphasizing the earlier statement: "They missed the gaming market".
How is this so difficult to understand? It is very simple, not obtuse, unless you are autistic.
Nvidia market cap is $2.26 Trillion.
AMD market cap is $290 Billion.
Intel market cap is $178 Billion.
AMD and Nvidia used to be a tiny fraction of Intel.
You guys are getting autistically stuck on this irrelevant detail about CPU popularity in gaming PCs and missing the bigger topic of the discussion. But even in that niche, Intel has lost significant market share to AMD.
Are we back in kindergarten, with name calling?
1. All those happened after Andy Grove's time.
2. And when Andy Grove was at the helm, Intel did not miss opportunities like that. E.g. when Intel's memory chip business started losing market share to the Japanese (who were at the time a low-wage country), they were able to transition to CPUs in time.
If you are in the business of making CPUs, and obviously aware of how fast things move in the tech world, then how can you not be aware of industry trends going on like smart phones, gaming and AI? If you are somehow late to see the trend then double down and catch up. What about getting behind on process nodes/generations? This used to be one of Intel's core strengths, and you'd have thought they'd have institutionalized the things you do and don't take on in a new process to keep the change manageable.
So, I wouldn't say it just a matter of not having Andy Grove - it seems like a matter of having incompetence at many levels.
The problem looks like they went down the typical dinosaurification route that their vanquished high end competitors the likes of DEC, Sun, HP, SGI, IBM, etc., which was to switch from manufacturing as much as possible, to protecting high margin x86 parts. Their x86 PC and server organization out-muscled their manufacturing organization (either that or finance did), and so the ended up being very reluctant to adopt GPGPUs or ARM mobile because those were a threat to x86. By the time they realized they'd missed the boat in those markets, they put out these ridiculous x86 mobile cores and x86 GPGPUs that were costly failures.
This pattern of protecting profit margins on high end products while fixed costs every generation increase and performance increases so low end grows up and erodes high end, causing further retreat and protectionism, is exactly what happened with those aforementioned big iron companies. When the bean counters look at the state of things without an understanding of the technology trends, that's the logical thing to do, but they paint themselves into this corner.
Intel might have just been saved by the bell with Dennard scaling breaking down around the time they were losing their manufacturing advantage. That meant that instead of competitors on a generation or two process lead wiping the floor with them as they did to the minicomputers, it was a much smaller disadvantage and they've been able to somewhat hold on.
That's my non-insider take on it anyway.
https://en.wikipedia.org/wiki/XScale#Sale_of_PXA_processor_l...
I was a physics student who took a nanofab class, fell in love, and desperately wanted to go down this path... until I learned about how complete and utter dogshit the wages were. I kept in touch with two classmates who stuck with it a bit longer. The free market had to beat them over the head a bit longer to get them to let go, but it eventually succeeded. Intel was absolutely printing money for investors the whole time, of course, and now that the material consequences of their poor management have come home to roost they are getting bailouts. Yay, capitalism!
Our education system over-produces qualified scientists, but if semiconductors are a road to not having a house or family and if it pays 5x better to sell ads or stocks... you get what you pay for.
I hope this has changed but I wouldn't bet on it.
Perhaps. But the more likely correct answer is: The MIC doesn't make chips. They couldn't and wouldn't push for something that didn't deepen their pockets.
Texas Instruments didn't give guys like Morris Chang enough opportunities to advance.
That's why TSMC was founded.
And now the taxpayer is on the hook for $8.5B and growing?
There's a certain smell to all this.