If things get bad enough for Intel, the precedent that makes the most sense is to follow the model that was used with GM: the company enters bankruptcy, existing investors and creditors are wiped out, and a new corporate entity backed by the fed.gov steps in and assumes the assets and operations of the company. Once things have sufficiently stabilized, the government can then divest its ownership in the company.
Intel is economically and strategically important enough that just letting it collapse without a plan to pick up the pieces is a serious footgun. We have a framework for handling this kind of situation that has been shown to work without rewarding those who caused the problem. It'd be silly not to use it.
Managers and executives are different groups of people.
Everyone wants better management, but it wont magically solve itself. Those with the power to drive that change need to have an incentive to do so.
I get that there is probably only one top-end fab in Intel and that would be hard to split across two entities.
But if you split Intel into three entities, they might (gasp) hire a bunch of the engineers that have steadily fled intel or be chopped off in shortsighted layoff rounds. You might get (gasp) innovation.
If you give all three the access rights to Intel's IP, things would probably be FINE in the long run. Give three separate companies a couple fabs and the IP, and see what happens. Intel has FIFTEEN fabs. So hand five to each of them.
Intel is a shell because existing management is financial "wizards" and war-on-labor MBAs that are trying to manipulate the stock price to hit options targets.
If you split the companies, they have to compete on engineering, or they die. You can probably also wipe away a lot of the management because the companies will have to do "real work" in the medium run and their "skillsets" won't really apply.
The MBA types will all say that's impossible. IMO that's why we should do it, because all the people that failed the industry and company are opposed to it.
It’s either bailout or not.
When they accidentally make something their customers like (the Bolt, CarPlay), upper management intervenes and discontinues it.
The US would be much better off if the engineers and factories they are squandering were allocated to other companies.
Haven't seen that before.
Excellent response, gave you the upvote so others will hopefully read it.
The state probably did a better job than a private takeover could have because: - They had effectively infinite backstop-- they could afford to spend years and front load a lot of costs to fix the mess - They had a mandate to restructure the sector beyond a single company. I'd expect a nationalized Intel would have an easier time pivoting to new models, while private investors might be too afraid of killing their current golden geese for, say, a full fab spin-off or becoming a more aggressive x86 licensor.
Exactly.
Then we should have let all the startups that had their funds in SVB bank fail, instead of another pseudo-bailout that occurred in March 2023, given that FDIC insurance did not apply to them given the majority of their capital is over the limit.
I don't know if I agree with the gov making them whole, but it isn't really comparable to the Intel situation imho. It's not like the gov bailed out SVB and its investors itself.
There’s more at stake than money when it comes to companies like GM, Boeing, and Intel.
Wipe out existing shareholders and management and start over like GM in 2008, letting Intel die would be a gift to our adversaries.
Remember there’s currently a rivalry between SpaceX and NASA’s SLS… one costs $70 million per launch, the other costs $2200 million per launch.
Government innovation mostly doesn’t work. Blame the people in power if you want, but the kinds of people in power is the hardest thing to change.
There is absolutely no reason to believe our government is competent enough to solve that particular issue. Heck, China hasn’t succeeded in solving it; and only recently began mass production of 14nm. If TSMC, and only TSMC, was not around, Intel would be viewed as ultra-competent right now.
The view of incompetence is because they are a few years
behind cutting edge, and as such, are losing orders.
Everybody's talking about Intel like they are turning out absolute garbage. It's true they're lagging the cutting edge, but from reading this discussion you'd think they were trying to sell 2003 P4 Netburst chips in 2024.
This is little different than the time Boeing got caught doing illegal corporate espionage against Lockheed, but possessed a launch capability that the American government needed. Boeing wasn't allowed to fail as some here probably think they should have; instead their launch business was merged into Lockheed's, forming ULA, to ensure that both could continue.
The Government is certainly capable of doing a shitty job, but that tends to happen more when the Government contracts things vs. actually doing real work in-house. At least in my field, I've seen some incredible innovation done within the U.S. Government.
Are people really still citing this website as a government failure? It had some scaling issues at launch that were fixed within 2-3 months and has been serving tens of millions of Americans without any major incidents since then.
It's not really better on the other side, and we need change somewhere.
-Intel Fails
-Production stops worldwide. (Not just development)
-US scrambling to sort out the supply chains
-China invades Taiwan
-US Fails
Intel must be replaced domestically. At least wait until there is another fab within the US mainland.
All the more reason to let Intel (or Boeing, or whoever) fail hardcore while we have time to adapt. Intel falling isn’t going to result in a Chinese invasion of Taiwan, but it would smack the hell out of politicians and consumers both that globalism, while a nice idea in times of peace, is not compatible with interests like National Security and the growth of the Middle Class.
Here's a tip; part of that "Western Capitalism" thing is governments sensibly not binding themselves to extreme libertarianism and being willing to protect strategic industries when necessary. Maybe you think that's not true capitalism or something, that it's not fair, but so what? The stakes are too high to fuck around with letting strategic industries fail out of some insane commitment to ideological purity.
> Here’s a tip;
You’re not looking for discourse so much as to have someone agree with your anxiety about a perceived potential conflict and its stakes, and I am not going to be that person to you, sorry.
I made my statements and I stand by them. If you’re extrapolating to the extremes to justify your point of view, then I hate to break it to you but you’re treading ground my OCD has already mapped down to the millimeter. The “National Security” defense is not a valid one absent plans to prevent the exploit of that reasoning by bad actors.
My point is that "western capitalism" isn't an ideological suicide pact. Letting important things fail because you want the system bound to some rigid of rules isn't an acceptable option. Rules exist to serve people, not the other way around.
And that's assuming that the government protecting a strategic industry from their own blunders is even breaking the rules. It isn't. It's one of the characteristic behaviors of "western capitalism". We're not talking about "Ayn Rand's capitalism", nor "Capitalism as Stego thinks it should work".
Their contract-fab business has been a sporadic joke up to now. Until there's an established toolchain and pipeline, and a history of reliable delivery, will there be anyone designing parts to use the Intel fab capacity?
System is working as designed. It's helpful to think of the USA economy at the very high level as a single gigantic factory. Instead of producing widgets, FactoryUSA produces multimillionaires and billionaires. The raw materials that come into the factory are taxpayers' and customers' money. Human labor gets applied to this money, sometimes products get moved around, bought and sold, sometimes it's just the money that moves around, but at the end of the assembly line, out come rich shareholders, SVPs and CxOs into their retirement. And at the exit marked "waste product" out comes the worn out bodies and minds of the working and middle class.
If you want to explain US policies, just look for whatever keeps the above assembly line cranking out rich people. If that requires bailing out a single company, it will be bailed out. If that involves a "cash infusion" from taxpayers, that's what will happen. If that involves less restrictive labor laws, we'll get them. The purpose of FactoryUSA is to consolidate everyone's money into a small number of "rich people" finished products.
Identifying natural resources, extracting them, transforming them, improving the technology of all those steps, selling the results to the rich who own shares in any of those steps.
Even if it is all machines doing the work, there is an economic cycle that continues.
If the machine doesn't need people, by definition it is doing well without them.
What policy would that be? Policy to stop large companies from mismanagement golden parachutes, and people losing their jobs due to shareholder greed? I'm all for it, but those are features, not bugs, of the rent-seeking capitalism on which the US is built.
I still support letting Intel fail, but I have absolutely no confidence anyone will let it happen.
So nationalize them and remove the waste
Perhaps we need a cycle of allowing capitalists to remove waste, nationalization to remove profit, and then capitalists to be allowed to begin again removing waste.
It would be different, of course, if intel were the bleeding edge of innovation.... but that hasn't been true for about twenty years. Maybe longer.
The mismanagement and waste come from a Congress more obsessed with its re-election and petty politics than it is actually running a gargantuan empire in a sustainable manner, not the agencies themselves, with one notable exception: the Department of Defense. That is a profoundly mismanaged and exploited department that drains valuable taxpayer money into fantasy boondoggles meant to get people promoted and swindle ever-more income from taxpayers in the process.
At the very least, the government should be the baseline option, with Capitalism competing against it on either efficiency or outcome, ideally both. Instead, what we have are Capitalist companies who game the system to extract more wealth for themselves and from each other, and demand the government cover their own mismanagement under the guise of “National Security.”
They cannot have it both ways. If they’re critical to the security of the country, they cannot exist as private enterprise. If they want maximum profit, then they cannot be of import to the government.
If you gave google the authority to jail customers who didn’t buy their services with 25% of income, even google might provide some customer service, but would surely provide better api’s.
It is one of the most cost effective agencies because their entire reason d'être is finding missing money and collecting it.
It doesn't really say anything about them being one of the most effective in the sense of good management and having minimal waste. I had to deal with them as an immigrant and it was a nightmare of wait times.
Intel switching to TSMC probably would have sidestepped their 10nm fab failures, and the resulting design pipeline bubble that meant a lot of stagnation after Kaby Lake instead of the tick/tock(/tock) cycle of sort of annual improvements.
But, even if Intel was still doing its thing right, Apple prefers to vertically integrate, and Apple has a niche where their cpu requirements are different enough, that a custom solution is better. AFAIK, Intel hasn't been willing to make really custom CPUs. The Apple cpus target a lower clockspeed, and that enables a smaller chip, and makes wider execution more feasible, and generates less heat. Intel probably wasn't willing to make a high performance but clock limited design. And Apple might not have wanted to have people compare their laptops with an Intel CPU that only runs at say 3GHz when everyone else is using chips that turbo to 4.5Ghz.
It would, but it would also drain a lot of investor confidence. Intel pulling the TSMC card in 2024 is acceptable, or even desirable, from a shareholder perspective. Doing it in 2017 would have been jaw-dropping, even if it came with the advantages of TSMC 7nm that AMD's mobile chipsets boasted. It might have been the right call, but it would be a kick in the pants to their fab business and a terrible omen of things to come.
> But, even if Intel was still doing its thing right, Apple prefers to vertically integrate
100% agree, and I feel like it's more to my point. Intel was a holdover from an era where Apple had to ditch their reliance on PowerPC. Buying pre-designed chips was an opportunistic success story on a high-margin product like the Mac, and it worked both ways until Apple started designing their own cores. Once Apple could ship an SOC that outperformed Intel, it didn't matter how much it cost to make because there was no middleman to pay. By any means necessary, undercutting Intel was a business imperative for Apple.
I guess the ultimate irony of this is how I hear people begging OEMs to license ARM tech for PCs now. Intel failed as a rent-seeking middleman for high-performance core designs, so now they will be supplanted by Arm, a rent-seeking middleman for low-performance core designs. All Arm Holdings has to do now is buy a fab and they'll be a dead ringer.
Unfortunately, that policy is wholly incompatible with the current wealth-extraction and funneling model of the present-day economy, and that’s why it won’t happen until it’s so irreparably broken that the entire global status quo shifts to adjust.
But if you want to be pedantic it’s both nationalized and private. It depends on whether you’re referring to the military or industry.
When you create these hybrids of business and government, corruption is inevitable.
That wouldn't be possible if those entities were simply nationalized. But since the gov is a customer, and them a producer, and the gov NEEDS the thing, and only the private sector can give the thing, it's a money bath.
Of course it's really full circle, because while the industry is private it's actually funded entirely by taxpayers. Because the customer is the government. So the corps have a strong incentive to be as inefficient and greedy as possible, and you actually pay for that.
I don't have a pat solution to this, but for example, Boeing, Lockheed Martin, Northrop Grumman, and Raytheon have little reason to improve when they have a captive customer. Raytheon recently agreed to pay ~$1B in penalties for illegal exploitation of their position and the market doesn't care: https://www.justice.gov/opa/pr/raytheon-company-pay-over-950...
Pure capitalism for these kinds of uniquely critical products and services doesn't seem like the right answer.
Extremes rarely work; rational compromise is what moves the needle forward, bit by bit.
With that being said, the situation of the USPS is not simple - it's been suffering political interference from elected officials for literally centuries. A very good example of why giving too much oversight power to elected officials and having too many political appointees is very dangerous.
Weird to see this framing for something that was promised as a condition of employment.
The USPS gets me my mail regularly. Not sure what else it should be doing. And yes, paying people pensions you promised them is a good thing to do and has nothing to do with mismanagement. Taking the money you had already promised for pensions to instead pay shareholders or executives seems to be mismanagement to me.
Question: what about if the thing they’re worried about isn’t about letting it fail, but rather geopolitical and military risk? Could the lead time to get the new companies up and running to fill In the gap be too long for them to not consider it too big of a risk of letting them fail?
geopolitical and military risk
There is a non-zero chance that China decides to simply seize Taiwan in the next decade or two.
Militarily there's absolutely nothing to prevent that unless we're willing to go nuclear or launch a land invasion of China (lol) or something; the idea of our carrier groups being an effective deterrent under a constant rain of missiles a couple hundred km from China's mainland is beyond delusional.
Since China & USA can't invade each other (LMAO) and a nuclear exchange would be suicide, any conflict in the South-China sea would have to be standoff - lobbing cruise missiles at the other non-stop. And the US doesn't even have that front locked down.
Despite spending $800b/y, the US military has a stockpile of just 4k Tomahwaks (as of 2020). If we translate China's production-spamming to the Taiwan situation, then we can safely assume they have a stockpile of missiles that dwarfs that several times. And since they're projecting power in their backyard, it'll be a logistical walkover, especially with how the CCP tends to get things done quickly and at scale.
Sorry if this feels off the point, but your comment just got me thinking about the SCS/Taiwan situation.
The idea of winning a conventional war in China's backyard after 10-20 years of them building toward it is absurd. And nuclear war is uh, nuclear war. Not really a "winner" there.
The only thing stopping China is obviously the huge financial incentive of losing their biggest trading partner(s). That will obviously be an enormous loss for them. At some point though they may calculate that the long term gains are worth it, I don't know the calculus there.
Just decades of sleeping at the wheels finally catching up.
So China dosen't have time on it's side. A hot war in one of the most busy regions would likely immediately cause a global recession as supply chains collapse, and the US can blockade oil and resources from the Middle East. This isn't like sanctions, if it goes on long enough. And remember that America can continously target and destroy their infrastructure and naval dockyards, China cannot. They've got great industrial capacity, but this war likely won't last long enough for them to actually finish building new ships, if the facilities even exist by then.
Well, some Chinese nationalists argue that strikes on the mainland will cause the CCP to start firing nukes at West Coast in retaliation as some sort of "city-trading" game, and that the Chinese will be more willing to sacrifice millions than the Americans at that, but we'll see if we get to that.
It would also be a world war at that point, so, I don't know that their plans would be restricted to US targets.
China knows that the cost would be devastating for them and the larger world economy as well, for the reasons you said. It would be at least a decade or two until the world economy recovered.
But China seems able and willing to play the long game in ways that the US (with our shorter election cycles) fundamentally cannot and if they are thinking strategically they know that this is one of their key advantages for this sort of conflict. I am not entirely sure that they wouldn't be willing to trade, say, 10-20 years of darkness (Cultural Revolution-style?) for 100 years of Chinese world supremacy atop a new world order.
It would also be a world war at that point, so, I don't know that their plans would be restricted to US targets.
China knows that the cost would be devastating for them and the larger world economy as well, for the reasons you said. It would be at least a decade or two until the world economy recovered.
But China seems able and willing to play the long game in ways that the US (with our shorter election cycles) fundamentally cannot and if they are thinking strategically they know that this is one of their key advantages for this sort of conflict. I am not entirely sure that they wouldn't be willing to trade, say, 10-20 years of darkness (Cultural Revolution-style?) for 100 years of Chinese world supremacy atop a new world order if (huge if) they thought it was achievable.
But they are also not dumb, and won't fight a war they can't win.
I'm old enough to remember people's endlessly repeating this about Japan in the 1980s.
Things are building toward war with China over Taiwan, with TSMC being a major factor.
Militarily there is nothing short of a full-scale open war with China that can prevent this and perhaps not even that.
We're not living in a playground with rounded corners, sometimes there are bad choices and there are even worse choices. You might feel moral indignation at the bankers who "got away" with the GFC, but is the feeling of moral satisfaction worth realizing a second Great Depression and potentially WW3 to come out of it?
The GFC happened due to the improper conduct by ratings agencies that gave subprime loans much higher credit status than should have gotten, overloading banks with toxic CDO assets that lead to a major systemic risk once the housing bubble popped. 10 years later, perhaps the executives got away with "golden parachutes", but we're not dealing with exotic derivatives much anymore, the biggest bubbles are just in pure hype stocks or index funds, whose risks are very much anticipated and do not pose a unknown systemic risk poised for incorrection. So I would argue that lessons were learnt.
The US cannot afford to lose some capabilities, like spaceflight. Or production of certain hardware.
You can theoretically outsource them to allies, but some of those allies may be in strategically precarious situation. Like Taiwan and South Korea, the two giants of advanced semiconductor production. Or Finland, the only nation which is capable of producing advanced icebreakers for reasonable price and on reasonable schedule.
Also, an adversary like China may be able to kill a healthy US corporation by massive dumping. Then what?
Hundreds of thousands of people without jobs? Let it fail.
No more domestic semiconductor company? Let it fail.
No more domestic aerospace company? LET IT FAIL.
We keep avoiding making the hard policy decisions by funneling taxpayer money into the hands of the already-wealthy who promise that this time it’ll be different, this time they won’t give it to shareholders and payout bonuses.
Let it fail. Once hundreds of thousands of Americans are jobless due to executive mismanagement and shareholder greed, will actually meaningful and impactful policy be made.