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Intel is on life support. Can anything save it?

72 pointsby jspann8 months ago

25 comments

elric8 months ago
Intel being on life support is a bit of a stretch. They are investing an awful lot of money, and it&#x27;s going to take time for those investments to pay off.<p>I worry more about their inept handling of recent CPU bugs than I do about their stock price or reduced dividends.
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fefe238 months ago
&gt; After two sets of disastrous quarterly earnings the company’s market value has shrivelled to $84bn, less than the value of its plants and equipment, from over $210bn in January.<p>Holy smokes. I just looked at the INTC 5 year chart and it is, in fact, a bath of blood. I don&#x27;t think it happens very often that the market cap of a company is less than the worth of its physical assets.
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BoardsOfCanada8 months ago
<a href="https:&#x2F;&#x2F;archive.is&#x2F;3VdVo" rel="nofollow">https:&#x2F;&#x2F;archive.is&#x2F;3VdVo</a>
summerlight8 months ago
I think it will all up to whether Intel can regain its technological edges. For years, Intel did produced worse chips in terms of power efficiency (vs ARM) and performance (vs AMD) but now it looks like the chip design has caught up given that Intel on TSMC now shows comparable power efficiency to ARM. I think the playground is now leveled in terms of chip design.<p>The real problem is the manufacturing process. This used to be the power house for Intel. They kept it 5 years ahead of their competitors before the Krzanich era. But in all the geopolitical and infrastructural contexts, is it even feasible to restore that in America? It is not very clear. Intel needs to build up all the ecosystems for semiconductor manufacturing but America is far, far behind of Taiwan (and eastern Asia in general).
nabla98 months ago
I think Gelsingers plan is sound, but they have only one try left after they desired to skip 20A to save money. It&#x27;s 18A or bust. If 18A is not success, Intel will drop out of manufacturing. If 18A does well, Intel is back making money next to TSMC.<p>So far 18A seems to be a success. Already sub-0.40 D0 defect density and launch at some time 2025Q3 and fully ramped up in 2026.<p>Fabs will bleed money 2024 and 2025, there is no way around it.
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dingi8 months ago
No one in their right mind would think this is going to be a smooth ride. The massive amount of capital required to build cutting-edge fabs is a hard pill to swallow. These news writers need to cut Intel some slack. The world needs cutting-edge fabs in geopolitically stable locations. I believe Intel is simply too critical to fail at this point, and, as always, Uncle Sam won&#x27;t let them.
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JonChesterfield8 months ago
&gt; Intel has expertise and talented engineers.<p>Intel certainly had those things. It has lots of interesting IP around processor design and tooling locked away in source control and so forth.<p>I think it is critically important whether Intel has retained the engineers who knew how to build world class products. Nehalem was excellent and shipped in 2008 so I&#x27;m sure they had the skills back then. They used to have a reputation for paying well.<p>It seems plausible that Intel is a bureaucratic horror show that no longer pays competitively, in which case it would be difficult to see why the engineers would still be there. Especially with redundancy offers waved around roughly annually.<p>I reckon they&#x27;re dead.
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bane8 months ago
I&#x27;m going to call it, and write it here so that I can link back to this comment in a few years to see how right or wrong I was.<p>Prediction: Intel is done. It will become a zombie company like IBM or Oracle in a few years, without the license lock-in moat keeping those rotting corpses alive, but may be able to offer cheaper fab services for &quot;it just was the state of the art&quot; chip manufacturing market. They&#x27;ll continue to focus on becoming a financial optimization organization and never return to being a technical leader. They&#x27;ve become a company of pure inertia.<p>Reasons for the prediction:<p>1. Intel is not longer the process node leader and hasn&#x27;t been for a while (when even was that? 14nm? 2014?).<p>2. Intel seems to be struggling to keep lead engineering talent, board members, and leaders of all kinds. Jim Kelly, Lip-Bu Tan, and so on. They still have Jeff Wilcox, but who knows for how long? At least the CEO is an engineer finally...I guess.<p>3. They continue to launch then retract in otherwise profitable markets, not taking any particular lead, but not continuing to invest until they get it. They still have really only one core business.<p>4. Their branding strategy seems to be built around confusing consumers in the hopes that they accidentally buy the wrong things. Successful companies can be clear in their product naming, zombie companies end up trying to stuff every single market niche with as much microtuned, barely differentiated, SKUs as possible. In actuality it&#x27;s probably financial engineering to figure out what to do with various classes of yield issues. Disable the bad part of the chip, slap a K or KS, or KF, or T, or whatever on it and get it on the shelf. I counted over a <i>dozen</i> different Core i5 14 gen SKUs, and over <i>20!</i> 13 gen Core i5 SKUs. There&#x27;s probably 200 different brand-new-from-Intel CPU SKUs on the market today. Insane.<p>5. They&#x27;re getting feature for feature beaten by smaller, lower stakes competitors both in and <i>out</i> of their ISA. Those same competitors are almost always cheaper, and made at other fabs. In otherwords, Intel doesn&#x27;t lead anywhere and has no lock-in.<p>6. Their main moat, their ISA, can be comfortably virtualized or emulated elsewhere, bugs and all, at entirely useful speeds meaning there is a ready exit ramp as customers wish to take it.<p>There&#x27;s probably more, and it&#x27;s probably continues to paint a very poor picture, but there is very little reason today, or in the near future, to stay with Intel as a manufacturer except for inertia.
bsder8 months ago
I&#x27;d love to have Intel&#x27;s cash flow while being on &quot;life support&quot;, thanks.<p>This was like the stupid ass DEC hostile giveaway to Compaq while DEC had almost 2 gigabucks+ a year in enterprise services revenue that was going to continue <i>forever</i>. A single year of services revenue was almost as large as the <i>entire merger deal</i>.<p>And then, as PCs crashed and burned, <i>Compaq</i> couldn&#x27;t figure out what to do with all that cash, either!<p>Executive morons all around.
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peppertree8 months ago
US government is going to keep bailing Intel out until it has a competitive fab. Intel is going to be the new Boeing&#x2F;GM.
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2OEH8eoCRo08 months ago
Intel is utterly massive and owns their own fabs. Companies that large don&#x27;t collapse in a day unless there is some illegal shenanigans going on.
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Animats8 months ago
<i>&quot;After two sets of disastrous quarterly earnings the company’s market value has shriveled to $84bn, less than the value of its plants and equipment, from over $210bn in January.&quot;</i><p>That&#x27;s scary.<p>Fabs are so insanely expensive now. US$1 billion to US$4 billion each. Without the money to keep up, Intel becomes a niche player.
jmclnx8 months ago
Is this this article really stating &quot;Wall Street is upset at Intel because they are not Nvidia&quot; ?<p>If I had to guess, I think the above is true. Well too bad Wall Street :)<p>If Intel is <i>really</i> in bad shape, then maybe it is time for some form of nationalization.
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lispisok8 months ago
Where does Intel go from here?<p>* They missed out the rise of mobile<p>* They missed out on the rise of GPU computing<p>* AMD has been making gains in the server cpu market<p>What do they have left other than consumer computer market where their main advantage is name recognition?
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Joel_Mckay8 months ago
They have so much inertia in the market, even if they stuck with i7 it would remain relevant for the next 2 decades.<p>Keen to see what the team that split off to do a RISC-V DSP chip end up producing. Even if they added dual RX&#x2F;TX SDR front ends on a SoC, than it could open up a single-chip smartphone solution etc.<p>Intel is entrenched with process-people obsessed with features no market asked for like hardware RATs, and betting on imaginary AI economies.<p>There are paths to move forwards technologically, but Intel as a company has structured itself to be its own worst problem. =3
mensetmanusman8 months ago
What can save it is a potential pointless war by China to destroy Taiwan.
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shrubble8 months ago
Lunar Lake, N100&#x2F;N97, plus datacenter sales still must add up to some amount of sales?
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soniman8 months ago
If Intel is critical to the US industrial base, why aren&#x27;t Nvidia and Apple stepping up to support Intel? What is the point of $3T national champions like Apple and Nvidia if they ship the industrial base overseas.
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segmondy8 months ago
US Govt will save it. chips are as much needed as oil, steel and other raw materials that any well equipped nation needs, without it your military is toast. So IMO, USA will save Intel.
m3kw98 months ago
A lot of companies is in life support, but Intel isn&#x27;t one of them. They can sell some of their businesses if they really needed cash to service debt.
antisthenes8 months ago
As always, The Economist is 2-3 months behind the hurrent hate trend.<p>Yes, Intel is currently in a slump. Just like AMD was for a decade before Zen 2&#x2F;3.
mjfl8 months ago
Good thing they are the spearhead of our current industrial policy. Like switching to an all-sugar diet to cure cancer.
api8 months ago
Split the fab business off and allow them to fab for anyone, for starters.
cue_the_strings8 months ago
Of all the tech companies in the US, Intel is the most likely to be bailed out by the government, no questions asked.<p>Poor business? Gimme a break. They could exterminate a smaller ~~African~~ scratch that, Central or South American country with zero consequences.<p>Joking aside, I can see the US engaging in heavy-handed protectionism to help Intel.
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andrewstuart8 months ago
Intel has to become a major players in GPUs.<p>If it gives up on GPUs then its finished.