Intel Weighs Options Including Foundry Split To Stem Losses (msn.com) 50
Intel is working with investment bankers to help navigate the most difficult period in its 56-year history, Bloomberg reports, citing people familiar with the matter. From the report: The company is discussing various scenarios, including a split of its product-design and manufacturing businesses, as well as which factory projects might potentially be scrapped, said the people, who asked not to be identified because the deliberations are private. Morgan Stanley and Goldman Sachs, Intel's longtime bankers, have been providing advice on the possibilities, which could also include potential M&A, the people said. The discussions have only grown more urgent since the Santa Clara, California-based company delivered a grim earnings report this month, which sent the shares plunging to their lowest level since 2013.
Re:What kind of stupid is this (Score:5, Interesting)
I saw this on Twitter from analyst Marko Jukic on the engineer vs MBA CEO. I think there's a bit more nuance to the stories but I really think this onto a trend...
It's unbelievable how many dynamic companies broke their streaks of engineer-CEOs for the first time in the 2000s, installing their first MBA/finance CEOs, who then promptly made fundamental strategic errors that nixed the company's future, that are now becoming obvious.
"He/she was the first CEO not to come from an engineering background" is not something that happened once or twice, it looks like it was an economy-wide trend, not just in the U.S. but Japan too.
Boeing, Sony, IBM, Intel... we will probably find more examples as we research.
Intel is maybe the most egregious example. First non-engineer CEO manages to say no to Steve Jobs to the offer of manufacturing CPUs for the iPhone. Then of course Intel just totally drops the ball on ARM, GPUs, EUV... literally misses every single development in computing.
The irony is that many of these MBA/finance CEOs in fact succeeded at greatly increasing revenues, profits, and shareholder value—even while making fundamental strategic errors that would effectively kill the company in the future. And they were lauded for it at the time!
You would think having an MBA/finance CEO for a few years wouldn't be that bad, surely inertia and some basic competence goes a long way... but no, the MBA/finance CEO immediately begins making catastrophic mistakes and vengefully purging any remnants of engineer-executives.
Boeing's first MBA CEO immediately starts designing planes that fall out of the sky.
Intel's first MBA CEO immediately forgoes the smartphone revolution on a silver platter.
Sony's first MBA CEO decides that Sony doesn't need to make new consumer electronics products anymore.
You would think that a company in the process of being murdered by its own CEO would see worse financial performance and lower stock valuations by investors, but in fact murdering a company seems to greatly increase profits and excite investor enthusiasm to unheard-of heights.
The apparent conclusion—uncomfortable if not unthinkable for free marketeers—is that MBA/finance thinking and decision-making is not just not helpful but actively hostile and destructive to running a successful, functional company.
How could that be? Well, if you accept there are such things as trade-offs between short-term profit vs. long-term viability, in the examples above we see MBA/finance dogma ruthlessly maximizing those trade-offs in favor of short-term profit. Including killing the company!
Maybe, as part of industrial policy to protect the American economy, the SEC should ban anyone with an MBA or CFA from being CEO of a publicly-traded company. They can be CFO or COO, but not CEO.
The core problem is that MBA/finance thinking teaches you to see every company not as a fragile organization of human beings with idiosyncratic skills and knowledge, competing against other such organizations, but as a financial product in a portfolio.
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What were you thinking?
> At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends.
This is what they're thinking. Stock price must go up, not necessarily correlated with revenue...
https://web.archive.org/web/20... [archive.org]
(currently the article is paywalled, this is fun )
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And at the same time instead of people's pensions being tied with the company it's tied to the stock market now so it going up has become a necessity for, just, society in general.
Not that pensions are out and out better than the other options but it's just another pebble on the pile of perverse incentives.
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We're on the tail end of an approximately century old grand delusion that Taylorization can make humans fungible. The phenomenon he is describe is just one portion of that.
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What those tactics do is liquidate the accumulated human capital of the organization until it is no longer capable of functioning.
Of course that appears profitable if you avoid measuring or are incapable of measuring the losses being accrued but that's just a measurement error.
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Yes, that nicely sums it up. It does also match what I have been thinking of MBA "leadership" since it became a thing: No clue about the company and products, short-term profit optimization, long-term survival uncertain with that type of "leadership". Yes, it was really obvious back when. I will not drag up old /. postings on the topic, but I am sure there are plenty from me and from some other people with a clue.
Also, on a more general level, greed kills societies, not only companies. MBAs are the embodime
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Great insights! Of course, the problem is the structure of executive compensation. Because most compensation overwhelmingly favors short-term financial metrics, it's not at all a surprise that long-term concerns are sacrificed on the alter of short-term performance.
The answer is also obvious: Structure executive compensation based on longer-term metrics. Yes, executives will balk at this, and lazy companies will complain that no executive will accept compensation based on the long term instead the short
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The most hilarious aspect of Intel's whole sordid history is how they believed their ticktock strategy was the reason for their success, when it was actually their illegal market control. This efficacy of ticktock was disproved in spectacular and costly fashion when Gelsinger jumped to VMware and tried it there. VMware tanked. Turns out that ticktock is really just a way to double the latency of your development cycle. Which is not a problem if you enjoy a monopoly. Quite a bit more of a problem if you have
Don't forget HP (Score:2)
Intel's Woes are the DEI Bean Counters (Score:3)
> 2013 make bribe government officials not to sue you for frivolous disparate impact claims, and secure 30 year property tax exemptions by agreeing to donate 10% of it to politically connected nonprofits, and agree to do DEI hiring quotas. Then lay off all your veteran engineers and replace them with recent college grads, and people who don't demand high salaries only to watch them go to other companies, and then forego expensive EUV equipment upgrades because you want to amortize the old equipment more instead only to discover you lack the experienced engineers to do the EUV upgrade for 5 years, meanwhile run your company with MBAs instead of engineers.
Intel was sucked dry by the parasitic political classes, race huslers, and institutional shareholders who thought they could milk the company while it was still fat, and now they wonder why the company is constantly failing
source: former employee.
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Keep Coping about how the company is still filled with incompetent people, and why every single AI chip (except for xe), is an acquisition from another company whose (many former intel) founders cashed out, now leaving you morons to manage 4 different AI/GPU hardware stacks. The intel "dev cloud" cant even instantiate a object storage buckets to this very day, and how many years did Intel have to figure out that if it didn't vertically integrate its offerings that datacenters would just squeeze their margin
forego expensive EUV equipment upgrades (Score:2)
Whats an EUV ?
Electric Utility Vehicle?
European Union Vacation?
End User Version?
Eastern Ukraine Veteran?
Re:forego expensive EUV equipment upgrades (Score:5, Informative)
But not as small as TSMC. TSMC took a bet on ASML and bought their new EUV system, which makes TSMC the only 2nm transistors out there. This bet put TSMC above Intel in the market, and Intel has been struggling ever since.
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That may be, but "Intel has secured all of ASML’s stock of High Numerical Aperture NA Extreme Ultraviolet (High NA EUV) chipmaking equipment due to be manufactured this year."
https://www.datacenterdynamics... [datacenterdynamics.com]
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So... that's 2024. Whereas the thread opener was talking about 2013.
I dunno specifically about 2013, but it's worth noting that Intel was stuck for a very long time on 14nm, 14nm+, 14nm++, 14nm+++++++1++!. Everytime they tried to make something with their 10nm process, yields flopped. They were stuck on 14nm for ~6 years, through 2021.
yes, I get it. "14nm" is a case where the names are made up and the numbers don't matter. When they finally got a "good enough" 10nm process they renamed it to Intel7 b/c its
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That may be, but "Intel has secured all of ASML’s stock of High Numerical Aperture NA Extreme Ultraviolet (High NA EUV) chipmaking equipment due to be manufactured this year."
"We missed the opportunity to get it right the first time so we decided to pay a premium to jump the queue to play catchup wit our competitors" is not the amazing tag line you think it is.
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I didn't say it was amazing, buddy. Clearly they squandered many years of competitive advantage. It may be too late to recover, but they are making the investments now.
Re:forego expensive EUV equipment upgrades (Score:4, Insightful)
To be fair, EUV was a long shot when it was proposed back in the 80s. Yes, EUV is that old and people were looking ahead. Intel and many other companies formed an EUV research corp back then (EUV Inc) to research this. But nothing was coming out - the primary problem being a lack of a suitable light source. This continued into the 2000s with both Nikon and Canon only having prototype dim light sources able to produce something in the EUV range, but that's it. By 2005, EUV Inc dissolved. Both Nikon and Canon continued researching it, promising a dim but potentially usable source in about 5 years. But then 2008 happened, and Japan imploded and research into EUV light disappeared.
ASML picked up a lot of it back when EUV Inc dissolved in the early 2000s and quietly worked away. Around 2005 they had a demonstration EUV light source. By the time 2010 rolled around, they had a production ready light source, and Nikon and Canon decided to pick up the research again, but realized they're basically 5 years too late and gave up again.
In the meantime there have been alternative methods proposed - EUV was considered a long shot with very little prospects. It was only when ASML demonstrated it was possible that suddenly thrust it into the spotlight.
Note that ASML makes the light source that exposes the wafers. Japan still has a big EUV industry as they make the chemicals used in the photomask and other things. Japan just couldn't produce a light source, but they have the optics, chemistry and everything else.
You have to remember EUV research has been going on for decades - both with DoD sponsorship and private investment, and didn't have much to show for it.
And now there's still issues - we need brighter EUV sources still and the tin-laser method is not quite sufficient.
It's not quite Intel's fault for not investing - EUV was looking to be a long shot, and the big guys in Japan basically gave up. ASML basically surprised the world it could work.
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I think you're excusing Intel too much here. ASML surprised the world showing it could work and while Intel's competitors went out and bought ASML's product Intel continued to dismiss it for many years. They aren't behind because they didn't research EUV, they are behind because they didn't buy EUV when it was shown to work. Now they are paying a premium to try and be the primary ASML customer to claw back any kind of competitive advantage which they ceded to competitors.
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Instead, they chose not to work with ASML. As a result, it was a multi-billion dollar boondoggle that 11 years later we're now discussing Intel spinning off it's foundry business because it's flailing while it's also lost market share in it's core areas.
Given
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Hand in your /. card
Extreme Ultra Violet
Nonsense (Score:1)
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Well, Gelsinger was pretty shitty too, as he proved when he jumped to VMware and tanked it. Turns out, running an illegal monopoly can make you look pretty good, even if you are an idiot.
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Something Intel has lagged behind consistently going all the way back to the early i-7s and the AMD-8350.
At the time as a research programmer on Linux working on systems that could be parallelized to some extent, I always thought the FX8350 was underrated. Sure it was hot and you wouldn't want one in a laptop (I'm still running an i7 from that era). And the i7 was one hell of a CPU, usually fastest thing you could get for a price. Bang for buck though I found the 8350s more than competitive.
Funny thing wi
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My prior machine ran on a FX8350. I sold it to a friend who is still using it. He and I both date back to a time when clock speeds were measured in MHz and anything over 100 MHz was fast AF (like Hypersparcs for example) so he's quite pleased. He needed something with a lot of SATA and that system had like 8 ports of that.
Now I have a 1600AF and it's plenty fast for my purposes, but I am looking at doing an upgrade in a month or two to something actually modern. I've been putting it off because of course I
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My prior machine ran on a FX8350. I sold it to a friend who is still using it.
Doesn't surprise me. My day to day home laptop is an i7 Q820 (from 2010, so contemporary with older processors), and I've got a rando desktop in my home shop which is a A something or other, bulldozer edition. So like an 8350 but slower. But... what do I do with it? Compile embedded code, wiggle wires up and down, read and write a USB serial device, browse datasheets on the web, occasional online ordering and playing tunez.
I upgra
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Well, since I'm cheap, it will depend on what's cheap then. But probably an X3D chip. And I'd really like to try to get ECC RAM this time, finally.
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They've been resting on their laurels because AMD has had crap hardware for a long time
That's false. AMD has had great hardware for a long, long time. Their 486 was perfectly fine, Am586 was highly compatible and very quick, the K6 was faster than the P2 clock for clock at everything but fp (and caught up in that by the end) and so on. Intel dominated for three reasons: superior process technology, deliberately compromising security in their superscalar design, and anticompetitive behavior. Once the process technology was no longer superior they only had antitrust and insecurity. Once this wh
Natural corporate old age (Score:2)
People blame the MBAs for ruining Intel and Boeing, but it’s really just old age. That’s like blaming a 100 year-old for being unable to win a 5k race. C
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Some manage it. For example german MAN (https://en.wikipedia.org/wiki/MAN_SE) at 266 years old, still doing impressive engineering and definitely stuff on the cutting edge, for example their heat-pumps. But yes, it is rare.
That said, whether the MBA morons come in because of old company age or whether the company ages prematurely because the MBA morons come in, is difficult to say. For example, AMD is just one year (!) younger than Intel, and they strike me as very much non-stale. But Lisa Su is an EE, not
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Intel is a 75-year old company. Once a company reaches 50 years, it’s almost impossible to maintain sharpness. Seriously, name me a company that’s this old and still on the cutting edge?
Apple and Microsoft are just 10 years younger than Intel, and not only are they going strong, but each got a second growth spurt after their first few decades. For both Apple and Microsoft, the argument could be made that executive leadership was the difference, with Apple bringing back Jobs and Microsoft replacing Balmer with Nadella.
If they do any kind of sale and leaseback. (Score:3)
No retail store at least has survived a property leaseback, because it doesn't fix anything while allowing assets to be taken cheap (usually by the shareholders that promoted the leaseback).
In a non-shareholder-greedy world, keeping the engineering tied with the manufacturing is an actual benefit. Whatever.
Re: If they do any kind of sale and leaseback. (Score:2)
AMD did a leaseback of several of their properties during their most desperate times, including their Santa Clara headquarters.
don't cheerlead the fall (Score:2)
Yeah Intel has been deeply shit but it is not a person and reasoning like a person is fallacious.
The market will not be better for lack of competition if one of the major players exits.
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While I don't agree with any of the MBA finger pointing going on elsewhere I will say that Intel has never really had any competition until now. The PC industry carried both Intel and M$ on a free ride for a long time. It squashed everything else in its path. Apple only survived because the web, and an out of touch music industry, allowed for iTunes ... followed by the iPhone.
On that note, Intel could have easily squashed AMD a long time ago as well. And probably the only reason it didn't happen was for
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you raise some good points.
Though I think they are over a number of different eras. Intel was being pretty crap in the P4 era and AMD kicked their arse work Opteron and x86-64. They'd still be hawking Itanium in their preferred future at that time.
This was at the end of a long period of vicious competition between CPU makers. Everyone on the high end except AMD and Intel feel by the wayside. If either party paused for a moment they were overtaken hard. This happened to Intel with Opteron. They couldn't tech
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The 1980's and 1990's wasn't any competition for Intel. The 1970's maybe, before the PC took over. The PC industry produced such a huge income that Intel could just spend its way to looking good. No one had a chance against that. AMD did the only thing possible and just joined in.
AMD64 was a move that had Intel on the hop for a moment but Intel flexed its muscle and pulled the OEMs into line pretty quick. Dell was the fall for that demonstration.
Funnily, it was the cellphones and smartphones that creat
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Oh, and the PC industry itself did produce the forerunners of the contract manufacturers, the "clone makers."
Please leave the politics outside. (Score:2)
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Even the lowest end microprocessor cores in a mobile phone processor are wide enough and have large enough caches that it gets lost in the noise now, x86 in mobile phones was just a little too early.
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As someone who has known people working at Intel for literally decades
Were all the people you knew there engineers, or do you know people in the antitrust department as well?
Were any of the engineers you knew responsible for SPECTRE or MELTDOWN?
There are real reasons to dislike Intel.
If intel is serious about recovery (Score:1)
If intel is serious about recovery and earning some good coin, licence the x86 which will of course lead to a ton of innovation, uptake, performance improvements and better market share.