Intel's Stock Jumps 18.8% - But What's In Its Future? (msn.com) 47
Intel's stock jumped nearly 19% this week. "However, in the past year through Wednesday's close, Intel stock had fallen 53%," notes Investor's Business Daily:
The appointment of Lip-Bu Tan as CEO is a "good start" but Intel has significant challenges, Morgan Stanley analyst Joseph Moore said in a client note. Those challenges include delays in its server chip product line, a very competitive PC chip market, lack of a compelling AI chip offering, and over $10 billion in losses in its foundry business over the past 12 months. There is "no quick fix" for those issues, he said.
"There are things you can do," a Columbia business school associate professor tells the Wall Street Journal in a video interview, "but it's going to be incremental, and it's going to be extremely risky... They will try to be competitive in the foundry manufacturing space," but "It takes very aggressive investments."
Meanwhile, TSMC is exploring a joint venture where they'd operate Intel's factories, even pitching the idea to AMD, Nvidia, Broadcam, and Qualcomm, according to Reuters. (They add that Intel "reported a 2024 net loss of $18.8 billion, its first since 1986," and talked to multiple sources "familiar with" talks about Intel's future). Multiple companies have expressed interest in buying parts of Intel, but two of the four sources said the U.S. company has rejected discussions about selling its chip design house separately from the foundry division. Qualcomm has exited earlier discussions to buy all or part of Intel, according to those people and a separate source. Intel board members have backed a deal and held negotiations with TSMC, while some executives are firmly opposed, according to two sources.
"They say Lip-Bu Tan is the best hope to fix Intel — if Intel can be fixed at all," writes the Wall Street Journal: He brings two decades of semiconductor industry experience, relationships across the sector, a startup mindset and an obsession with AI...and basketball. He also comes with tricky China business relationships, underscoring Silicon Valley's inability to sever itself from one of America's top adversaries... [Intel's] stock has lost two-thirds of its value in four short years as Intel sat out the AI boom...
Manufacturing chips is an enormous expense that Intel can't currently sustain, say industry leaders and analysts. Former board members have called for a split-up. But a deal to sell all or part of Intel to competitors seems to be off the table for the immediate future, according to bankers. A variety of early-stage discussions with Broadcom, Qualcomm, GlobalFoundries and TSMC in recent months have failed to go anywhere, and so far seem unlikely to progress. The company has already hinted at a more likely outcome: bringing in outside financial backers, including customers who want a stake in the manufacturing business...
Tan has likely no more than a year to turn the company around, said people close to the company. His decades of investing in startups and running companies — he founded a multinational venture firm and was CEO of chip design company Cadence Design Systems for 13 years — provide indications of how Tan will tackle this task in the early days: by cutting expenses, moving quickly and trying to turn Intel back into an engineering-first company. "In areas where we are behind the competition, we need to take calculated risks to disrupt and leapfrog," Tan said in a note to Intel employees on Wednesday. "And in areas where our progress has been slower than expected, we need to find new ways to pick up the pace...."
Many take this culture reset to also mean significant cuts at Intel, which already shed about 15,000 jobs last year. "He is brave enough to adjust the workforce to the size needed for the business today," said Reed Hundt, a former Intel board member who has known Tan since the 1990s.
"There are things you can do," a Columbia business school associate professor tells the Wall Street Journal in a video interview, "but it's going to be incremental, and it's going to be extremely risky... They will try to be competitive in the foundry manufacturing space," but "It takes very aggressive investments."
Meanwhile, TSMC is exploring a joint venture where they'd operate Intel's factories, even pitching the idea to AMD, Nvidia, Broadcam, and Qualcomm, according to Reuters. (They add that Intel "reported a 2024 net loss of $18.8 billion, its first since 1986," and talked to multiple sources "familiar with" talks about Intel's future). Multiple companies have expressed interest in buying parts of Intel, but two of the four sources said the U.S. company has rejected discussions about selling its chip design house separately from the foundry division. Qualcomm has exited earlier discussions to buy all or part of Intel, according to those people and a separate source. Intel board members have backed a deal and held negotiations with TSMC, while some executives are firmly opposed, according to two sources.
"They say Lip-Bu Tan is the best hope to fix Intel — if Intel can be fixed at all," writes the Wall Street Journal: He brings two decades of semiconductor industry experience, relationships across the sector, a startup mindset and an obsession with AI...and basketball. He also comes with tricky China business relationships, underscoring Silicon Valley's inability to sever itself from one of America's top adversaries... [Intel's] stock has lost two-thirds of its value in four short years as Intel sat out the AI boom...
Manufacturing chips is an enormous expense that Intel can't currently sustain, say industry leaders and analysts. Former board members have called for a split-up. But a deal to sell all or part of Intel to competitors seems to be off the table for the immediate future, according to bankers. A variety of early-stage discussions with Broadcom, Qualcomm, GlobalFoundries and TSMC in recent months have failed to go anywhere, and so far seem unlikely to progress. The company has already hinted at a more likely outcome: bringing in outside financial backers, including customers who want a stake in the manufacturing business...
Tan has likely no more than a year to turn the company around, said people close to the company. His decades of investing in startups and running companies — he founded a multinational venture firm and was CEO of chip design company Cadence Design Systems for 13 years — provide indications of how Tan will tackle this task in the early days: by cutting expenses, moving quickly and trying to turn Intel back into an engineering-first company. "In areas where we are behind the competition, we need to take calculated risks to disrupt and leapfrog," Tan said in a note to Intel employees on Wednesday. "And in areas where our progress has been slower than expected, we need to find new ways to pick up the pace...."
Many take this culture reset to also mean significant cuts at Intel, which already shed about 15,000 jobs last year. "He is brave enough to adjust the workforce to the size needed for the business today," said Reed Hundt, a former Intel board member who has known Tan since the 1990s.
Think any of the stock buybacks had an impact? (Score:2)
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Ok? (Score:3, Insightful)
It's like the least efficient way to pay your employees. If you want to pay them, just pay them. If that was the goal, 90% of that $100 billion was wasted. They could have just paid their employees a few billion and then invested the rest in R&D.
The whole point of paying employees in stock is to avoid the cash hit. Spending $100 billion to juice the stock price to benefit employees is pants-on-head retarded.
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The money was NEVER going to be invested in extra R&D regardless of buybacks or employee share schemes, the extra would have gone to dividends for shareholders or on corporate buyouts/other company share investments if not used for buyback.
What a load of shit.
You have no idea what they could have spent that money on if they hadn't raided the corporate coffers to pay shareholders. How could you possibly know what opportunities and projects they said "no" to over the last 10 years because the decision makers opted to pay themselves rather than explore those opportunities and projects? It's not like that money was some restricted fund that is only useable for shareholder payoff or something - they could have built additional fabrication facili
Which workers? (Score:3)
I think the best one was there was a company that made a streaming video game box where the employees built the prod
Re:Which workers? (Score:5, Insightful)
Seriously, just stop spreading BS. Intel cannot be remotely compared to AOL, and even your fear-mongering of "stock options getting stolen" is largely BS. For the record, Intel switched from stock options a long time ago to RSUs or restricted stock units. Intel has been in existence for decades and has made steady profits for shareholders for decades. Intel's employees have become literal millionaires - and thousands of them. You're comparing this to some BS based on some cherry picked anecdotal data or some skewed comparison with startups.
Intel is not a startup. It has been rock solid for literally decades - spanning the career lifetime of many many employees. People have literally joined Intel fresh out of college and have retired out of Intel and have seen massive wealth creation from stock options they received. Not the paranoid BS you are writing.
Show me ONE example in Intel's 55+ years of history where Intel's lawyers have screwed Intel's employees out of stock options? Otherwise you're just farting in the wind.
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Are they feeling enriched when they get laid off due to budget cuts and liquidations of their foundries?
Are they feeling enriched when their options are underwater due to a sinking stock price, in spite of the $100B taken off the balance sheet and handed to shareholders?
Nonsense.
It's not just a worker base (Score:2)
That's why Intel is in the mess it's in now. Anything they tried to do that wasn't immediately balls to the walls profitable got thrown out. They started to compete with arm on low po
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You gave a couple of good reasons for buybacks, but the main driver is to neck up the share price so the stock options are worth more. Those stocks can then be sold and taxed at the capital gains rate instead of the C-level income tax rates.
From my standpoint having the stock go up isn't that useful because I can only sell the share of stock once. Dividends are a repeating income stream that is far more preferable even if the tax rate is higher. Then again, my marginal tax rate is 22%, not 36 something.
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Also: remember that the decision makers that approve the stock buybacks (C-suite, board members) are the biggest beneficiaries of their own decision making.
Yeah, that's not problematic at all.
Re: It's not just a worker base (Score:2)
How they are used is a different thing entirely. Business is war. Things don't work out for everyone. Shares and options are also tools.... and rewards depending on which side you are on. Are they evil or can they be manipulated ? Sure they can
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Stock buybacks aren't awful. They're just a company using excess cash to buy stock in a company, which they do all the time.
There is a certain situation where the execs have a lot of poorly thought out stock price-based incentives and can cheat the system a bit, primarily by borrowing to buy the company's own stock, but boards and investors aren't as dumb as people seem to think so that's not nearly as widespread as those people would assume.
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I've never heard a good explanation for why stock buy backs are so awful.
Okay how about instead of using that money to invest in things like capital, R&D, acquisitions, pay raises, more personnel, better benefits, etc. that money goes only to shareholders. Or in the alternative, use that buyback money to keep personnel instead of laying them off. One of the main reasons Apple moved off from Intel was Skylake QA was so bad, Apple was reporting more bugs than Intel. That does not help that Intel was cutting their R&D budgets by $300M and laying off 1200 personnel that year
Sell the fab biz! (Score:1)
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Once upon a time, Intel's vertical integration was a strength, not a weakness.
I'm not so sure that's the case any more, as they've fell behind in process and technology. I'm sure the $100B in stock buybacks sucking capital out of the business had nothing to do with that though... /s
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They're already engaging in a JV with TSMC? Whatever. They need to let go of their fab 10BN/year loser biz and focus on what they can much more easily turn profitable if they want to have a prayer of saving people's jobs, improving shareholder value, and focus their R&D in design and product... not manufacturing.
That only works in a fantasy world where TSMC is not fully booked year after year. Everyone else uses TSMC like Apple, AMD, NVidia, Qualcomm, ARM, etc. TSMC cannot make enough for the customers they have today much less take on all of Intel's manufacturing.
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not at all, if they approached TSMC I am sure they would come to an arrangement to build capacity for Intel with their much better processes,
TSMC probably has future immediate capacity already reserved for current customers. For example, Apple in the past has loaned TSMC hundreds of millions to build capacity years in advance for the right to be the first customer on that node. Right one of the major limitations of additional capacity for everyone is only one company (AMSL) in the world makes EUV lithography machines and they are booked years in advance. Even if TSMC could build many more fabs, they can't magically get ASML to conjure up EUV mac
Guessing ... (Score:4, Funny)
Intel's Stock Jumps 18.8% - But What's In Its Future?
Bonuses and golden parachutes for upper management?
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its shit
coprocessors are where that stuff already exists
they are only doing it to try to salvage binned parts because intels fab yields are shit, they still havent gotten their act together
an intel without fabs is a far less valuable company, but it would continue to exist.. an intel reborn as a rent-a-fab would go out of business overnight due to how shit the fabs are in comparison to the competition
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an intel without fabs is a far less valuable company, but it would continue to exist.. an intel reborn as a rent-a-fab would go out of business overnight due to how shit the fabs are in comparison to the competition
Back when Intel had the best fabs, they suggested they were open to making chips for other companies. Other companies talked to Intel about this possibility; no one worked with Intel because Intel wanted ridiculous amounts of money. These days no one wants to work with Intel because they're not the best (and they probably still want ridiculous amounts of money).
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Stop listening to P.R. fluff.
Intel was ever only 1 node ahead in lithography, however they also had a topology advantage with their novel 3D trigates for awhile. Chasing that same topology at smaller node sizes cost them 3 node shrinks vs the competition, but they were always destined to lose to the rent-a-fabs
I have a hunch (Score:2)
this whole break up Intel thing? this super feels like huge propaganda just to break up Intel and line pockets.
Intel is nowhere near as bad a shape as AMD was back in the day, so calling for them to be broken up Seems absolutely insane... it all just feels odd. Intel is fine. So they stumbled, big deal. there is plenty they can do going on from here.
people are making it seem like itâ(TM)s a bunch of knuckleheads and there is no future there. In truth, they have the groundwork already laid to do all kin
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they have a hefty portfolio that is diversified across hardware types, unlike other companies.... .
Which may yet to be the thing that cause their undoing... In our tech world, having a product in the 2nd place is almost as good as having nothing, as AMD learned from their bitter experience. Having one leading product is better than having a wide portfolio of ten non-leading products. Now that Intel will be forced to cut their expenses, what do you think will happen with their hefty and diverse portfolio?
Electronics limits will save Intel (Score:3)
How many atoms does it take to build a photonic gate?
How many atoms wide toms wide does an electronic or photonic trace need to be to be stable?
If we use the absolute minimum number of atoms, what will the failure rate be over what duration?
What is the minimum dimensions of a stable semiconducting lattice?
All semiconductor fabs in the world will reach these limits in the near future. All other advances will be related to more efficient stacking, cooling, use of newer materials, etc...
Unless we can reliably go subatomic we're at the end of the road. No companies (or countries) will have any advantage due to transistor, trace, inductor, insulator size. Packaging, yield, etc... Will be the deciding factors.
Within 5-10 years, Chinese companies will commoditize chip fabs and companies using western tech that cost billions will have to compete with companies all across the world able to deliver similar tech using fabs that cost a hundred million or less.
Don't forget, patents are royalties paid by companies who use other companies' tech. When Trump and Biden restricted that tech to China, they effectively blocked western companies from licensing their tech to China and blocked China from paying those patents. So, China can build all of these technologies relatively patent free.
In the short term, fabs make sense. But many of these fans won't be worth much once anyone can buy a leading edge fab for a hundredth of the price.
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Electronics limits will save Intel
Electronics limits killed Intel. Because they let TSMC reduce the Intel's lead, and as they were approaching on the horizon, Intel mishandled its manufacturing badly, and lost its edge to TSMC, will all the catastrophic consequences. Intel has a history of doing such missteps - like when they let AMD Athlons reach the 1GHz barrier first and lost the performance crown temporarily, but the current one might prove fatal.
Electronics limits won't save Intel. How will this happen? They might kill TSMC eventually,
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You're assuming we already have a nearly optimal design. I doubt this. I suspect an optimal design will use infinitesimal gates with a high failure rate, but duplicated sufficiently that we can recover the correct result. There may be only one or two atoms/gate. I suspect that the switching will be photonic with different atoms being set or reset by different frequencies.
I also suspect we're a long way from optimal. (Though just how you measure that is a tricky item. We're probably over 90% of the way
... if Intel can be fixed at all (Score:2)
... - if Intel can be fixed at all.
I thing the Chinese are doing this as we speak, by switching to RISK-V. They are not fixing Intel as a company, but they are surely fixing Intel as a monopolist.
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