Intel's Immiseration – The Chip Letter

The biggest problem I've seen with Intel is that they are "getting high on their own supply" and the whole tech press enables them with the sole exception of Charlie Demerjian.

They should pick a few random people out of the phone book and pay them handsomely for their advice, this way they might start to "see themselves as other see them". Most of all they need to recognize the phenomenon of "brand destruction" which has manifest in clueless campaigns such as "Ultrabooks", brands that should have been killed off years ago ("Celeron", sorry, low performance brands have a shelf life, there's a reason why Honda is still making the Civic but GM is not making the Chevette) and that they should write it in their bylaws that they are getting out of the GPU business permanently (they've made so many awful products it will take 15 years for people to get the idea that an Intel GPU adds value, instead it's this awful thing you have to turn off so that it won't screw up graphics in your web browser when you're using a Discrete GPU.) People might get their heads around the idea that an Intel CPU is a premium brand if it had a GPU chiplet from a reputable manufacturer like AMD or NVIDIA.

(Oddly when Intel has had a truly premium brand, as in SSDs, they've ignored it. Hardly anybody noticed the great 95% latency performance that of Intel SSDs because hardly anybody realizes that 95% latency is what you feel when your computer feels slow. Intel SSDs were one Intel product that I would seek out by name, at least until they sold their SSD division. Most people who've run a lot of Intel SSDs swear by them.)

The classic moat metaphor that the OP article and others use needs to be fleshed out to match Intel's predicament.

A moat protects a castle that adversaries want to take over. The presence of the castle defines what can and cannot be done with the surrounding landscape. But if the castle ceases to protect what people care about, or make meaningful additions to the environment, it becomes irrelevant and the presence of the moat makes no difference.

Intel's problem isn't that competitors want to storm the castle and achieve domination over the landscape that x86 controls. It's that the competition have built their own castles on the other side of the river, and a lot of the peasants are tilling the lands around Castle ARM and Chateau NVIDIA.

To put it another way, Intel thought the castle was "control of computing" and the moat was "leadership in x86" but irrelevance comes a little closer with each passing chip generation. It is fortunate for Intel that corraling an ecosystem into existence around the alternatives to x86 is an insanely difficult task, but it has been done with ARM, it has been done (albeit for a niche) with NVIDIA and it can be done again with whatever comes next.

We are coming up on 7 years since the first Ryzen chip. In 7 years AMD went from very behind to a little behind then on-par and finally now market leader. The fact Intel let this happen in such a short time frame is a bit mind boggling.

I feel like Intel has embarked upon a bunch of good ideas like SDI (https://www.intel.com/content/www/us/en/manufacturing/softwa...), IoT / Edison (https://ark.intel.com/content/www/us/en/ark/products/84572/i...), Silicon Photonics (https://www.intel.com/content/www/us/en/products/details/net...), and SDN (https://www.intc.com/news-events/press-releases/detail/640/i...).

But, they manage to fail to capitalize on any of these. What's wrong with them?

The "paradox of the x86" is simply the classic Innovator's Dilemma. In fact the history of the last 20 years against ARM could be a case study right out of the book.

Worse for Intel, AMD flubbed it time and time again, but now Intel is too weak to defend against a resurgent AMD.

Meanwhile they are cutting headcount deeply yet only now suspended the dividend. Madness!

They should take a page out of AMD's book and spin off fab. That new company can then be flooded with "strategic" government aid, and maybe the rest of intel can catch up (or not) but it would at least give the shareholders a better chance. Right now the combination is acting like two anchors tied together.

Intel's decline was obvious when I worked for them in 2010, their compensation package wasn't competitive with FANG and they consistently missed out or lost their better engineers.

The article quotes a mention of Intel getting into the foundry business - this seems like the most obvious good move to make, even if a little late, right?

Being able to operate a general fab for chips seems far more important now than the design of the chips, since design has been somewhat commoditized by ARM. Any big downside for this move?

They just slept for a decade... I had an overclocked i7 3970k (2012) and there was no need to update for 8 years. The perfomance increase was always marginal. I finally pulled the trigger when AVX happened.

I think referring to bankruptcy is excessive. Intel bulls might be going bankrupt, but the share price doesn't affect most companies unless their only reasonable way to raise money is through the stock market. The Intel bond yields are not too high yet.

The question then becomes, is this a low (trading around book value) with recovery in the future, or is it the beginning of a long, dark time, leading to an inability to raise money down the line?

When I left Intel, it was already going downhill and this was almost a decade back. Good employees will also see through and make a move and we all know how the negative spiral works.

FWIW, my previous comment https://news.ycombinator.com/item?id=27597749, more than 3 years back. It seems they have hit real rock bottom with no way up!

That is very questionable reporting right from the start:

- First graph: Yikes, that is going almost all the way to the bottom. Oh, the y-axis is fake.

- "Revenue for the quarter was a third lower than in the corresponding quarter three years ago." Wait, wasn't three years ago covid times, which lead to a giant boost in demand for laptops and pcs?

https://www.windowscentral.com/canalys-pc-market-2021-report

Maybe the article gets better after that, but that seems not okay.

I don't know, a lot of these explanations seem more like reading astrological maps in hindsight. Example:

> Intel passed on making the System on Chip for Apple’s new iPhone, Instead Apple used an Arm designed processor in an SoC built by Samsung. Too late Intel realised the mistake.

Mistake? AMD didn't even try to build SoCs to compete with ARM / Qualcomm / etc. They seem to be doing ok.

Now, you could say "Well, throwing 10^10 USD on trying to build an SoC was the mistake" - maybe, but then it's the opposite mistake than the article claims.

I'm buying PCs for myself for three decades and never chose Intel for my build (apart from the Pentium 133 in my first pc computer). Every time I considered it but alternative was just significantly cheaper option at power levels that interested me.

The only Intel's I got were in laptops where I was interested only about the price of a whole PC that interested me for other reasons than CPU.

Since Internet became a thing I choose CPU by downloading price and benchmark results, drawing price/power chart and choosing a point on a good edge of a point cloud that's not unreasonably expensive. It never happened to be Intel.

Intel's main problem is its people. Sorry to say.

The management culture there is insanely siloed and toxic, full of scar tissue from previous periods of political turmoil and a few relentless sociopaths who absolutely will not stop climbing just because it's obviously damaging to the company.

The engineering culture is full of secrets, moats, and the general sense that while making progress might be your job, stopping it is everyone's job. And there are always more of them than there are of you.

Perhaps most fatally, responsibility for decisionmaking is ultimately delegated to the process of decisionmaking rather than the people involved. The resulting proliferation of checkboxes and box checkers have elevated dysfunctions like "the perfect being the enemy of the good" and "none of us is as dumb as all of us" into de facto mottos for large parts of the company.

All of this happens against the backdrop of eroding mind and marketshare, a total lack of real product clarity, and a pervasive culture of bullshit that puffs politically convenient non-accomplishments into events worth of companywide applause while spinning, downplaying, or even hiding bad news of calamitous import.

Intel has vast reserves of talent but without deep (IMO, impossible) cultural changes it will inevitably fail under its own weight.

Is Intel poaching TSMC senior engineers in Arizona ( https://tinyurl.com/duvfkrm2 ) related? Cause, I would be really pissed off, if I we'd agreed to build a factory in foreign land out of desire to build good long-term relationships, and then, that country's strategically important corporation would decide take away our key engineers.

What's normalized in context of free opportunistic market can be seen as treacherous in context of politics and in the behaviors of strategically important enterprises of countries.

> Intel passed on making the System on Chip for Apple’s new iPhone

Is "passed on" the right term? I seem to remember reading that Intel quoted an extortionate price for making the chips, hence Apple passed on the offer.

I know what to do... a re-org!

I'll call it the Volkswagen Trap, or more general the ICE one-way street

> Intel couldn't break into smartphone SoCs with clear process leadership and the financial strength to invest heavily. Why should it be able to break into other competitive markets today when it no longer has those advantages?

Maybe because you're looking at it backwards? There must be some conspiracy among Softbank investors to portray everyone that doesn't pay for ARM licenses as a Muppet. Intel has no competitive advantage manufacturing licensed RISC CPUs when their desktop and server markets are hot, and even when x86 dies it will still be less attractive than owning fabs. With how bad the Cortex designs continue to be and how much leeway ARM gives licensees like Apple, even businesses like Qualcomm can't be bothered to take the ISA seriously. It feels disingenuous to say ARM is the panacea when designing ARM cores would have left Intel in an even worse position.

Look at Samsung; a company people on this site would describe as misery incarnate, but chances are they're typing their comment from a device using Samsung-fabbed silicon. They're not even that competitive either; they just offer a cheap alternative to TSMC that offers OEMs an economically-minded option for less dense components.

I called a while ago this on copium filled people, probably intel employees, about their 1.4 "process" and how they'd surpass TSMC, like buddy, come on, you guys got stuck for 10 years in 14nm, the manufacturing issues nowadays are a showing that Intel is incapable of competing with leading manufacturing companies in the world, they are just too error prone, their GPU business is failing hard because of significant delays, and I don't see a way out, and they are stuck on x86 when ARM is gaining ground.

They have become more of a political tool of a company to receive subsidies like Boeing than a real actual competitor to TSMC

Intel is simply a product of winner take all capitalism when economies of scale are allowed to reign completely. TSMC took all the business at low margin and became so massive that R&D costs were manageable.

Reading the comments here gives me the impression that Intel is indirectly responsible for the Taiwan conflict. If they would have done their job better they would be on TSMC level now and that inside USA.