Understanding Intel

One thing that I think this article misses is a way in which Intel explains it's business internally. The author kind of presents it as "You have CPU design companies, CPU design companies use companies like TSMC to fab the chips, but Intel does it in house and this is a competitive advantage". This is not how Intel explains it's business internally historically. Historically it's the other way around, Intel is a manufacturing company that happens to design CPUs to drive demand.

Also, I think that the thing about their chip design not being a relevant strategic advantage is wrong. The reason they lost the mobile market is to a large extent because their chip design was bad.

The other thing to mention of course is that strategically breaking the foundry off from the rest of the Intel business lines Intel up to basically dump their foundry the way AMD did. Strategically, Intel's foundry pays a massive cost (a) by canabilising the profit of the product group - you now have an internal allocation of costs/profits that don't functionally exist, and (b) competitors don't like to use your foundry, because you're likely to be their biggest competitor and have in the past used foundry customers as terrible acquisition targets.

Nice writeup overall, but I think it falls victim to the "trusting the number on the tin" trap. If you look purely at the names TSMC and Intel assigned to their process nodes in the 2010s, it'd be easy to look at the timeline and think "TSMC got smaller transistors than Intel, and so Intel fell behind. Ergo, the core architecture didn't matter."

In reality, TSMC only caught up to Intel's process in 2016. The playing field remained pretty even over the ensuing 4 years. The level playing field exposed Intel's stagnant core architecture, breaking their datacenter hegemony.

I think the author gets the big picture right - the process node sets the bar. But, I do wonder if the author glosses over architecture too easily. Sure, history tells us that it only matters when the "process playing field" is level. But, times are changing. There are fewer players than ever in the cutting-edge process arena, yet the cost of implementing those new processes marches forward at its usual exponential pace. Major world powers are more interested than ever in keeping their domestic fabs at the forefront of the field. In this environment, can anyone safely assume they'll be able to lean into a long-term process advantage?

Note to author, you don't need 6+ clumsy paragraphs explaining your Ohm's Law analogy. You can just explain you're using an analogy in a single sentence.

As an aside, I feel the analogy in the introduction undersells Ohm’s law. This is not a commonly understood (or explained) point below the college physics level, but it makes the already overstretched statement that “[t]he best ideal models are simple” almost painful: as far as linear laws go, Ohm’s law is a miracle. Sure, there are linear approximations to almost everything, but with a few exceptions they fall apart the moment you look them funny, especially the bulk ones (like Ohm’s law instead of like the diffusion equation). In short, you’re much more likely to encounter linear drag than Ohm’s law.

The best ideal models are simple. Unfortunately for ideal models, more often than not, data says no[1].

[1] https://tapas.io/episode/1722940

I think Intel stock is a good buy now to hold for 3-5 years now. I think the shakeup under way and engineering leadership will most likely bring it back. Not financial advise lol.

Will the need to build newer more advanced (and expensive) fabs continue forever? Will it ever get to the point where there's 'enough' transistors to not need to build more chips, but rather keep pumping out existing models?

My question hinges on moore's law eventually rounding off, but eventually 'more speed' doesn't equal business outcomes for companies using these chips right? Specifically for CPU-style chips, not GPUs*

The duopoly used to be the only game in town; now ARM is everywhere. In this situation, where Intel and AMD get to bloody each other over x86_64 price and performance, in a shrinking market, while carrying more historical/operational baggage than most of their non-x86 competitors, doesn’t seem like a bright future for either of them.

There’s a throwaway line about not being able to empirically test the business strategy model as applied to Intel, but that’s kind of a key point. Ohm’s Law can be empirically validated, so we know we’re not vastly oversimplifying in modeling because it stands up under empirical test. Even if you thought this kind of analogization between the physical and human worlds was a good idea (and I very much don’t think that), the lack of sanity checking against empirical reality on the business strategy side stretches the analogy to a breaking point.

Look, the post is fine as far as it goes. If you want to tell a simple story, that’s fine. The problems start when you try to understand what’s actually happening in the real, chaotic world (like why Intel had a bad second quarter or why it laid off a bunch of people) with reference only to your too simple model.