They're throwing money away. Actually, I would be glad if this money was entirely used for research, because Intel and other US companies badly need it. But they will waste it on plants that are already outdated in the best case scenario. The worst case scenario is Intel giving this money to investors directly or indirectly in the form of stock buy backs. And nothing of this would be necessary if Intel had invested their profits in research, instead of sending money to investors to keep the stock price high and, consequently, their executive compensation.
What do you mean by outdated? Companies are already designing chips for their 1.8nm process, in addition to Intel's mid-late 2025 chips switched back to Intel fabs, for 6 months from now. TSMC is still working on their 2nm process.
The only players in that market are Samsung, TSMC, and Intel. It'd be crazy to let one of the three global EUV lithography manufacturers disappear because their R&D costs have lowered net revenue temporarily.
People act like Intel has nothing to offer, when they're one of a low single-digits number of companies who are even capable of making modern microchips. Even China won't likely crack EUV for the next 5 years. Throwing all of the money on pure R&D would be madness. And the chips act is investing in a major R&D facility in upstate NY for next gen stuff anyway.
Scrapping their last gen process to focus on 1.8nm was a long term play, and all signs point out to it working out well.
Not to mention, it'll be nice to have at least this one US company making modern microchips, in case the many fabless US microchip companies ever need to switch to domestic production, due to economic or geopolitical reasons that are clearly on the short term horizon.
Intel had to agree not to buy back stock for 5 years when they accepted this money. They went from 50 to a low of around 20 during a huge bull run in semis too so whatever they are guilty of I don’t think they can be accused of “keeping the stock price high”. I believe they have smart people doing research but extremely poor incentives and siloing so no engineers can make any headway. I don’t think Gelsinger has gone hard enough in correcting this so maybe fresh leadership would help.
So whatever their problems are, throwing more money at R&D is unlikely to solve them.
Also, Intel has committed to not doing stock buybacks and has stopped the dividends completely. They may resume at some point, but it's unlikely to be soon.
Intel doesn't have a problem with R&D at the moment. At least in terms of direction they are doing great. ( May be not GPU but that is another story ) And as others have said they cant buy back stock with this money grant.
They need the money if they want to do foundry business competing against TSMC. And I would argue even $8B is too little. Latest Leading edge Giga Foundry in Taiwan is roughly $20B. You will probably need at least $30B in US.
Very unfortunate Intel is still hanging on to its GPU unit which is burning money. I guess part of the AI hype meant Pat Gelsinger cant let that part go.
Their consumer GPU segment def does look a bit shaky at the moment. The Arc gen 2 discrete GPUs will only compete current-gen to current-gen with mid tier Nvidia and AMD chips. However, gen 3 is on an accelerated release schedule, and will likely be arriving late next year (supposedly, with capabilities that will bring it closer to the top tier chips).
I think where Intel really shows promise for GPUs and accelerators is in the price-point area.
The Gaudi 3 accelerators that entered general availability two months ago manage to outdo Nvidia's hopper chips when comparing precision-to-precision, and retail for half as much. The overall success of that line really depends on whether work to overcome the lock in of CUDA will pan out sufficiently. Personally, I think it will, as AMD, Google, Amazon, and others are all making (and successfully rolling out) chips which depend on breaking the industry out of the walled garden of CUDA via direct integration with the most common higher level tools used by ML engineers.
Given the availability bottleneck for Blackwell, there is a growing market for alternatives.
And, again, half the price of Hopper chips, for better performance, for a product that's already on the market, is a pretty attractive proposition that will certainly see more orgs coming through the door. Might need to put one of these $14k 128GB intel hopper-peers in my workstation...
> And as others have said they cant buy back stock with this money grant.
Money is fungible though. If I gave you $1000 and stipulated that you can only spend it on your mortgage, and you do indeed do that, you still have an extra $1000 you normally wouldn't have at the end of the month. Now let's say you decide to buy a TV with your extra $1000. Did the $1000 I give you go towards paying your mortgage or buying a TV, which is something I explicitly said you couldn't do?
Now scale that scenario up to Intel's case. Methinks they'll build a fab AND do a stock buyback. Under normal circumstances, they'd have to pick one of those things to do.
Much like with Boeing, they are out of options. the US has no other chipmaker but Intel. China has about half a dozen.
the 8bn is more of a pointy stick at this stage to try and get your 56 year old failing chipmaker to do something besides profiteering (buybacks layoffs and mergers.) Its a wasted effort. short of nationalizing Intel, the US is going to lose a crown jewel of its technological advantage solely due to mismanagement.
The problem is that if what they say were true it would be hard to believe that Gelsinger, the main supporter of 18A as the savior of the company, would have accepted to be retired before enjoying the success of his efforts.
The forced retirement can be explained only in two ways, either the 18A is projected to be a failure and USA has lost any chances to become competitive with TSMC, or the retirement has been imposed by political forces that are completely incompetent and which do not understand anything about the semiconductor industry, and also in this case it seems likely that USA will fail to become great again in semiconductor IC manufacturing.
That's actually pretty cool. Chip companies can't complain that Chinese companies are ramping up faster just because of their subsidies anymore. This should level the playing field, hopefully?
>And will likely disappear on January because anything one party does must be undone.
I completely understand the sentiment and I believe your read of the ideological landscape is probably spot on. But in practical terms, how likely is it that such a thing could actually happen? Once the grants are locked in I think it might be really difficult to attempt to claw back money that's been allocated. The same things going on with the infrastructure bill and the inflation reduction act, namely that I think there's a race against time to try to get these funds out the door before the next Congress could take them away.
So, despite the best efforts of the next congress, we might nevertheless stay at the frontier of things like chip manufacturing and next gen infrastructure in it's various forms.
I'd think any such flip-flopping would have to be limited to whether to issue additional grants, rather than trying to cancel ones that were already issued?
> And will likely disappear on January because anything one party does must be undone
Trade policy, especially towards China, has been quite bipartisan the past two Administrations so your pessimism isn’t entirely warranted. Trump doesn’t like the CHIPS Act but it’s unclear how serious any opposition will be once they get in and how much discretion they even have given the circumstances.
The x86 companies (and/intel) do better with competition.
I’ve had my last laptops (work/home) with amd and it’s much better battery life and performance then my (9th? Gen) intel notebook with nvidia (the battery life was Terrible but it could game). I think Apple puts a lot of pressure on too, which helps.
I guess intels “ultra” notebook parts are better.
There is some x86 advisory group now to keep the instruction set in sync between the 2 companies. Linux is involved and is Linus so it should be at least a little fun.
I ended up with a 3090FE card, decided to build the first tower I’ve built in years. Opted for and 7800x3d, didn’t realize what a dope chip it was. It was just a better price point than intel - I think 2022 or 2023
When the company is the only company that's building a product that's needed domestically and internationally and is essential in the modern age and their biggest competitor is in a country that you need to protect from another world superpower I'd say exceptions are in order
Or you force them to license their patents and I.P. to alternative suppliers on reasonable terms, invest money in all of the players in that market, and the best players grab more market. If building a fab, it should probably not be managed by Intel but could pay them for their tech. Intel should get much less of the money since their management is the problem.
I’ll note that the only reason there even is a good market for x86 is that Intel was forced to license patents to AMD. Centaur and Transmeta had their innovations, too. More competition, esp building on proven fabs and I.P., would be the best route for the x86 ecosystem.
Likewise, IBM has competing suppliers in POWER markets. Apple bought the power-efficient one. ARM’s model is pro-competition with the huge number of good products showing what my Intel proposal might accomplish.
The biggest difference from 2023 Q3 is a massive loss in "Cash flows provided by (used for) operating activities". Too many pizza parties I guess. This feels more like creative accounting to justify the layoffs and other cut backs.
People are comparing intel vs AMD here, but in this context -- AMD doesn't actually make the chips do they? They've designed the chips and other companies such as TSMC make the chips.
A chip plant / "fab" is the thing that makes the chips, and the point of the chips act is to bring some of that manufacturing back to north america in case we end up in or watching a big fat war in asia that may impact TSMC or samsung's capacity to make chips.
Efficient is a synonym of "brittle" and some important things are better if they're inefficient and robust.
I’m a fairly traditional libertarian but I’ve softened a bit on my definition of “essential industries”. If other countries make essential goods we need, and they become hostile to us or get conquered politically by those hostile to us, in a war we would be in a lot of trouble. We saw a bit of this during COVID when we couldn’t even make basic products.
No matter the subsidies they will still lose if their products suck. But we need some minimum ability to build things here if it all goes to hell.
Yes, it's something that all governments should be thinking about. Globalisation is amazing for delivering the greatest production efficiencies, but it can easily break down in times of pandemic or war.
Wonder what the economic benefit of giving away 20K median priced homes would be for the economy versus giving Intel's stockholders an incentive to build the bare minimum in the US.
Probably goes in the same category as other defense spending. Short term plan is to defend Taiwan and hope nothing goes down. Long term is to ensure that we won’t have to in the future.
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The only players in that market are Samsung, TSMC, and Intel. It'd be crazy to let one of the three global EUV lithography manufacturers disappear because their R&D costs have lowered net revenue temporarily.
People act like Intel has nothing to offer, when they're one of a low single-digits number of companies who are even capable of making modern microchips. Even China won't likely crack EUV for the next 5 years. Throwing all of the money on pure R&D would be madness. And the chips act is investing in a major R&D facility in upstate NY for next gen stuff anyway.
Scrapping their last gen process to focus on 1.8nm was a long term play, and all signs point out to it working out well.
Not to mention, it'll be nice to have at least this one US company making modern microchips, in case the many fabless US microchip companies ever need to switch to domestic production, due to economic or geopolitical reasons that are clearly on the short term horizon.
Intel has always had great "signs" but fell completely apart once the time came for execution.
Which is to say, I'll believe it when I see it. I say that as an Intel fanboi, too.
If Trump/DOGE comes in and slashes Intel funding one way or another, even better.
Sure, but have you heard of creative accounting? That's how they manage to move money from one place to another without breaking any contracts...
https://www.intc.com/financial-info/income-statement
So whatever their problems are, throwing more money at R&D is unlikely to solve them.
Also, Intel has committed to not doing stock buybacks and has stopped the dividends completely. They may resume at some point, but it's unlikely to be soon.
They need the money if they want to do foundry business competing against TSMC. And I would argue even $8B is too little. Latest Leading edge Giga Foundry in Taiwan is roughly $20B. You will probably need at least $30B in US.
Very unfortunate Intel is still hanging on to its GPU unit which is burning money. I guess part of the AI hype meant Pat Gelsinger cant let that part go.
I think where Intel really shows promise for GPUs and accelerators is in the price-point area.
The Gaudi 3 accelerators that entered general availability two months ago manage to outdo Nvidia's hopper chips when comparing precision-to-precision, and retail for half as much. The overall success of that line really depends on whether work to overcome the lock in of CUDA will pan out sufficiently. Personally, I think it will, as AMD, Google, Amazon, and others are all making (and successfully rolling out) chips which depend on breaking the industry out of the walled garden of CUDA via direct integration with the most common higher level tools used by ML engineers.
Given the availability bottleneck for Blackwell, there is a growing market for alternatives.
And, again, half the price of Hopper chips, for better performance, for a product that's already on the market, is a pretty attractive proposition that will certainly see more orgs coming through the door. Might need to put one of these $14k 128GB intel hopper-peers in my workstation...
Money is fungible though. If I gave you $1000 and stipulated that you can only spend it on your mortgage, and you do indeed do that, you still have an extra $1000 you normally wouldn't have at the end of the month. Now let's say you decide to buy a TV with your extra $1000. Did the $1000 I give you go towards paying your mortgage or buying a TV, which is something I explicitly said you couldn't do?
Now scale that scenario up to Intel's case. Methinks they'll build a fab AND do a stock buyback. Under normal circumstances, they'd have to pick one of those things to do.
the 8bn is more of a pointy stick at this stage to try and get your 56 year old failing chipmaker to do something besides profiteering (buybacks layoffs and mergers.) Its a wasted effort. short of nationalizing Intel, the US is going to lose a crown jewel of its technological advantage solely due to mismanagement.
The only players in the space globally are TSMC, Intel, and Samsung.
The US has many fabs that are on par with Chinese fabs.
They say they are on track to delivery 18A - leading node in next 7 months
The forced retirement can be explained only in two ways, either the 18A is projected to be a failure and USA has lost any chances to become competitive with TSMC, or the retirement has been imposed by political forces that are completely incompetent and which do not understand anything about the semiconductor industry, and also in this case it seems likely that USA will fail to become great again in semiconductor IC manufacturing.
I completely understand the sentiment and I believe your read of the ideological landscape is probably spot on. But in practical terms, how likely is it that such a thing could actually happen? Once the grants are locked in I think it might be really difficult to attempt to claw back money that's been allocated. The same things going on with the infrastructure bill and the inflation reduction act, namely that I think there's a race against time to try to get these funds out the door before the next Congress could take them away.
So, despite the best efforts of the next congress, we might nevertheless stay at the frontier of things like chip manufacturing and next gen infrastructure in it's various forms.
Trade policy, especially towards China, has been quite bipartisan the past two Administrations so your pessimism isn’t entirely warranted. Trump doesn’t like the CHIPS Act but it’s unclear how serious any opposition will be once they get in and how much discretion they even have given the circumstances.
Dead Comment
I’ve had my last laptops (work/home) with amd and it’s much better battery life and performance then my (9th? Gen) intel notebook with nvidia (the battery life was Terrible but it could game). I think Apple puts a lot of pressure on too, which helps.
I guess intels “ultra” notebook parts are better.
There is some x86 advisory group now to keep the instruction set in sync between the 2 companies. Linux is involved and is Linus so it should be at least a little fun.
It's well known that an integrated GPU will give you a better battery life compared to a discreet GPU.
At barely any power consumption whatsoever. (Compared to Intel CPUs at the time of release).
Deleted Comment
I’ll note that the only reason there even is a good market for x86 is that Intel was forced to license patents to AMD. Centaur and Transmeta had their innovations, too. More competition, esp building on proven fabs and I.P., would be the best route for the x86 ecosystem.
Likewise, IBM has competing suppliers in POWER markets. Apple bought the power-efficient one. ARM’s model is pro-competition with the huge number of good products showing what my Intel proposal might accomplish.
Abstract national security FUD is a boon for mega-corp welfare in the US. Boeing is the model star to follow I guess.
The biggest difference from 2023 Q3 is a massive loss in "Cash flows provided by (used for) operating activities". Too many pizza parties I guess. This feels more like creative accounting to justify the layoffs and other cut backs.
A chip plant / "fab" is the thing that makes the chips, and the point of the chips act is to bring some of that manufacturing back to north america in case we end up in or watching a big fat war in asia that may impact TSMC or samsung's capacity to make chips.
Efficient is a synonym of "brittle" and some important things are better if they're inefficient and robust.
No matter the subsidies they will still lose if their products suck. But we need some minimum ability to build things here if it all goes to hell.