Intel is in more danger than its profits suggest and should spin off its manufacturing business unless the US can subsidize it, ideally with purchase guarantees
Ben Thompson's argument that Intel should spin off its foundry business unless Washington backs US-made chips with purchase guarantees has aged into the central question of Intel's strategy. When Intel first weighed outsourcing manufacturing in 2020, Bloomberg framed it as the end of an era of US dominance in semiconductors; since then the board has been weighing scaling back factories, selling subsidiaries, or a full split, and Intel's own $7.86B subsidy came with strings attached.
First-order effects
Intel faces a binary on its 14A process: secure external foundry customers or exit cutting-edge manufacturing entirely, ending its role as steward of Moore's Law.
Any separation of Intel Foundry is constrained by the subsidy filing's requirement that Intel retain at least 50.1% ownership if the unit becomes a new privately held entity.
Second-order effects
The Nvidia–Intel partnership's refusal to address who manufactures what reinforces the spin-off case, because a design company pairing with Intel while dodging the foundry question signals customers won't commit to Intel fabs without structural change.
Without purchase guarantees, Intel's fabs compete for orders against TSMC-class incumbents with no committed demand, pushing the board toward the scale-back and divestiture options Bloomberg outlined rather than a standalone foundry.
Third-order effects
If the pattern holds, US leading-edge chipmaking survives only as a policy-subsidized utility — government money plus guaranteed demand replacing the integrated-model economics that once made Intel self-funding.
A spun-off Intel Foundry would mark the formal end of the merchant-IDM era Bloomberg flagged in 2020, splitting the industry into design firms and sovereignly underwritten contract manufacturers.
The trend: US semiconductor policy is converging on state-guaranteed demand for domestic leading-edge chips as the price of keeping Intel in the foundry business at all.
@handleym99 @jonmasters Depends on the depths of the PTSD, unlike Apple where it was one issue, MacOS, exacerbated by new processor quest, in Intel's you can see the roots in the 8080, i432, infighting i860 vs. i960, Pentium II panic and, finally, Itanium. That's one long list of…
@stvngrdy @jonmasters @getwired @OVanhoja @lkruijsw @MrMilli79 @stratechery The ecomics do not make any sense without keeping the thing together.Those guys need to put their nose into the Intel financial reports before saying such stupid things. On the top of this, splitting inte…
@jonmasters As I've been saying over and over again Intel suffers from PTSD which has been piling up over several failed processors and causes, in effect, internal panic towards any decision which deviates from x86 which is the only processor which ever made them money.
@stvngrdy @jonmasters @getwired @OVanhoja @lkruijsw @MrMilli79 @stratechery @benthompson How is the fabless strategy working for AMD? Even with good product, they are failing to capture market shares, because they are under prioritized compare to apple or nVidia who are ok to let…
@jonmasters @FPiednoel @getwired @OVanhoja @lkruijsw @MrMilli79 Today's @stratechery article makes a good case for Intel to split up into a chip design company, and a foundry that makes chips for everyone.
@cynicalsecurity @jonmasters There are solutions (or there were...) Apple had a similar sort of PTSD towards OS's after the debacles of Copland+Taligent+OpenDoc all failing together. Fixed by bringing in an outside OS team to reorient and provide morale. A SMART Intel would have …
@stvngrdy @jonmasters @getwired @OVanhoja @lkruijsw @MrMilli79 @stratechery That is one of the dumbest analysis of the last year. They do not understand the inner functioning of Chipzilla.
Typically thoughtful article that begins by admitting error and ends with invocation of the too neglected procurement power of government to pull innovation: Intel Problems https://stratechery.com/...
Intel Problems Intel is in much more danger than its profits suggest; the problems are a long time in the making, and the solution is to split up the company. https://stratechery.com/...