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Intel to Receive $8.5B in Grants to Build Chip Plants

nytimes.com

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Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#331

Post by beauzero »

kurthr wrote: post #260
faktory wrote: post #256

Earlier quoted context omitted.

While I agree with you I would say that supply chain is upstream of chip-production. The mining industry needed those money not Intel. It's the mining industry that's been neglected the last 20 years or so. It will take at least 10 years to get anything resembling chinese supply chain in place.

The chip supply chain is a lot shorter and more concentrated than the mining supply chain. If you're thinking of "rare earth" metals in particular, it's probably better to focus on the refining rather than digging out of the ground. Between South America, West Africa, and Australia there are lots of mines for most of the metals, but only refining in China (because it has been highly subsidized by both monetary and re…

Refining is dirty and dangerous so it has been pushed out. Used to work for a Canadian gold mine in Montana in the mid 90's. Most of the friends I graduated with went overseas for new mines or were Environmental engineers focused on cleaning up messes from the late 1800's early 1900's.

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#332

Post by rhelz »

markhahn wrote: post #306
rhelz wrote: post #299

Earlier quoted context omitted.

> Intel at the time wasn't interested in fabing ARM chips, and the rest is history. Fun fact, in the late 90's, Intel was the biggest manufacturer of ARM chips. I was there at the time, and I wrote lots of software to aid in their design. What happened to Intel was twofold: The first problem was that Robert Noyce, Andy Grove, And Gordon Moore died. Each one was a once-in-century intellect, and it took Intel a while t…

It's also interesting that Intel made some specific bad technical choices. (ie, not investing in EUV, assuming SAQP would work forever, ignoring the consequences of everything being power-limited...) This kind of decision is hard, because it's a technical-economic tradeoff, and the latter is more voodoo than math. And that's not even addressing whether you get surprised by things like the LLM boom...

You say:

> It's also interesting that Intel made some specific bad technical choices.

That's like saying Saudi Arabia made some bad policy decisions. If you are in Saudi Arabia, nothing has a higher return on investment than petroleum. If you invest in anything else, you are leaving money---A LOT of money--on the table.

The result is that capital is drained out of any other business, and the country gets so dependent on just one industry that when the oil runs out, it is a major crisis.

Put yourself in the place of an Intel CEO. You've just invested $4 Billion in a fab. People will by absolutely every single x86 chip that fab will make ~$40 billion over the course of the technology node's life time.

Or, you could make chips for the iPhone, which maybe, perhaps would be a hit? And even if Apple's wildest projections come true, you'll make $8 billion instead of $40 billion, because Apple is not going to pay for Intel to pocket a 90% profit margin, when it could just go to TSMC.

So you are a CEO, and wondering how on the next earnings call you are going to justify turning an asset worth $40 Billion into one worth $8 billion....

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#333

Post by BeetleB »

Aloisius wrote: post #298
BeetleB wrote: post #147

Earlier quoted context omitted.

You start a business and have partners who have bankrolled you. They own a percentage of the company. At some point, you want to buy out their share. But the government just banned it. You can only dilute your share, never increase your ownership stake. Does that make sense? Because that's what banning stock buybacks will achieve. > Companies use stock buybacks to give away massive amounts of capital. It's one use of…

> Companies also do buybacks to get a greater ownership stake. Greater ownership stake in what? Companies, at least in the US, can't own themselves. Stock buybacks merely reduce outstanding shares effectively increasing the percentage of the company owned remaining shareholders.

> Companies, at least in the US, can't own themselves.

These are technicalities: The point was to prevent things like hostile takeovers:

https://www.sciencedirect.com/topics/economics-econometrics-...

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#334

Post by rhelz »

HarHarVeryFunny wrote: post #308
rhelz wrote: post #299

Earlier quoted context omitted.

> Intel at the time wasn't interested in fabing ARM chips, and the rest is history. Fun fact, in the late 90's, Intel was the biggest manufacturer of ARM chips. I was there at the time, and I wrote lots of software to aid in their design. What happened to Intel was twofold: The first problem was that Robert Noyce, Andy Grove, And Gordon Moore died. Each one was a once-in-century intellect, and it took Intel a while t…

It seems that what happened to Intel was a lot worse than just missing Andy Grove's paranoia... - They missed the mobile market - They missed the gaming market - They missed the AI/ML market - They got multiple generations behind TSMC and Samsung in the fab business - They lost a whole bunch of market share to AMD, including datacenter The NY Times article is paywalled, so I can't read it, but I have to wonder what k…

You are forgetting two things:

1. All those happened after Andy Grove's time.

2. And when Andy Grove was at the helm, Intel did not miss opportunities like that. E.g. when Intel's memory chip business started losing market share to the Japanese (who were at the time a low-wage country), they were able to transition to CPUs in time.

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#335

Post by rhelz »

chiefalchemist wrote: post #323
HarHarVeryFunny wrote: post #308

Earlier quoted context omitted.

It seems that what happened to Intel was a lot worse than just missing Andy Grove's paranoia... - They missed the mobile market - They missed the gaming market - They missed the AI/ML market - They got multiple generations behind TSMC and Samsung in the fab business - They lost a whole bunch of market share to AMD, including datacenter The NY Times article is paywalled, so I can't read it, but I have to wonder what k…

When you connect those dots this feels more like a pseudo bailout in disguise.

Oh, its not a pseudo bailout. It's a bailout full stop. Doesn't mean its a bad idea.

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#336

Post by bgnn »

mywittyname wrote: post #187
FredPret wrote: post #140

Earlier quoted context omitted.

Not saying INTC isn't valuable - just saying they seem to have missed the boat in a big way and changes are in order. The US does of course need on-shore chip foundries for strategic reasons.

It was not obvious to Intel leadership that the future of manufacturing was to become a contracted fabricator of the design of other companies. Vertical integration and total control over both design and manufacture of chips was the obvious (and, until recently) successful path. What board would keep an Intel CEO that presented the idea of shifting the primary focus of the company to manufacturing the designs of othe…

It's TSMC. Their rise is waaay before Apple or ARM. Plug and play fab model made getting into semiconductor design as a start-up possible. Broadcom, Qualcomm, Nvidia, Conexant etc all used TSMC in 90s, way before smart phones and ARM-mania. Intel saw this coming but they were ahead and they didn't worry about it. At the end they got stuck at getting bad yield from their FinFETs, which is invented by Intel, while TSMC and Samsung moved forward. Iphones would have been using Intel processors if Intel had a competing product to be honest. They screwed that up too. TSMC and Samsung just had the right mindset and focus, and a lot of smart and hardworking people.

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#337

Post by unyttigfjelltol »

nwiswell wrote: post #199
unyttigfjelltol wrote: post #52

Earlier quoted context omitted.

The US is spinning $1T new public debt every 100 days and there's no credible path to return to a sustainable trajectory. Plus, the poster child for federal corporate welfare-- Boeing-- has not done so well with that largesse, Intel is a rather sad candidate to carry that torch forward.[1] [1] https://www.nytimes.com/2020/09/04/opinion/pefco-export-impo...

> The US is spinning $1T new public debt every 100 days and there's no credible path to return to a sustainable trajectory. How are you calculating this? The full-year deficit is running at less than $1T... You aren't counting it when Treasury rolls maturing bonds over into new debt, are you? That's normal and irrelevant. https://fiscaldata.treasury.gov/americas-finance-guide/natio... There's a few things worth menti…

Your link indicates a $1.7T deficit for FY23 which is not "less than $1T". That's roughly twice the figure you offer as " sustainable" ($700B).

It's been widely reported [1] that the US debt reached $32T in June 2023, $33T in Sept 2023, $34T January 2024, achieving those milestones roughly every 100 days. The projections indicate an exponential increase, which doesn't help the case for sustainability.

Sovereign debt and fiat ultimately are confidence games. Being unable to offer credible long-term math is a problem.

[1] https://www.cnbc.com/2024/03/01/the-us-national-debt-is-risi...

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#338

Post by s1artibartfast »

gamepsys wrote: post #255
s1artibartfast wrote: post #234

Earlier quoted context omitted.

I'm not sure if this was your intent, but it sounds like you're describing the world as it actually works. Companies execute stock BuyBacks when they don't have better internal Investments, and that's a good thing! Intel doesn't care about more us-based Fabs, nor are they high yield. This is why the US government has to pay them if the US government wants those things to exist.

> I'm not sure if this was your intent, but it sounds like you're describing the world as it actually works. This was in fact my intent. I would just like to highlight there are alternative ways besides grants to encourage Intel to open US based manufacturing. Ultimately it's the tax payer that is funding this grant, so it's important they feel like they are getting a good deal. I think it's also telling that Intel d…

I'm curious what you think it is telling?

What are the alternative incentives?

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#339

Post by s1artibartfast »

adventured wrote: post #284
s1artibartfast wrote: post #210

Earlier quoted context omitted.

Global trade as a percentage of global GDP peaked somewhere around 2011 and has been steadily declining. If you look at the US in particular the relative value of imports and exports is down about 30% from the peak 10 years ago. That's a big change for such a short duration

And simultaneously the US has been ploughing massive amounts of capital into domestic manufacturing construction. Money that would have previously been invested into China or elsewhere, is now staying domestic (with a lot of capital also going to eg Mexico).

What do you mean when you say that the money would have previously been invested into China?

Was the US federal government previously funding fab development in China?

That is to say, it seams like this investment is to meet a very specific need, and wouldn't have happened otherwise. Similarly those paying aren't the same either.

Re: Intel to Receive $8.5B in Grants to Build Chip Plants

#340

Post by yard2010 »

orangecat wrote: post #272
bluSCALE4 wrote: post #28

Glad to see so many people pissed off. Nothing will change but it's good to see so much information and callouts of corporate welfare.

Yes this is corporate welfare, and sadly it's probably necessary. We need to be able and willing to blow the TSMC fabs if China invades Taiwan, and being able to credibly make that threat decreases the chance that they will invade.

China has their plan up to 2049. I doubt that something that other nations would do change it.
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