I’ll be honest: there is a very good chance this won’t work .... At the same time, the China concerns are real, Intel Foundry needs a guarantee of existence to even court customers, and there really is no coming back from an exit. There won’t be a startup to fill Intel’s place. The U.S. will be completely dependent on foreign companies for the most important products on earth, and while everything may seem fine for the next five, ten, or even fifteen years, the seeds of that failure will eventually sprout, just like those 2007 seeds sprouted for Intel over the last couple of years. The only difference is that the repercussions of this failure will be catastrophic not for the U.S.’s leading semiconductor company, but for the U.S. itself.
Very well argued. It's such a stunning dereliction the US let things get to this point. We were doing the "pivot to Asia" over a decade ago but no one thought to find TSMC on a map and ask whether Intel was driving itself into the dirt? "For want of a nail the kingdom was lost" but in this case the nail is like your entire metallurgical industry outsourced to the territory you plan on fighting over.
If I may add my view as a formerly high-achieving semiconductor worker that Intel would benefit greatly from having right now, a lot of us pivoted to software and machine learning to earn more money. My first 2 years as a software engineer earned me more RSUs than a decade in semiconductors. Semiconductors is not prestigious work in the U.S., despite the strategic importance. By contrast, it is highly respected and relatively well remunerated in the countries doing well in it.
From this lens, the silver lining of the software layoffs going on may be to stem the bleeding of semiconductor workers to the field. If Intel were really smart, they’d be hiring more right now the people they couldn’t get or retain 3-5 years ago
We have developed an economy oriented around selling one another websites, and we are only belatedly noticing that none of our enemies seem to have followed.
It’s ridiculous. It’s so easy to find VC funding for software but heaven forbid you try and make agricultural innovations. Biotech is slightly better but still a struggle. Hardware only counts right now if it’s defense tech but even then people would rather have another SaaS.
I'd say that VC funding may be an inappropriate tool for that. VCs want you to either grow fast, or fail fast. Not necessarily to bring profit fast, but to visibly capture the market (see Uber). Move fast, break things, rework things every week, trigger that wave of sign-ups.
Agriculture is much slower, every iteration may be is a year, or (in tropical climates) half a year. Microelectronics is comparably slow, and even more unforgiving about making mistakes. Building robots does not scale ls easily as producing chips, let alone software.
These areas need a different model of investment, with a longer horizon, slower growth, less influence of fads, better understanding of fundamentals. In some areas, DARPA provided such investment, with a good rate of success.
What country are you thinking when you say that? It doesn't sound like the US. Through the zero-interest rate era they've been absurdly tolerant of companies offering no- to little- returns on investment. They've basically been operating investor-led charities.
It is still unsettling seeing Uber turning a profit, but even with that they're not turning a net profit over the lifetime of the company yet and won't be for a few years. Hopefully no-one pops up to compete with them now the sector has profits in it.
Their sentiment and their phrasing ("it's almost as if... ") is a Reddit-level meme I see all the time on that site that's then blindly upvoted, so I don't think they're thinking of any country besides the US in particular when they say that.
It seems really unlikely so many elements of American society decided to prioritize returns simultaneously… but more like those who didn’t… eventually couldn’t compete anymore and left the market.
Leaving behind only those completely focused on returns.
I'd reframe that slightly. There is a vast foundation of stable, optimized businesses that are in commoditized/low-growth ares. They function as the underpinnings of the American economy.
When turning the spotlight to capital that is seeking returns, it is true that these areas may be mediocre places to deploy fresh capital, but it doesn't mean that these players aren't competing, and they will probably be cranking out sheet metal and port cargo logistics optimization well after 90% of the AI startups fold.
The caveat is of course Private Equity, which is about 10 trillion in assets. They can derive high returns from these areas, but it requires leverage.
Not only leverage, but also destabilizing those optimized businesses to harvest the capital assets from their balance sheets to pay for the leverage, while destroying the underlying business.
PE is arguably much worse than VC. VC's business model is well understood and by taking VC funding, you are committing to their expected returns.
PE is, usually, unsolicited and is designed to exploit what appears to be a "lazy" balance sheet, but which is actually a stable business producing output and providing a reasonable ROI.
PE played a part in manufacturing leaving the US. Often the buyouts were of sick companies, and it was just the optimum way to monetize their death. But without PE not all of them wouldnhave eventually died, and it would have given policy makers more time to react to what was happening.
It’s just natural that nobody wanted to pay for outdated machines and tooling in developed countries.
Labor costs, permits, fees, etc., means that buying used just doesn’t make sense unless it’s almost free.
Whereas developing countries were willing to pay a lot more, sometimes as much as 50 cents on the dollar compared to brand new equipment and they would send a team to rip it out too.
I’ve heard that applied to almost everything too heavy to move by forklift during the 80s, 90s, and 2000s.
They're very much yin and yang. PE's operating model is to take businesses that are operating inefficiently, squeeze all the inefficiencies out, sell off assets that would be more productive under other management, and basically strip the company bare. If it kills the company, that creates fertile ground for new startups funded by VC.
Think of PE as the decomposers of capitalism, and VC as its seeds. Most people don't like to think of it that way because they don't like to be reminded that death is a part of life. But if you view capitalism as a living ecosystem and your role within capitalism as someone to accelerate growth and then accelerate death so that new growth can take its place, it all makes sense. And you can probably profit pretty handsomely from it, because most people don't view capitalism like that and instead seek stability in the dying parts.
In the US there have been a few, i.e., apparently less than 20, universities with an applied math program up to date in and teaching optimization.
Sooooo, anyone at all seriously interested, long, for decades, would, could, should visit some of those math programs, meet some of the profs, get recommendations for their former students, call them, chat, and offer a job better than their current lawn mowing, fast food restaurant kitchen cleaning, or car washing. Instead of just the US, might also consider Waterloo in Canada. Actually the Chair of my Ph.D. orals committee specialized in optimization in logistics. After sending 1000+ beautifully written resume copies and hearing back nothing, can begin to conclude that optimization is not a hot field and for highly dedicated optimizers who want to sleep on a cot in a single room, forgo bathing, most days eat bread, other days peanut butter, have no children, wife, or family contact, don't own a car, and must get any needed medical care from some of the last resort special clinics. Ah, real optimization!
It shouldn’t be that way though. Venture capital is only for SaaS? It should be for technology in general. But the IRR demands are too much so it concentrates to SaaS.
VC capital is like a detonator. It seeks explosives, and when it finds them, produces spectacular fireworks that illuminate the entire industry, or even the entire world. It also ends up with a lot of duds, but it's OK by them.
What VC capital is not interested in is regular fuel, which can burn steadily and expand gradually, without a shock wave. Such companies can be quite important. Say, GitHub was such a company for many years, before it took a large VC investment and got acquired MS. Investing in such companies requires much more diligence and foresight, maybe too much predictive power to work at mass scale.
VCs' math only works because a single 1000x hit easily pays for a hundred of duds. If ROI per hit is 2-3x, and research required is 10x more deep, the prospects likely start to seem too bleak for folks with billions seeking return.
People in this thread act like VC is the only way to raise capital. Ever heard of getting a business loan? Even a lot of companies in the Valley could probably get one more easily than they might think, if they're profitable. You don't have to give up equity either.
>how does one get a business loan, with real stuff at stake
Show them your finances and collateral to demonstrate that you'll be able to pay off the loan.
>I especially dislike the way VC funded startups use VC dollars to effectively be a “loss leaders” for years to choke out the rest of the market.
It's a fair point, but it's a point which does not apply to the industries we are discussing, which do not receive VC investment.
I actually really like your point about Masayoshi Son-style investments which are just an attempt to entrench a monopoly. I'm no socialist, but if socialists called for identifying and taxing such investments, I wouldn't object. The trick is to distinguish between the WeWorks of the world, and the Boom Supersonic type companies which genuinely need gobs of capital for breakthrough innovation.
Wouldn't being aggressive about antitrust chill auch investments in the first place? Uber wouldn't have been so eager to overcome lyft if it knew that it would mean getting broken up or fined into unprofitability.
That's another approach. However, I think it's worth distinguishing if a company acquires market dominance because of merit, vs because it got a big infusion of cash.
I somewhat dislike antitrust because it requires judgement calls on the part of regulators. I prefer simple, elegant rules. Just like in software development. Law should ideally be elegant, just like code.
Nobody will give you a regular business loan if you need the cash to R&D your (especially non-software) product in the first place. Even more so without personal liability or in the amounts to compete for engineers in VC-funded companies.
Early on, with a good technical background, I guessed that, of course, the key to success in technology was some good technology but soon discovered that VCs just want to make money, a lot of money, quickly, and otherwise will hear from the investors in their fund.
Just heard of Palmer Luckey. Hmm! Money? No big staff, not much equipment, essentially just one person?? $1B+, quickly? Example: Taylor Swift. Did she ever hear of Linux???
Probably because the US let software be a breeding ground for monopolies. People invest there because they understand that's the best sector to, if the company works out, get unreasonable returns. As an example, the current AI valuations make no sense if the industry doesn't solidify around one or two companies.
If you have money, the returns you'll get elsewhere are much less attractive, and can only be justified if they're very safe investments.
Yeah seeing the innovations DJI is making in agriculture makes me wonder why VCs do not want to fund other startups like it. I know the margins are worse and it takes way more capital to fund hardware companies, but that has to be better than funding another chat-gpt wrapper. I guess that is why I am not a VC though lol.
I've seen US startup people deal with manufacturing. There is a class gap that leaves no real space for skilled blue-collar work to exist and also be business critical, and fully integrated into the team. That is how a three-week turnaround for a milled prototype part ends up being tolerated.
How is boston dynamics doing? They do very cool stuff but it feels like they struggle commercializing their technology. I remember they were once bought by google I think? And then spat out...
Hyundai is a massive conglomerate doing a ton of different things. Having a side bet on hydrogen isn't bad, especially considering it's potential potential in applications such as aviation.
It was also the Korean automaker’s best July sales month since launching its first vehicle in 1986.
The growth was mainly driven by electrified vehicles, including EVs and hybrids (HEVs).
The infrastructure to rapidly iterate and manufacture just isn’t here anymore, so everything costs significantly more to the point where we’re noncompetitive. Even VCs with no experience see the top line numbers for hardware startups and nope out.
Contrast this with biotech venture capital which has been doing well for decades, often investing more capital in a year than software VCs. The difference is that all the research, clinical trial, and manufacturing expertise is already here and concentrated in a few localities like South San Francisco, San Diego, and Boston.
Yeah that makes a lot of sense. Way easier to iterate when you have access to a machine shop vs having to upload a CAD file and have a part shipped from another country.
There isn't even anyone here competing with eg JLCPCB just for PCBs let alone all the other prototyping stuff. It makes sense, somehow China is able to do it for less than the materials cost.
I think that's why most people just aren't that upset about tariffs. It would be nice to be able to participate in our own economy other than by grifting off real estate or software.
I feel like anything relevantly practical is denied investment.
But when it comes to anything flashy and hip, a train of dump trucks filled with cash couldn’t deliver money as quick as the VC dollars that flow into to startups with no business model and no hope of being profitable…
Yeah, I get that startups should invest profits and not actually make profits for a while… But when they’re on their 4th round of funding with thousands of employees… shouldn’t they at least try to be a bit more financially responsible?
only in software there's a clear, tried and tested multiple times path for 1000x ROI for an investor. thermodynamics themselves limit ROI for anything physical.
Not necessarily the real limiter, right now, is finding a combination useful and profitable application. Simply charging money for generalized AI access is never going to be the ideal profit center.
- The chatbot people have a personal attachment to
- The processing tool.
In the second, you only care about the result. Something like Claude Code can call any other provider if that's cheaper and visa-verse. Once I have the result, my dependency / lock-in is no more than a brand of toilet paper. The providers will have to do the 'capitalism thing' and compete.
It's almost like WeWork's, valuated at IT levels by being in the style, only for investors to eventually figure out the marginal production costs are not reducible to near 0, and you can't just bully out competition / network-effect to get a monopoly.
And this applies to any company that wraps and re-sells AI.
Something the tech-VC world is so unfamiliar with, it's scrambling to present the truth of what is 'econ-101' for the rest of the world.
It's about risk / reward, and patient capital. Within 10 years I am probably going to sell my SaaS business a very rich man, and I am going to self-fund a new company in hardware and / or manufacturing. America has made so many talented people wealthy very quickly over the past 2 decades, and as the low-hanging software fruit is ever-harder to find, the skilled entrepreneurs will look for new things do to, and more of us will get into hardware.
They should plan more long term. In an economic downturn like after 2000, all these nonsense valuations for vaporware are going to go to the center of the earth. And all signs point to another downturn for the next decade.
VCs are happy to send a vast majority of their investments in search for billion-dollar company. There is no chance to get an agricultural startup to billion dollar valuation, agricultural innovations don't scale at a click of a button.
We need regulation around how VCs work. They are in a house flipping game and nothing more, slapping on a bad kitchen remodel and then handing the hot potato onto the next sucker.
Why not just let it play out in their own arena? We already had the major unwind with the interest rate hikes. The tide went out and the players with their pants off were exposed for the most part.
That said, allowing VC into 401ks and such I would agree is an abominable idea, because this stuff isn't marked properly until it is in distress. Actually, that area could use better regulation. Volatility laundering is already a systemic risk. Many of these vehicles have creative ways to not mark to their market value, which makes pension fund managers and leered participants happy because it greatly improves the perceived risk metrics and performance, at the equal expense of cloaked fragility.
But perhaps just let them have a thunderdome, and if they want to breach the walls and enter areas like retirement funds where society agrees standard are higher, there is a strong set of filters/regulations that must be adhered to.
Letting them have their own thunderdome is regulation. It means they don't get to pee in our pool. I am all for a freemarket, but it needs to be kept in a cage match.
Because, despite all the belated narratives from a lot of people perusing this very website, Venture Capitalism is not a driver of innovation. It's an efficiency filter to supercharge capitalism and speed up the concentration of wealth into the pockets of the VCs themselves.
Software is nimble, has less overhead, can be optimized for profit faster, can be recombined, pivoted, repurposed way faster.
Ergo, the market economics of VC are terrible at naturally selecting for innovation with a societal benefit, because that’s absolutely not in their firmware.
Let’s not forget here that Chinese companies operate some of—if not the—most popular social networks in the world. WeChat and TikTok/Douyin are enormous.
(Also, in neither country is the majority of its GDP comprised of websites.)
Yes but the Chinese state is much more willing to direct capital to where it thinks it should go. The argument w.r.t. geopolitics is usually that the US is late to doing this and now lacks production capacity which is useful for competing.
The countries producing semiconductors and manufacturing other goods are also producing SaaS services. It's not unique to the United States.
The number of countries producing leading edge semiconductors is actually small. The number of companies doing this work is very small, too. Although much of the economy needs chips to operate, those leading chips are concentrated in the production of a very small number of companies.
I'm p convinced that this push for age verification using govt IDs & debit/cc tx is the death rattle of the rampant ad fraud that has sustained the tech bubble
>Americans may be proud of that, but that’s pure bullying.
It's slightly weird to me how foreigners seem to look on the Trump era as personifying the US to a greater degree than e.g. the Biden or Obama eras. Trump is not especially popular right now: https://www.economist.com/interactive/trump-approval-tracker
And for some reason Europe is always excused from that standard, despite Orban, Fico, Meloni, Wilders, Nawrocki, Erdogan, etc etc.
We're meant to believe that the 49%-to-48% election of Trump is some deep window into the eternal American psyche, but Orban's fifteen-year drive into corrupt, racist autocracy, endorsed by the voters at every turn, is just some sort of very temporary oopsie that says nothing at all about Europe.
When Meloni uses her pulpit as a popular Italian prime minister to attack gay families, you don't see anyone claiming this reflects the bullying nature of the Italian people, but that's par for the course for coverage of Americans and Trump. Swathes of Poland declaring themselves "gay free zones" is an aberration from European values, whereas anything that happens in deepest Alabama is the truest reflection of the American spirit.
Le Pen's far-right National Rally (RN) has had ties with the Kremlin for a long time. That alone should have discredited this party a long time ago, but no, it is ranking as high as ever, even after russia's overt invasion of Ukraine in 2022.
Mélenchon's far-left "France Insoumise" party ranks very high too, and is similarly pro-russian, anti-EU, anti-NATO.
In the town where I live, more than half the votes have gone to the RN these past elections. I often feel like a Cassandra.
It is easy to be in opposition and complain about everything. The contrarian parties tend to get very popular in the years between election cycles as the governing party can't deliver on everything and has to compromise.
Because you do know that Labour in the UK won a landslide victory a year ago and the last date for holding a new general election is in 2029.
The Scandinavian experience is that these parties crash as soon as they get to real power and have to compromise. Suddenly they had to be responsible.
If we do see these Trumpian parties win the majority in these elections in more rather than one-offs then we have a problem. But you're just fearmongering because you can't accept how completely wacko Trump is and need to blame it on "everyone does it!!!".
>The contrarian parties tend to get very popular in the years between election cycles as the governing party can't deliver on everything and has to compromise.
So what happened in Hungary, or Italy, or other examples mentioned by troad?
Are you aware that RN, at this very moment, has by far the most seats of any party in the French parliament? Those far-right sentiments didn't magically disappear on election day.
>The Scandinavian experience is that these parties crash as soon as they get to real power and have to compromise. Suddenly they had to be responsible.
>If we do see these Trumpian parties win the majority in these elections in more rather than one-offs then we have a problem.
The "majority" comparison is meaningless in this context because the US only has support for two parties. (Imagine Germany had a contest between AfD and Die Linke only. That's akin to the situation in the US right now.) "Governing coalitions" aren't really formed here, so the notion of "they get to real power and have to compromise" doesn't exist in the same way.
So: Even assuming we grant your argument, Trump's power in the US has more to do with quirks of our political system than something fundamental about American culture.
>you can't accept how completely wacko Trump is
I never said he wasn't completely wacko. I simply said he doesn't personify the US any more than Biden does.
> Are you aware that RN, at this very moment, has by far the most seats of any party in the French parliament? Those far-right sentiments didn't magically disappear on election day.
And the Social Democrats has been the largest party in Sweden since the early 1900s. Given that the left, with all parties combined, haven't held a majority since 2006 while managing to rule with a minority government from 2014 to 2022.
You make a lot of noise for understanding quite little.
Yes. The US has a broken political system, and you the American people haven't done jack shit to fix it.
> So: Even assuming we grant your argument, Trump's power in the US has more to do with quirks of our political system than something fundamental about American culture.
Trumps power in the US is entirely because he is what the American psyche wants or tolerates.
You keep attempting to dodge the outcome and blame it on everyone else. But you need to own it.
Trump is personifying America, which is quite evident given how he has won twice. The American people wants him.
DeSantis says a lot about Florida, less so the USA.
Pritzker says a lot about Illinois, less so the USA.
Abbott says a lot about Texas, less so the USA.
Newsom says a lot about California, less so the USA.
Understand why your argument is a very poor one? If not, I have 46 more of these examples.
> but Orban's fifteen-year drive into corrupt, racist autocracy, endorsed by the voters at every turn, is just some sort of very temporary oopsie that says nothing at all about Europe
Yes, Orban says nothing about Europe. It says plenty about Hungary though. Europe not being a country, and the EU being very heavily decentralised, that makes sense.
Hungary is literally in Europe. If Orban says nothing about Europe, then nothing can ever say anything about Europe.
Your country is choosing to stay in a union with Orban's. If EU membership is meaningless, as you imply, it should be easy for your country to quit in order to make a point about Hungary.
> Hungary is literally in Europe. If Orban says nothing about Europe, then nothing can ever say anything about Europe.
so are the Vatican and Andorra and Belarus, so all of Europe is theocratic and/or a kleptocracy?
> Your country is choosing to stay in a union with Orban's
Because the benefits far outweigh the association with that pigshit, who will also die some day. Also, the EU can and does exert influence over countries, so some of Orban's excesses can be curbed.
>so are the Vatican and Andorra and Belarus, so all of Europe is theocratic and/or a kleptocracy?
All of the places we're discussing are part of Europe, so insofar as any place can be said to "say something about" Europe, each says something about it.
>Because the benefits far outweigh the association with that pigshit, who will also die some day. Also, the EU can and does exert influence over countries, so some of Orban's excesses can be curbed.
One could make similar arguments for staying in the US. Trump is 79; Orban is 62.
What Trump is and his values aren't particularly different from the usual right-wing populism elsewhere, hell for most of the "global south" people like him or the norm if not the majority of voters.
> It's slightly weird to me how foreigners seem to look on the Trump era as personifying the US to a greater degree than e.g. the Biden or Obama eras.
That's easy to explain. Trump is so much out there in being aggressively obnoxious, criminal, racist and senile. His platform was a list of nonsense combined blatant diminishing of rights and social progress. The fact that a majority of voting Americans chose him is irredeemable.
Biden, Bush, Obama were normal candidates with pros and cons, where depending on your views, you could pick one or the other, and you could understand others who voted otherwise.
Trump? I cannot understand anyone who voted for him. They were either extremely narrowly self-centred and thought they could make a buck at everyone else's expense, extremely misinformed and/or dumb, or just hate specific groups of people they know will get hurt. There's nothing redeemable in any of those. He and his voters are the personification of the "fuck you, I've got mine mindset".
It's normal for countries to prioritize their own self-interest. The unusual thing is the degree to which the US attempted to take responsibility for world affairs for as long as it did, to the point where other countries took the US for granted. Now other countries interpret America's failure to take responsibility for their problems as aggression. See here: https://news.ycombinator.com/item?id=45035076
> It's normal for countries to prioritize their own self-interest
I'm not talking about countries, I'm talking about Trump voters. An "America first" approach is totally fine, nobody outside of the US cares about.
An "America first" approach by a convicted criminal that is obviously senile, that results in arbitrary tariffs, threats of invasion of various allies, and a million other absurd consequences, is a problem for everyone. It's a problem for US partners, allies, and also the US for it's short and medium term future. Nobody will trust the US as a future trade and military partner.
In any case, as I said, I'm talking about Trump voters. The "extremely narrowly self-centred" ones are of the Andreessen types, the ones who think they can make a little bit more money if Trump is in power, even if objectively he's a terrible candidate on literally every level (criminal, rapist, pedophile, senile, can't string more than half a sentence, mocks disabled people, lies, doesn't comprehend realtively basic things, promises to deport millions of people while that being physically impossible, makes up stuff on the fly, wants to curb rights for women, LGBTQ folks, etc)
You say you cannot understand anyone who voted for Trump. Can you understand anyone who plans to vote for RN, the most popular political party in France by far, lead by a woman who said she shares Putin's global vision?
Do I get to blame you if RN wins the presidency? Same country, after all.
> Can you understand anyone who plans to vote for RN, the most popular political party in France by far, lead by a woman who said she shares Putin's global vision?
"by far" only if you get stuck on political party; considering there has been a united left coalition for multiple years and rounds of elections, that seems purposefully omissive. United left and RN are pretty close, polls and election results wise, with the centre-right and traditional right trailing closely behind. Neither of them have anything resembling a majority though, as is reflected in the current parliament, where each block has a bit less than 30% each.
And yes, I can understand them. RN's program contains points which cater to large amounts of French people, especially in rural disadvantaged areas. They're unrealistic or just fluff, mind you, but still sound good. RN is led by moderately charismatic people who have a good media presence - the party's head is Bardella, a young guy with a TikTok following who talks a decent talk. He's a nepo baby (son in law of Marine Le Pen), and mostly a grifter, but he can link a couple of phrases together and sound semi-convincing. Also, while Le Pen is a convicted criminal, it's "just" for stealing government and EU money, which a lot of people don't actually mind, and Bardella isn't.
Comparing to a delusional and senile old man who is literally convicted of rape, and there is plenty of credible evidence, out in the open, is also a pedophile. With a shit program with little concrete other than fucking up groups of people. After seeing his "work" his first term.
Yeah, I can understand, and probably have a discussion with an RN voter. (Those of the "black/brown people bad" variety mostly vote even further to the right, like Zemmour, those are the people I don't understand and wouldn't be able to talk with). A Trump voter? Something is seriously wrong with you to either like that, or pick your potential personal benefit over everything else.
>it's "just" for stealing government and EU money, which a lot of people don't actually mind
I think your double standard is pretty clear at this point. I won't be offering further replies to you in this subthread after this one.
>Comparing to a delusional and senile old man who is literally convicted of rape, and there is plenty of credible evidence, out in the open, is also a pedophile. With a shit program with little concrete other than fucking up groups of people. After seeing his "work" his first term.
IMO, the fundamental reason people in the US vote for Trump is because they don't trust the establishment/media. So yeah, if you uncritically believe everything that's reported about Trump in left-leaning ("mainstream") US media, of course you won't understand why people vote for him.
> think your double standard is pretty clear at this point
What double standard?? I'm merely pointing out that people distrustful of the government/EU are fine with Le Pen stealing from them. It's not an opinion I share, but I can understand it. I can't understand those people being fine with Putin bankrolling Le Pen though.
And still a million times better than Trump who not only stole from a cancer charity, but whose corruption is directly in the open and undeniable.
> IMO, the fundamental reason people in the US vote for Trump is because they don't trust the establishment/media
Regardless of that, they can see and hear with their own eyes and ears that he cannot string two coherent sentences together, and is obscenely disturbing as a human being.
Worth distinguishing between actively engaging in harmful behavior, and "failing to help". The Europeans have taken the US for granted for so long that when the US is only Ukraine's #1 donor country in absolute terms by far, their main response is to complain that even more help should be offered, and pretend the US is somehow hurting them.
Keep in mind that Ukraine is literally on the opposite side of the world from us. What's Brazil doing for Ukraine? What's Australia doing?
As an American, I consistently argue that the US should not ally with Europe here on HN. But even I don't argue in favor of actively working to harm Europe. I just think we should cut Europe loose, because nothing we do for Europe will ever be enough, and Europe is a wealthy region that's plenty capable of providing for itself.
Around $1.5B (AUD) so far, Bushmasters, 50 M1A1s, M113s, training, etc.
We didn't sign the Budapest Memorandum, neither are we part of NATO, but we do our part, as we did in Afghanistan, Iraq (after the lies about WMD), in the Red Sea and other international events.
Oh and on the articles you quoted, some of the biggest fines were from the UK, which is not part of the EU.
As for tariffs, the US upended 80 years of work on international trade, with Trump applying tariffs without any underlying criteria except his complete misunderstanding of the difference between a trade deficit and bad trade.
The US has maintained its currency's dominance for all of the post WW2 era, which has allowed you to borrow and spend in a currency that everyone else has to support to be able to buy things like oil.
As an American, you should realize that in the last 6 months, the US has decided to abdicate its leadership, and as oil becomes less important to world trade, the USD will start to lose its dominance over trade, which means that your debts will have to be paid back in other currencies while the tariffs do nothing but damage the US consumers and economy in general.
All the US promised in the Memorandum was to seek UN Security Council assistance if Ukraine was victimized. We went far beyond that.
Think about it: why would Ukraine be so desperate for NATO membership, if the "defense promise" in the Memorandum was already broken? Because there was no meaningful defense promise in the Memorandum! That is simply a malicious lie about the US that's very widespread online. Again, this is why I'm an isolationist. I give up. Our "allies" will hate us no matter what we do. I've figured it out. I want to be Switzerland. We'll worry about our continent, and you worry about yours.
>I love "US so big arguments", no one else cares!!
The US is being targeted specifically because we've given so much. No one is bothering Japan, or Argentina, or Saudi Arabia. It's because the US has been generous (in absolute terms) that we get so much flak.
Imagine if we sent thoughts and prayers the way Kazakhstan does. That way we would get less hate. When's the last time you heard Kazakhstan criticized for lack of Ukraine support?
>And then looking at per capita the US sits at number 16.
>You do know that the per capita number is from your own link? Japan sits at number 19 per capita.
ctrl-f "per capita", nothing comes up.
I do notice that Japan is #19 in terms of % of GDP however...
I actually think your confusion here explains a lot. You don't know the difference between "per capita" and "GDP". That shows you don't speak English well. That's probably why you don't know much about the US.
The fundamental issue is that you think you know a lot, but you actually know little. You're mostly just reading what is written about the US in your native language. Probably there is lots of misinformation.
>Was the US doing about as much as Japan the argument you wanted to make?
Why is the US being harassed and not Japan?
>Or are just here to be a contrarian?
The absurdity of Europeans who complain endlessly about the US, while we've historically pursued a relatively generous foreign policy towards you, gets under my skin.
>Maybe the US have an incentive in seeing the American built world order continue?
I've very consistently stated in this thread, and on Hacker News more generally, that the US should abandon the so-called "American-built world order". It causes us no end of grief, as you are illustrating at this very moment with your comments.
>But hey, turn inward and let China and India win.
The US economy was doing amazing back when we were more isolationist. Switzerland does amazing despite rejecting memberships in multinational organizations like the EU and NATO. India is very explicit in its policy of "multi-alignment", i.e. avoiding big firm coalitions like EU/NATO.
You Europeans are so invested in the idea that America needs to protect Europe for America to succeed. As far as I can tell, this idea is total nonsense. Barely a shred of evidence is offered in favor of it.
China and India aren't exactly looking to form alternatives to NATO either. Why would a big country agree to defend a small country? It doesn't usually make sense from a national interest perspective.
>But don’t get mad when tariff situation with Europe etc. Is equalized over time and the American big tech is targeted to lessen the dependency.
You guys have been raiding big tech bank accounts for years now. You shouldn't be surprised by US retaliation. What goes around comes around. We can tell you're not actually our friends.
Oh my god. This is so funny. You truly have to stoop down to insults because you are so fragile? Who hurt you?
Sorry, the massive difference of "per capita" and "% of GDP". Which would be aligned assuming equal GDP.
Given GDP differences between the donor countries the differences aren't meaningful. But sorry, I should have specified as "% of GDP" where the US is a joke comparatively.
What is even more funny is that I have lived a year in the US, I have traveled all over the US. I have college credits in American history. You know the tiny High School course "AP US History"? Have you heard of it?
Which is also why I was not surprised when Trump won in 2016. I had seen the culture. I had seen the close mindedness.
> The US economy was doing amazing back when we were more isolationist.
You mean the roaring 20s right before the great depression? Because that is the last time the US was isolationist.
Seems like you are dreaming about something you don't have the slightest clue about.
Your response is very typical for the absolute craziness that has infected the US psyche. Donald Trump is not a one off, he is what Americans want.
It's pretty wild that you think AP US History - an introductory course aimed at school-aged children - gives you some great insight into "the US psyche". An insight you gleamed as... what, a high school exchange student?
>Oh my god. This is so funny. You truly have to stoop down to insults because you are so fragile? Who hurt you?
You were the one who started with dickish behavior. Don't dish it out if you can't take it.
>Given GDP differences between the donor countries the differences aren't meaningful. But sorry, I should have specified as "% of GDP" where the US is a joke comparatively.
Actually it does make a difference here. See the link I provided: https://old.reddit.com/r/europe/comments/1hd7aud/military_ai... Considering per capita, 8 months ago the US was more generous than almost all of Europe. Per capita is arguably the correct metric, since part of why US GDP is greater is because Americans work longer hours and take less vacation.
In any case, even if we consider the metric less favorable to the US (% of GDP), the US gives more as a fraction of GDP than almost every country outside Europe. If the US is a joke, than Spain, Ireland, France, and Italy are even funnier. We're very generous in every sense considering this isn't our war.
But since you call US aid a joke, I hope you won't miss it when it's gone. And I appreciate you confirming the points I've made, with your remark: Helping Ukraine gets us nothing but grief.
>You mean the roaring 20s right before the great depression? Because that is the last time the US was isolationist.
"Frustrated by French meddling in U.S. politics, Washington warned the nation to avoid permanent alliances with foreign nations and to rely instead on temporary alliances for emergencies... Washington’s remarks have served as an inspiration for American isolationism, and his advice against joining a permanent alliance was heeded for more than a century and a half."
The US economy mostly did great during that century and a half. Furthermore, the Great Depression was not simply caused by "isolationism". This is more intellectual sloppiness on your part.
I advocate a Swiss approach to foreign policy. That doesn't mean disengaging from other nations. It means not promising to help them with their problems.
Your continent, your problem. This is the approach that most of the world adopts towards Ukraine. The US was foolish to get involved. And we've been punished severely for it, by people like you. No more.
I see your point, but isn't it fair to say Intel is too big to fail?
Not in the "lots of people would lose jobs" or "ripple effects would cause economic disruption" but in the true national security sense. What allied semiconductor manufacturers have significant cutting edge fabs in Europe?
IMO the company can fail. It’s the people, facilities and equipment that matter. Those can get picked up by a company or companies that know how to use them.
Secondarily, a TSMC fab on US soil seems like a better investment. In the catastrophic event that Taiwan were invaded — it’s still people, facilities and equipment that remain here.
> It’s the people, facilities and equipment that matter. Those can get picked up by a company or companies that know how to use them.
This trope keeps getting repeated on HN.
No, the point of the top level comment and article is that no US based company will replace Intel's fabs, nor will they form a "better" Intel. This stuff is intensely capital intensive, and nothing short of a government mandate will make any other company spend so much money on such a big risk.
Trust me - if they could have, they would have. Intel's fabs have pretty much been up for sale since Pat was ousted.
The only companies that know how to use the people and the equipment are not US based. TSMC already had an opportunity to buy much of Intel's fabs, and they concluded that shifting their process to match TSMCs would be cost prohibitive.
If we're already into the realm of the US government taking huge equity stakes and forming state corporations, maybe they could help form a new JV after a theoretical Intel failure. That's no less major a step to take.
In the scenario where Intel fails (which would primarily be centered around defaulting on the 50 billion of debt that they built up and can barely service), the US gov could offer strong tax incentives to players who want to form up a new national fab company. Give it favored status essentially (again, if the US is already crossing fairly extreme lines of having US state owned corporations, this doesn't seem so extreme in comparison).
You already have Private Equity interests that are starting to consume Intel. Ex: some of the new fabs are funded by Brookstone, and they have sold off a portion of the profit from the venture, and then collateralized the transaction with the hard assets and put Private Equity at the top of the bankruptcy cap stack.
I think that if the US gave some incentives, the pieces would fall into place extremely quickly. PE would do the actual capital funding in a heartbeat if they had sweetheart tax incentives, and Japan/SK/TSMC would also get involved. Presumably - given the style of the current admin - the "deal" would be "you get favored status by taking part in this project. We will give strong tax benefits to also drive profit. If you turn it down, expect to see tariffs and calls go unanswered while your competition has a direct line."
If they are "too big to fail" then they shouldn't exist because they are also a national security issue. Either let them fall apart and fund everyone but them, or split them apart into multiple companies with new leadership.
That sounds like you expect a competitive, free market for things as complex as the world's cutting edge CPU or nuclear weapons or fighter jet technology. I think when it gets as specialized and capital intensive as those things, a true free market is less likely to exist.
Similar, My major in university was computer engineering (as opposed to pure CS or EE) because I wasn't sure if I wanted to go into a hardware or software profession. I ended up going with software since all the interesting opportunities were there, whereas most jobs in hardware seemed to be working for stodgy old companies barely making six figures if I was lucky.
It's made me one of the only leaders in my Software Org that actually knows what happens below the level of the instruction set. I can talk about the power and heat implications of algorithmic decisions. But mostly nobody cares, theres always enough money to buy more servers.
The gap between hardware and software salaries has been strangely stubborn.
I started in hardware and pivoted to software for the same reason: It's easier to find higher paying jobs.
It's been strange to see the gap persist at companies that cling to salary data for compensation decisions. Incredible to see companies complain about not being able to find good hardware talent but then also refuse to pay hardware hires at the same level as software hires.
Amen brother! And the work-life conditions are also much better in software. I remember in grad school an executive from a big semiconductor company (I think it was ON semi) was complaining to the EE department that most students are now pursuing EE as a CS degree and very few went into hardware so they claimed the talent pool was small.
How about paying more then?
Show me the incentive and I'll show you the outcome.
When I interviewed at intel the position they were offering was to be the "owner" of a tool and I'd be on call.... Yeah no thanks, I get a PhD just to be owned by some company?
Same boat. The pay was mediocre, the hours were bad and far too many, and the company used cyclical demand to keep us in perpetual fear of layoffs. Mandatory pager carry 24/7/365 unless I was on vacation out of town. Rotating weekend coverage. Rotating holiday coverage. First couple of years were 12 hour shifts on my feet, then I went to process integration and did endless meetings instead.
I loved, still love, the actual technology of semiconductor fabrication, but you’d have to pay me 8x what I was making for me to go back to the business of semiconductor fabrication.
Amen, software sucked all the talent out of the hardware room. When you write the pros and cons of software vs hardware, pretty much the only positive on the hardware side is a subjective "it's more fun".
There are extraordinarily highly paying semi firms in the US, but neither Intel nor AMD fit that mould unfortunately.
I’ve never understood why that’s the case; they are also high leverage jobs where a few can do extraordinary work and be rewarded thus. Look at Nvidia. Their employees are well compensated and they stay and the company does fantastically.
I think this is more of an Intel problem than a general semi industry problem. I work for Arm and I’m compensated better than when I worked at Microsoft (although it’s partly due to stock appreciation after the IPO). But I’ve also heard that Broadcom has top-teir RSU grants as well, and even AMD is more competitive than Intel.
same - left the industry after 2 years. Made more as a startup founder while working better hours.
It's not just the pay, a fab operates 24x7x365 and how management turns that into work practices and life for employees.
I once interviewed at a fab that offered 'better work life balance'...and what they meant was you weren't allowed to access any email or information off site so they couldn't bug you as much. In reality, it just meant you had to actually go in to the plant if anythign went wrong.
Honestly, I don’t think US wages make sense any longer. We have extraordinarily profitable semi companies that don’t pay more than a third of what non profitable startups are paying software engineers.
The issue seems to be one of negotiation power as the determinate of wages taken to an extreme - leading to companies taking a monopoly position, paying poorly, then falling to foreign competition due to lack of talent.
Greed. You’re describing greed. The folks at the top of the pile in the US seemingly all have hoarding disorder. Very little of what they do appears rational… unless you concede their actions are meant to harm the general wellbeing of the US. population, while themselves being nicely insulated from all that.
Same for me except I never started. Graduated EE and went straight into software. Not just higher pay, but also a hell of a lot more jobs available, especially to new grads.
If Intel were well managed they would purge like 2/3rs of the managers and anyone in the bottom 50th percentile and then pay whatever it takes to get people skilled in their core industry back, training the remaining people as necessary to fill in gaps for the future.
They literally cannot have a culture that encourages the now-traditional job hopping that is so pervasive in American business culture. They can't afford it.
So current management, who had proven incapable of running a business, will be trusted to ignore past political games and just retain talent? That's certainly a take
Fair enough, I suppose I was being hyperbolic, but nevertheless...
It would be interesting to see the graph before 2019. For a decade, all of the investment money, talent following behind it, piled into Uber, etc.
> has resilient even in a broader VC pullback
Yes, people are starting to catch on now. Even so, investment is at best a leading indicator. In terms of existing on-the-ground domestic infrastructure, we're sorely lagging in real-world capabilities, but the better part of the last fifteen years was spent creating a vast Grubhub-type delivery infrastructure across the US while the amount of resources dedicated to peer or near-peer conflict logistics and long term agricultural production were relatively ignored.
I don't consider synthetic nutrition agriculture; what I'm talking about is regenerative farming practices or high tech alternatives to pesticides i.e. Carbon Robotics.
It's only be a short term thing, because fundamentally software is more profitable because it's much less costly to scale. And individual developers have more bargaining power, because they can own the "means of production", while the means of production for hardware is much more expensive.
Well, there's a really easy and straightforward explanation for how this happened. It's just uncomfortable for everyone who's succeeded because of it. So they don't say it.
America abandoned free enterprise in favor of managed monopolies. It happened via a wave of financialization, globalization, government bailouts, mergers and consolidation that all granted immediate financial benefits to shareholders, at the cost of long term competitiveness.
That's it that's the whole story in a nutshell, look at Boeing, Intel and others, you'll see it again and again.
This is not the right way and US economics are looking more like Mussolini's every day.
Force these incumbents to compete. With fragments of each other, or with new American companies. Perhaps shelter them from some foreign competition if you really must.
That would once again unlock the unparalleled power of the 350 million enterprising souls spread between the two coasts. Which is what got America to #1 in the first place.
Give those souls something to do again that isn't meth or opiates.
That's backwards. US companies moved manufacturing out of the US because other countries had competitive advantages (often cheaper labour), not because they weren't free enterprises but they were. Making stuff in the US doesn't make business sense. Patriotism doesn't make business sense. If you tell companies their business is to compete with each other to be the most profitable, that's what they'll do, and that's what they did.
Government decides when and where to apply tariffs.
If government applies a tariff on imports from any country that has cheap labor, businesses will stop offshoring to that country because it will no longer be cheaper.
Or at least, that's what businesses do in a free market economy. In the free market where many firms compete for your dollar, they can and will compete on price when they have to.
But in a "managed monopolies" economy like 2025 America, they may just raise prices instead because they have at most 2-3 competitors, and all it takes is a few games of golf, a wink and a nod to keep prices high.
We used to call that a cartel, prosecute the shit out of those companies, and defend the free market.
America's government stopped doing that. Now our enforcement is Luigi. When and where will the next Luigi strike? How many Luigis do you want to see? I would rather have government resume serving the People, it will work better, like it did with Standard Oil and AT&T.
Patriotism is not required. Policy that puts the people first plus competent law enforcement against corporate crime is all that we need.
Well, an internal, relatively free market with some barriers against foreign competition is exactly the strategy that a number of Asian countries employed to get rich, and furthermore, earlier in its history the USA did exactly the same thing. Whether it is "antithetical" or not.
I think your comment is low quality. Like I made an effort here to write at length about how government and economics work in the hopes that someone would learn from it, and you strawmanned one idea and called it "wild." This is not the Hacker News way and it is not commenting in good faith.
Free markets only exist in unnaturally heavily regulated circumstances. If you let the markets to be on their own devices then you get monopoly. Regulation is ironically what makes free markets possible.
It's basically exactly the same as democracy vs feudalism.
> systemically putting short term gains ahead of long term research
That's more the stock market than the US government though. You could argue the US government tries to play a long game, and often the way the US plays that game is to let the free market decide (hands off, small government). It's definitely a valid strategy and has worked extremely well in a number of other industries, but for this specific niche, less so, and even then you could argue it's down to Intel's mismanagement than anything the government could or should have done.
It is clear that the government and wall street are generally of one mind on this. One recent specific way the government contributed to this is via the Tax Cuts and Jobs Act (TCJA) of 2017, which increased tax burden of R&D. They've also cut a lot of their own research funding (NIH, NSF).
I can't make the argument that the government is "hands off, small government" because I simply don't see the evidence of that. To the contrary, I have seen things like TARP, stimulus checks, oh, and the government buying 10% of Intel.
Now that we have lawmakers openly declaring they would pick capitalism over democracy if forced to choose, I have little hope that the government will be receptive to changing anything structural.
The strategy is fine, the problem is there aren’t enough domestic competing players in cutting edge semi nodes for it to work anymore. The US had many competing foundries before its semi industry was hollowed out by Japan and Korea. Now the only player in the US is Intel and, having been mismanaged for the last decade or more, it’s at risk.
I don’t think propping up Intel is going to work though, they’re a sinking ship and their management seems too risk averse and incompetent. It might be better for the US, long term, to let them collapse and sell off strategic parts to different domestic players (NVIDIA, AMD, micron, TI, etc) and use tariffs or other trade policy to force some amount of leading edge semi fabrication to use domestic manufacturing.
I would argue that federal and state governments play even shorter games than investors in the stock market. They're constantly putting their thumbs on whichever scales are politically expedient to claim they did something every 2/4/6 years when it's time for reelection.
Just as an example, the calculus for "where should I build a factory" comes down to "which politicians give the biggest tax incentives" and not any market dynamics.
This and everything else. We outsourced manufacturing of almost everything then are surprised when the people doing it for decades are better than we were.
We outsourced manufacturing because it's not very profitable. The Mag 7 make 50x as much money as TSMC. Apple and Microsoft are the most profitable businesses in history.
Intel was very profitable until it was not. They spent over $800B on stock buybacks. That will buy you some fabs, some R&D. Its true they invested in R&D but not well. Maybe the answer was to fund an independent internal competitor to keep the org focused.
Financialization is a dead end when you face a nation state determined to control steps in you value chain. How profitable will apple be if they can’t get chips?
I still think Intel missed the boat when they had the dominant process in focusing entirely on their own chips and not taking customers for third party fabbing. Samsung and especially TSMC have demonstrated conclusively that the real money is in producing chips for other companies. It might be lower margin, but the volume is undeniable and it keeps your company on its toes with node improvements.
Intel switched to a "service the stockholders before the customers" mode and they have never recovered.
TSMC does not compete with their customers. Intel would. I know that is not a new idea and there are some established mitigations. But it seems it would be better if it wasn't an issue at all.
Samsung competes with their customers and yet they still sometimes choose Samsung. Same with IBM when they were a big competitive chip manufacturer. It probably makes the sale harder but it has been a common arrangement in the past.
Chips are one of those things where being the best is simultaneously very important and not at all important. Making a 10% better chip gets you the entire market. But it makes practically no difference if your cellphone or laptop or server or whatever has a 10% worse chip.
> Making a 10% better chip gets you the entire market
Gets you the entire datacenter market maybe. End user (PCs, cellphones etc) stuff is much more concerned about perf/$ (up front cost) than perf/watt (long term cost), and the embedded market (electronics, appliances etc) mostly care about 'good enough' as cheaply as possible - performance isn't a concern at all for many use cases.
And the corporate market mostly cares about (perceived) reliability/liability concerns over everything else - see how hard it's been for AMD cpus to penetrate despite being measurably better in every category compared to Intel at various points in time.
No, we outsourced it for the same reason we outsource anything else: because someone else, somewhere else, is doing it for cheaper. It has nothing to do with the profitability of the manufacturing company and everything to do with the costs of the products and services to their customers
mind you that a lot of this outsourcing is also happening inside the EU from high wage western countries to lower waged eastern countries (poland, hungary, romania etc).
The reason this pivot happened was because of the Pandemic. As soon as the Pandemic hit and China stopped sending us PPE it was a violent slap in the face and an extremely rude awakening that we are completely dependent on China and other countries for basic necessities. India also stopped sending us pharmaceuticals.
This realization means that no matter what, Americans need to make certain basic necessities, and chips are one of them. I have friends at Intel that have been there for 20 years and they basically say it's dead man walking. They have chip equipment that they paid billions for that is sitting idle because they don't have the demand, but they can't turn them off otherwise it will be destroyed. However, these machines cost hundreds of millions to keep on. Plus they are already out of date compared to TSMC. The entire thing is a disaster, but Americans need an American source of chips so they have no choice but to double and triple down on a bad investment and hope that something happens that will let them become competitive again.
> Very well argued. It's such a stunning dereliction the US let things get to this point. We were doing the "pivot to Asia" over a decade ago but no one thought to find TSMC on a map and ask whether Intel was driving itself into the dirt? "For want of a nail the kingdom was lost" but in this case the nail is like your entire metallurgical industry outsourced to the territory you plan on fighting over.
What's annoying about this is that it's the same people who drove the outsourcing and decline of American industry who are using the same framework they've been using to drive that stunning dereliction to argue that this is the wrong approach.
Perhaps then fabs should be considered important enough for the US then that a new entity, perhaps not unlike NASA, is created to create and run these.
There are already domestic semiconductor fabs dedicated to the defense industry. The issue is that military semiconductors ceased to be cutting edge in the 80s and now everything runs on old processes for the enhanced reliability. That's perfect for most applications except when you need a low power handheld supercomputer that only TSMC can make.
This won’t solve the biggest challenge/problem, which is lack of talent for staffing the fab. In Arizona they had to import a bunch of temp workers from Taiwan just to train the locals. We don’t have the skills. If you want to involve the government, maybe we should be training units of the military to make their own chips.
That’s the specific problem a well organized governmental body can address. Funding research through university and private R&D lab grants and spreading/licensing the knowledge to domestic companies. Fund grants for universities and scholarships to spread that further. Invest in multiple startups attacking the problem at different levels in the stack (semi manufacturing has a LOT of inputs).
There are loads of ways you can effectively steer an economy to stimulate growth while also meeting geopolitical needs through effective and liberal application of the national purse. DOGE seems to have different ideas about the value of such programs.
How many workers do we need? TSMC has 80k workers all in. 15-24 there is about 3 million US NEETs. I think that we could have a 10 year plan to get 80k people with EE/CE/NanoTech Eng/ChemEng/etc degrees. Make college free, or hell even a stipend for people to pursue "Critical Careers", heavily fund Phds in the same areas for US Citizens, and we will see workers with the skills.
This is the wrong way to look at it. The people in the US that you would want working in semiconductors aren't NEETs. They are at Facebook/Google/Jane Street/Citadel/McKinsey.
If I am a capable person working on delivering node improvements dealing with smaller and smaller challenges as the physics issues become quantum - I will eventually start to ask myself: why am I working on the hardest physics problems in the private sector for 150k/yr, when I can transition to Facebook or Jane Street, work equally (if not less) as hard and make 500k/yr?
The US has plenty of smart people. I'd argue more that the wealth inequality gap makes it _incredibly_ difficult to justify working for less, even in a field you love, when you can make top 1-4% of income doing something else.
The cost of assets (especially housing, schooling, and health care) is a huge problem, and your example is a poignant one. More funding could sway a few people in that pipeline to go towards semi-conductors, but the majority of workers aren't Jane Street quality, they are technicians and engineers doing lots of highly skilled "grunt" work.
Personally I think the other half of the problem, Big Tech paying so much might be solving itself right now, excepting really only the very very top.
When Silicon Valley was cheap enough to live in that people could casually start a company in their garage... Then people didn't have to relentlessly optimize for short term comp.
Today you have to work at FANG to afford a garage in the Bay area.
Look at the insane salaries/equity going to AI researchers. Those at the cutting edge of semi manufacturing/design are likely completely capable of reproducing the skills sets of those people- how do they not cut and run?
If the government has to provide the funds, so be it, make those jobs valuable enough and the skills will be there.
Is that true? I thought a lot of semi-conductor work is borderline blue-collar factory work and physical labor.
What you’re describing is in the R&D area and also not physically dependent on being colocated in a fab. So we should have an easier time finding that talent, although we’re probably underpaying them now, as you point out.
The most salient issue with Intel in the past 10 year was their constant delay of the 10nm node process. While TMSC was constantly pushing down the Node size, Intel struggled and ceded a lot of ground to AMD & Apple. At the same time Intel struggled to develop a competitive 5G radio, and GPU.
These are all downstream of R&D. If your fab cannot shrink it's node size, then you won't get the most profitable orders.
I’m not sure it would have made a difference if they hit 10nm faster. Apple has always wanted to make its own chips. Some marginal efficiencies wouldn’t dissuade them from investing in themselves. And it’s not like Intel was going to start a consumer PC business…
Yep, Apple buying PA Semi was an indicator of their intention all those years back. I suspect intel was just hoping they would fail at their ambitions.
I believe something similar is happening in drug development right now. It may take less than 5, 10, 15 years to see the impact to the US. But from someone who has a vantage point to see it across many parts of the industry, including having seen the evolution of Intel / TSMC, I think it is a very similar story. Right now is like 2007 (or maybe even a bit later) for therapeutics. In the future, we will look back on this year as the year we gave it up.
Agreed. Also the biotech industry is largely getting defunded. Venture funds are pointing dollars elsewhere so fewer new companies are being started, while more biotechs are being started in China.
Most new drugs come from biotechs nowadays (not all of them, not GLP-1’s). But many do. If that innovation is happening in China and not the US today then it will create an issue in several years. We will not control our supply chain for a critical set of goods.
Biotech still has a lot of basic science kinds of questions in it too. There's a lot about biology we seem to not really know in large populations. A ton of things we need to know more about before we even talk about commercial applications still.
Is it just me or is the author only making an argument for why Intel is too big to fail? He says hes steelmanning the equity stake but then he doesn't argue why it's necessary. He devotes 2 sentences to CLAIMING its necessary after aruging that Intel is too big to fail.
The article is basically like this:
> Leading edge domestic foundry companies are a national security concern. Therefor Intel is too big to fail.
OK. Many can agree with this. And I think the author makes a very good argument for it. He makes some good points:
- Startup cant replace Intel
- US cant rely on TSMC alone
- Artificial demand could actually improve Intel by solving the chicken and egg problem
But that doesn't answer the question, "why the equity stake?" And for more context, it's replacing what would have been grants with the equity stake. So it's, "Why replace the $XB in grants with an equity stake?"
He does touch on it but it's just a claim thrown in at the end:
>The single most important reason for the U.S. to own part of Intel, however, is the implicit promise that Intel Foundry is not going anywhere. There simply isn’t a credible way to make that promise without having skin in the game, and that is now the case.
OK, maybe. But that now needs to be argued for. The US can give them money as grants. Grants put skin in the game for the US because they require Intel to meet the terms.
Yeah he could have explained that more, maybe he's assuming familiarity with other public-private ventures around the world?
If I was explaining it I would say "a huge equity stake gives you a lot of votes and influence over the company's strategic direction", including what the returns to shareholders should look like.
Think of railways in countries where the government has say, a 50% stake.
Except what the government purchased is a block of non-voting shares as long as the government holds them. So what benefit does that provide over grants?
But they don't get to take part in the decision making with this equity stake either. The shares are non-voting while the government holds them, and revert to voting shares once sold to a private entity.
> over a decade ago but no one thought to find TSMC on a map and ask whether Intel was driving itself into the dirt?
Over a decade ago Intel wasn't driving itself into the dirt. Their failure was just beginning approximately 1 decade ago, starting with their failure at EUV leaving them trapped on 14nm.
That article is from before Intel started to decline. Quoting the end of that article:
> Intel is already the best microprocessor manufacturing company in the world
Intel was not driving themselves into the dirt if they are the best in their field. Instead, I'd suggest looking at when the process nodes were achieved:
I would like to challenge the notion that you absolutely need state of the art fabs to win a war. Most military gear uses "proven technology" several generations behind SOTA. When push really comes to shove there is a lot you can do with the chips you already have and nationalizing the fabs under your control.
The dependence on oil from the Middle East is comparatively a bigger problem for the West (though not for the US with its shale oil reserves).
>It's such a stunning dereliction the US let things get to this point. We were doing the "pivot to Asia" over a decade ago but no one thought to find TSMC on a map and ask whether Intel was driving itself into the dirt? "For want of a nail the kingdom was lost" but in this case the nail is like your entire metallurgical industry outsourced to the territory you plan on fighting over.
There were a few of us warning about this well before it all happened in 2013 and 2014. Predicted the death of Intel, and surge of AMD and TSMC before majority of people even heard of TSMC.
I also feel a little sad about TSMC, now that they have invested a lot in US but US is actively and strategically trying to pop up Intel to compete. But TSMC is at least 2 cycle ahead, meaning 5 - 6 years time. Unless TSMC make any mistakes even in the best case scenario I dont see Intel catching up within that time frame. Especially now they have little to no cash cow. Server, GPU, Consumer CPU are all under threats.
The world collectively (mostly the US) spends trillions on national defense, that spending is unnecessary if we all just got along. I think you're right that everyone spending money on local semiconductor industries is even more wasteful.
Unfortunately, that defense allows hoarding wealth. If the wealth was more evenly distributed globally, there would be little reason to defend against raids.
This is how places like the US despite having 4% of the population have about a quarter of the material and energy consumption. Not to single them out, I am in Australia, it is a similar ratio.
I am not defending this situation, just highlighting its role.
Not all wars are about raiding, especially in the modern era. Putin isn’t interested in Ukraine’s wealth. Nor would a Chinese invasion of Taiwan be about money.
"No wars have been more ruthless and ravaging than “just” wars, fought in “defense” of religion, honor, or principle. If war must be, give me rather a war to capture an enemy’s wealth and territory, based on honest greed, in which I shall be careful not to destroy what I want to possess. " - Alan Watts
I think it depends on what the goal is. Like, lots of countries (and probably a few US state) could, I bet, do their own foundries for, like, 22nm. Process node names are bullshit of course, but we’re talking about stuff that Intel was doing in 2012, Global Foundries in 2015.
22nm is already overkill for a lot of applications. But, like, if your country gets embargoed, you should be able to make computer chips for cars and farming equipment. Top end GPUs? Not necessary. Some basic RISC-V cpu for compute appliances? That should be a capability that everybody has.
That doesn't sound unreasonable. That is Ivy Bridge/Intel Core 3rd gen capabilities. You aren't running a generative AI but can do all manner of work loads. Combined with some software efficiency gains and you could be fairly comfortable.
This part of why I have been advocating for years that the open source/free software folks should be focusing on optimization and stability/security as long term it will probably be much more useful that adding features that can be dumped on top.
Whats wrong with redundancy? Not having redundant supply of anything is a problem as human history has repeatedly shown. I think this kind of modern "more profit = more better" is just a ticking time bomb for a massive disaster, and it isn't like we haven't had any warning signs about critical supply problems for any number of resources and goods.
If you can print the money required with no bad consequences, go right ahead and build all the redundancies.
The problem with bleeding-edge fab is it's a (fast) moving target. It's not a solved problem. And customers can't simply migrate their designs to a different fab, as the designs are increasingly specific to a process.
I do think we need more fabs but not this kind. Very low cost fabs with standardized PDK and open(ish) tools, should be as simple as ordering a PCB. Not going to happen anytime soon though, needs old fabs to stop production and the bleeding-edge to hit a hard wall. Can't compete with fully depreciated legacy fabs/nodes.
Sounds like a huge infusion of cash to highly skilled workers, and supporting the building of skills that can be transferred between companies sounds like a good thing.
This is too glib: If you imagine a world where every critical industry is replicated in every large nation, often inefficiently or inadequately, that’s a world where the average person is much, much poorer.
The premise of this thread is that efficient markets and comparative advantage won’t leave even a large nation with enough of the right competitive local industries for national security or whatever objective.
Thus to sustain those industries (semiconductor fabrication in this case) industrial policy (subsidies, tariffs, government investment, “Buy American” rules, … ) is essential.
I agree that industrial policy is essential for a nation that wants to ensure that competitive industries exist within the nation's economy.
But the justification I replied to was that the nation must inherently suffer material inefficiencies for a nation to do this, due to how economies work, which is not the case (or at least, no real justification was offered other than the heuristic that larger firms are somehow inherently more efficient, which if anything is opposite to my experience in a very large org).
A nation might well implement an industrial policy so as to pessimize its local industries that survive, but that is not required to happen either.
It’s a tradeoff between resilience and efficiency.
You can go for full efficiency if you want, but then like the US auto manufacturers learned during Covid, you don’t have any way to handle disruptions to your business
I don’t think the problem with the Soviets was doing everything themselves, which seems to be working okay for China. The problem is that centralized planning doesn’t work, and the system dehumanized people and destroyed incentives for people to innovate.
People have been raising this alarm for decades as more of our domestic manufacturing is off shored. Few listened then. It's unlikely we will come back from this.
Maybe the problem for Intel is complacency exactly because there is this expectation of a bailout when things don't go to plan.
While other hardware companies got lean operationally and employee wise Intel did not. The ex-Intel employees all paint somewhat the same picture of bureaucracy, layers of (poorly managed) dependencies and reliance on paradigms that worked during late 90s / early 2000s.
If you followed sources like semiaccurate the situation at Intel is not surprising either, they've been reporting on issues there since their inception.
There's a real folly in capitalist countries thinking they can be self-sufficient walled castles. Capitalism by its nature will seek out the lowest cost be it in labor or manufacturing. That means often means outsourcing.
Our system has no breaks for this. In fact it works actively for this, hence the neolib ideal of "just move towards efficiencies, and let the chips fall where they may." This is ideal under capitalism. As long as we avoid the needed migration to socialism, this is the best we can do.
Neolib economies generally work as much as anything "works" under capitalism. The GDP of the USA, median salary, quality of life, etc was the envy of the world until the recent nationalist movement that's based on "insourcing" and tariffs. You can't go back and capitalism migrates to efficiencies, which means outsourcing. Its more efficient to export factories and keep cushy office/service jobs here and drain the profits from those factories overseas.
Nationalism/protectionism and capitalism are fundamentally incompatible, so here we are. Demagogy and populism and "return to the past" mentalities used to win political power are the actual problem here.
Also what exactly happens if intel goes under? We have to buy 'foreign' licensed ARM? Manufacture in Asia? We're already doing that. And we have AMD which is a good, if not, superior product, regardless of manufacturing locale. We don't need local fabs the same way we don't need local factories for a lot of other things. You can't just depress wages with a wave of a hand nor do tariffs work outside of some really focused edge cases.
>The U.S. will be completely dependent on foreign companies
This is true of nearly all things in nearly all countries. Recent nationalist movements won't change how capitalism works and recent tariffs and protectionism has only hurt these industries and the working class. The toothpaste is out of the tube and it cannot be put back in. What we're seeing with the government buying intel is an attempt to do that, and it will fail. Expect more tomfoolery like this until we get responsible leadership, but until then we all have to sit here and watch these various economic horrors unfold. Be it this, inflation, mindless tariffs, etc. This will fail and its obvious it will, but currently it buys political power, so we will go this route because voters, largely uninformed on how capitalism works, think this is the "one weird trick" that will make them wealthy. It won't. In fact, all recent indicators are more negative as these policies continue. It will instead make them poor.
>Also what exactly happens if intel goes under? We have to buy 'foreign' licensed ARM? Manufacture in Asia? We're already doing that. And we have AMD which is a good, if not, superior product, regardless of manufacturing locale. We don't need local fabs the same way we don't need local factories for a lot of other things. You can't just depress wages with a wave of a hand nor do tariffs work outside of some really focused edge cases.
This is the same short sighted nonsense that got us into this mess. What happens if China invades Taiwan tomorrow? They can cut off the supply of chips to most of the world and global economies will collapse overnight. You really haven't thought through the implications of having critical dependence on a single small island that a global power is incredibly invested in controlling.
What happens if there’s a global pandemic next month and every industry experiences massive labor and supply chain disruption?
It sucks for a while; the system is strong and adapts.
I appreciate fabs are multi-year, massive capital investments, but TSMC already has one up and running in Arizona. There are others (including owned by Intel) all around the world. They won’t go poof when INTC is no more.
Efficiency is in tension with resilience. I think the pursuit of efficiency at the high end results in a less efficient system because of all the second order effects.
I like that framing. I also think it’s a disservice to only think in terms of capital efficiency since who really cares how efficient your capital is if you can’t produce food when there’s a shock?
'and I'm happy to make money off the jokes about/normalize the little girl that has to work in a sweet shop in a tropical climate doing it for basically nothing'.
Unless you believe that rich countries should altruistically give resources to poor countries, this is the best we can do. If there were no cost advantages to manufacturing in poor countries, they would have been entirely left out of the global economic sphere and unable to trade anything for industrial machines and technology.
> There's a real folly in capitalist countries thinking they can be self-sufficient walled castles. Capitalism by its nature will seek out the lowest cost be it in labor or manufacturing. That means often means outsourcing.
It can mean outsourcing, but I think your broader point is undercut by the fact that the USD holds a very special place as the world reserve currency. This creates high foreign demand for the USD which pushes up the exchange rate and leads to US exports being less competitive on the international market (i.e. our manufacturing base gets hollowed out because it cannot compete). This is a large market distortion that the US actively defends because it benefits us in other ways. Tariffs and general protectionism is not a good thing in a free market, but that's not really what is happening at the international level.
That's the premise of neoliberalism, you need globalism or the entire idea of capitalism falls apart and every domestic company becomes a crab in a bucket... trying to recapture that lost value with nationalism won't work within the span of political term limits, they're trying to undo something that's been happening for 50 years... we literally don't even have the underlying infrastructure for re-shoring, basics like getting electricity where it needs to go become a problem
They both have strong labor unions and/or collective bargaining agreements the USA does not have. That is to say socialist-coded policy is what is helping here, not capitalist ones.
Their benefits are almost purely from the strength of the working class, hence workers having it better there.
In France, the percentage of employees covered by a collective bargaining agreement, which is very high (around 95-98%)
In Germany, about 50% of workers are directly covered by collective bargaining agreements (CBAs)
In 2024, the union membership rate in the United States was 9.9%, representing 14.3 million workers, while 16.0 million workers were represented by a union under a collective agreement, accounting for 11.1% of the workforce.
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If American workers want a better life they need CBA's and unions, not protectionist tariffs and buying chunks of random tech companies.
That’s Intel management’s FUD building a moat against such startups with the government’s help.
Several billions of dollars is not a scary level of funding these days for such startups to happen. Plus CHIPS pile of hundreds of billions. Plus Nvidia, Google, Amazon, Apple and others can always form a consortium to build a foundry. A lot of options, yet all of them are being killed by the Intel management skillfully working the bronze ear. That is how a tech race is lost - by letting government instead of the market to pick winner.
Intel was the best until fairly recently. Then they still looked like the best to a non-expert observer, and then still looked at least competitive until even more recently. The modern world changes too fast for our governments to adapt to. Especially when we're talking about state of the art semiconductors and our leader was born before the invention of the transistor.
Intel hasn’t been “the best” since the world cared more about mobile in 2010. There GPUs have always been also ran. It just wasn’t a big deal until crypto and later machine learning.
Even for integrated graphics, Intel has been behind Apple’s/TSMC ARM based processor before the Mx based Macs.
The OP is talking about fabrication technology, not end products. Even years into their delays getting to 10nm, Intel had more advanced fabrication technology than TSMC until N7 reached volume in 2018.
What’s the use of having “better fabs” to make worse products that the market doesn’t need and not be a foundry for other companies that can use it?
The reason they are in the shape they are in right now is because they didn’t have the volume to invest in the next generation and even now the CEO said they aren’t going to invest in making a cutting edge foundry until they have customers committed to it.
For me it's debatable that they were "behind" on GPU because I didn't need a bleeding edge gaming GPU. I only needed a GPU fast enough for spreadsheets and code editors, provided at a competitive price and power budget. Intel actually did deliver that.
To a first approximation, no one cares about open source drivers when most PCs are running Windows and servers running Linux don’t care about Intels GPUs
Mobile as cellphone chips? I guess you are right, they were never really all that close to best.
Intel was very competitive in laptops until Apple started coming out with the M-chips. Now, AMD is doing pretty good. Has Microsoft released their Snapdragon surfaces? Haven’t heard much on that front.
Intel dropping the XScale ARM was the beginning of the end. Their iGPU's where fine so long as the peak of usage was google Earth/Maps. But it was wildly under supported and they ended up missing the boat, that could go for a lot of their products.
And it took a long time for mobile CPUs to be considered important. Arguably mobile CPUs still aren't considered more important than desktop, even though they obviously sell more.
Mobile CPUs are almost a commodity these days and fairly low margin especially compared to server chips. Most people really don't care what chip does their phone has and its almost always "good enough" relative to the price.
IMO that's much less of a case for laptop and desktop (let alone server). Even if people don't understand the technical details e.g. Apple's superior performance per watt (or its implications at least) is something a lot more people notice.
This is demonstrably not true. TSMC is ahead because of the volume of mobile and that happened on the back of a lot of investment from Apple - who does make high end chips.
Intel focus on low volume high end chips is another reason they are behind.
TSMC doesen't design or sell the chips. If they have limited capacity they will of course charge more for manufacturing mobile chips if they can sell the capacity to Nvidia/AMD/Apple instead.
ARM chips (and that's pretty much by design based on ARM's business model) are close to being a commodity.
Apple is of course an exception but they are not directly part of the CPU market. And ARM and Qualcomm are barely bothering trying to compete with them because there doesen't seem to be a lot of point. They themselves are pivoting to datacenter because there is just more money to be made there.
> Intel focus on low volume high end chips is another reason they are behind.
I guess that's complicated. It seems like an optimal strategy if you are a chip designer (e.g. Nvidia or AMD vs Qualcomm). Not so much if you are a fabricator. Of course Intel being both makes things a lot harder for them.
> TSMC doesen't design or sell the chips. If they have limited capacity they will of course charge more for manufacturing mobile chips if they can sell the capacity to Nvidia/AMD/Apple instead
That’s the entire point. Intel is behind because their vertical market strategy of using their own fabs only for their own chips doesn’t give them enough volume compared to TSMC who has volume because they are a foundry.
> ARM chips (and that's pretty much by design based on ARM's business model) are close to being a commodity.
ARM doesn’t manufacture chips. The entire argument is that it’s a strategic interest for Intel to manufacture chips in the US. ARM is irrelevant to this conversation.
> Apple is of course an exception but they are not directly part of the CPU market. And ARM and Qualcomm are barely bothering trying to compete with them because there doesen't seem to be a lot of point. They themselves are pivoting to datacenter because there is just more money to be made there.
Apple, Nvidia and to a lesser extent all of the companies that are designing chips and using TSMC as a foundry are more relevant than x86 chips.
Between phones, tablets, watches, and Macs, Apple, etc alone sells more devices with Arm chips than PCs and servers sold by Intel.
They have enough scale to fund leading edge processing.
Qualcomm is a bigger seller of processors than anyone since every mobile cellular chip that I’m aware of except for the very few designed by Apple for the low end 16e is sold by Qualcomm.
> I guess that's complicated. It seems like an optimal strategy if you are a chip designer (e.g. Nvidia or AMD vs Qualcomm). Not so much if you are a fabricator. Of course Intel being both makes things a lot harder for them.
That’s exactly the issue. Intel the chip designer would be better off if they used TSMC and Intel the fabricator would have a lot more funding if other chip designers trusted them enough to use them as a foundry.
Every company that both tries to be vertically integrated and a “platform” fails at one or the other.
Google - The Google Pixel is an also ran hobby project. But they are relatively successful with their products across iOS and Android
Apple - a great vertically integrated product. But no one uses Apple Music on Android unless they are an iPhone family with the one off Android user. iTunes has sucked from day one on Windows and Safari for Windows was rapidly abandoned.
Microsoft - the Surface laptops have gained some traction. But sales are miniscule in the grand scheme of things.
But you notice in the case of Google and Microsoft, they aren’t crazy enough to manufacture their hardware.
My only point was that mobile chips are pretty much a commodity these days and not a particularly lucrative market if you want to maximize margins and growth. The fact that there are way more ARM chips sold in a year than x86 servers doesen't prove much.
> Qualcomm is a bigger seller of processors
Yes, even for their highest end mobile chip (Snapdragon 8 Elite) the estimated OEM price seems to be under <$200.
A midrange AMD EPYC 9004 chip is $4000-6000. Presumably the gross margin is also higher. So hardly a fair comparison. Of course Intel seems to be propping up it's server marketshare by dropping its margins, so I wouldn't be surprised if they are lower than Qualcomm's.
> But you notice in the case of Google
They design their own mobile SoCs though which seems like a fairly serious effort for a hobby project (although being an off the shelf design like almost all ARM chips besides Apple's maybe not)
Reminds me of the desktop/server processor space in the late 90's. At least this time we have a dozen vendors that are all using ARM instead of x86/POWER/DEC Aplha/MIPS/IA-64 & ARM. More chance of surviving together rather than making multiple moats.
I had a Duron chip that, for like two full years in the early '00s, would've required an Intel chip about double the price to beat it. That was wild. I assume the Celeron line in particular only hung on through that period via contract-inertia and brand recognition, because it was a total joke next to Duron, on a bang-for-your-buck basis.
Like I did (at the time) high-end gaming on it, back when gaming used to sometimes tax your CPU and not only your GPU, and in that entire time I didn't ever feel like I would have benefitted at all from an upgrade, it was so far ahead of the curve. And that was AMD's budget chip line! They simply didn't deliberately cripple it nearly as much as Intel did their Celerons.
> "The single most important reason for the U.S. to own part of Intel, however, is the implicit promise that Intel Foundry is not going anywhere."
If the last 8 Months of this year has shown something, it's that every decision the US takes could be considerate, but as likely also completely random and reversed and bent at any moment in the future.
Accepting those risks in order to sell in the US-market (assuming it would be required) requires that the US-market also provides the commercial rewards.
For now I don't see that this is secured in sufficient volume to justify such an investment, considering that it will take YEARS for Intel to actually become a viable foundry and have a customer product ready to be produced there. And I'm not even talking about the potential cost-increase vs. an established high-volume foundry...
> every decision the US takes could be considerate, but as likely also completely random and reversed and bent at any moment in the future.
This my main problem with this investment. I can certainly appreciate the benefit of US government investment to ensure "homegrown" production capabilities. However, this depends a lot on a level of understanding, intelligence, and planning from the US federal government which is monumentally lacking. If no one trusts Intel now, I cannot begin to imagine how anyone would view Intel plus the current US government as more trustworthy.
Just look at the current approach to tariffs as a good example for how current "industrial policy" is being carried out. Unpredictable, vengeful, and declared with little plan or forethought. Why should we expect any differently from other policies?
Add to this the fact that given the government is now propping up a poor performing company there's no possible reason to try to create a new domestic competitor. If you do and you start becoming successful, the government can just increase their "investment" in your chief competitor and shut you down. It's ludicrous.
The point of the article was that there's never going to be a new domestic competitor. It would take hundreds of billions in investment to get off the ground and build a fab from scratch, and they'd be in an even worse position than Intel is currently. No external customer would want to risk using them, and they don't have the internal demand of x86 to keep going on their own.
There are other alterntives to the US Gov taking a 10% stake (and it must be noted that this is for money already distributed to Intel via the CHIPS act, so it's tough to say how the gov having a 10% stake is really helping Intel here, there's no new investment involved and Intel needs ca$h). I agree with the article that there's a significant geopolitical risk to the status quo. I think it would've been better for the president & his economic staff to arrange a meeting of US companies that need foundry services and try to get them to a "come to Jesus" moment re the geopolitical risk to their current operations relying so heavily on Taiwan. The government role here shouldn't be to own Intel (or other companies) but to incentivize those large fab customers (Apple, Nvidia, AMD, Broadcom, etc) to make a significant investment into Intel foundry services. Not sure what those incentives would look like - perhaps tax incentives. There's also the possibility that some kind of 3rd party consortium could be setup to run Intel. This way they're not trying to start from scratch (which would take too long and too much capital), but also allows those other investing companies to have some kind of control at a distance.
I frankly look forward to see whether the US will actually CARE how Intel will conduct its business, instead of simply trying to just reap benefits from it.
Everything can for now be put under the umbrella of "US semiconductor sovereignty", but actually making this happen involves much more strategic planning and investment from the government.
For example, I doubt that Intel has sufficient experience as a foundry to support design-finalization for ARM, they are JUST starting NOW with this.
So who will pay for closing such gaps? Would they force e.g. Apple to use Intel as foundry and swallow all the associated cost, or would they rather accept Apple to source from a TSMC fab (which is built in US for the big customers like Apple and nVidia)
This is relevant how? You can be the most dyed-in-the-wool old school businessman who only reads physical newspapers and the first thing you’d think of is the way all of your suppliers are reporting unpredictability and your buyers are talking about reduced demand. Businesses like predictability and between the chaotic massive tax hikes and aggressively politicizing the federal reserve, they don’t have a stable environment.
I actually think that if we're going to tax-privilege capital gains to a huge degree over wages, it's entirely appropriate for the government to claim some small chunk of non-voting, least-privileged (both to avoid conflicts of interest and fucking up the regular equities & debt markets) shares of every corporation over some size, probably with some other implementation details in there (graduated percentage as company revenue size grows or whatever, that kind of thing). I also think we should consider going back to things like having some parts of the defense industry outright government-operated, like we used to do, which these days might include a chip foundry or two. Not saying we should definitely do it, but I think it should be seriously considered.
... this ain't that, though. It's a one-off, not a reliable broadly-applicable policy, and it's not clear what kind of strategy it represents in the bigger picture. I also doubt the ownership structure is as hands-off as I'd prefer, though I admit I've not looked into the details (if there even are details yet—we've had a lot of reporting on things as if they've happened, that then sometimes go on to never actually happen, lately)
[EDIT] I further think it would be better than the status quo to acknowledge that we have an economy dominated by Zaibatsu now, and to use the government to leverage them for public benefit the way the "Asian Tigers" do/have, though I don't think this is that happening, either. I think we're currently picking the worst of three options, of "intentionally use them to their fullest; break them up; do nothing" (we've been on the "do nothing" track so far, having abandoned "break them up" in the '70s).
He's reported to have many more liberal friends when he was in college, used to be vocally anti trump, wrote a book criticizing rural Americans and their culture before running on a base of them. That kinda stuff.
At minimum he's made a never Trump - maga pivot for political expediency but it also seems like his positions are tied to whatever Peter thiel wants
I'm not so sure that things would settle down if trump was out of the picture. Trump is obviously an active force, but even if he is gone, the forces that led to his rise will still exist. In other words, even without trump there is a strong anti-elite, anti-expert, nationalist/isolationist movement in the US. Waiting for trump to die or go away is foolish.
Sure, but the thing is, from appearances Trump seems to lack the ability to think strategically, to plan, and importantly, to find and listen to people who know things.
Even setting aside most of the culture-war stuff, which is so white-hot right now that it clouds matters, I think almost any other politician other than Trump, AOC, MTG, and probably a couple more I'm forgetting, would be more likely to do that last thing.
Trump's main issue is that he gets all excited and makes rash decisions based on the last person he talked to, compounded by the fact that he chooses who to talk to overwhelmingly based on chump change "campaign contributions" (bribes), family nepotism, or just his existing network of sycophants.
I'm saying all this neutrally toward ideology and left/right. Frankly I think life was fine domestically under both G. W. Bush and Obama, because both of them weren't impulsive and easily swayed to erratic decisions.
The other day when the US's stake in Intel was announced, people assumed it was a political stunt. I suspected it was because of national security interests. The CHIPS act probably didn't get the result US Defense wanted quickly enough. Some details that were glossed over include that there was a chip shortage a few years ago as a result of COVID and TSMC supply chain disruptions that led to a shortage in electronics and automobiles even. This started to look like a national security interest back then.
Second, there is an AI race going on. US intelligence is taking it very seriously and views supremacy of our AI as very important. Recently, the US was pushing NVDA to start using Intel's foundry. I assume it's for national security reasons.
Finally, a couple of details from the Intel deal that were not widely discussed is that the US is taking a passive seat[1]
The government’s investment in Intel will be a passive ownership, with no Board representation or other governance or information rights. The government also agrees to vote with the Company’s Board of Directors on matters requiring shareholder approval, with limited exceptions.
There are also warrants being given whose status is based on Intel's foundry. That suggests the foundry was the interest all along.
> The CHIPS act probably didn't get the result US Defense wanted quickly enough.
It might have helped if they actually distributed the authorized funds. CHIPS act was passed just over 3 years ago now, and Intel never received their grant money (which has now turned into the cash for equity deal of dubious legality).
> Recently, the US was pushing NVDA to start using Intel's foundry. I assume it's for national security reasons.
The real reason is simple, if you've been following IFS: Intel's foundry has no large customers. The free market has spoken and almost every single customer prefers TSMC or Samsung silicon. America was boxed-out of serious world-class chip manufacturing ever since Intel swerved on EULV. If it was for natsec reasons then I doubt the fed would waste their time taking a passive seat when they could claim Intel as eminent domain.
It's not about national security whatsoever; this is part of a last-ditch effort to force Apple and Nvidia to buy American silicon.
I'm not sure they need to claim Intel as eminent domain and that type of move is beyond what I know about but I suppose they could've done that previously but opted instead for market based solutions like with the CHIPS Act. That is really what led to the equity stake. The purpose of the CHIPS Act had more to do with the AI Cold War and securing the supply chain than it did trying to save one particular business. So I believe national security is the major concern and not saving one particular business.
> The purpose of the CHIPS Act had more to do with the AI Cold War and securing the supply chain than it did trying to save one particular business
I just don't think we're ever going to see eye-to-eye if this is your belief. In realpolitiks terms, Intel hasn't been a player on the AI board since Gaudi. And even that was a total flop.
If securing AI compute was the goal, buying Intel is about as large of a mistake as you can possibly make. Even Samsung has more skin in the game at this point. The only logical explanation, given Intel's history, is that they're desperate for customers and need help from the fed. If this is our plan to win the "AI cold war" then we've already lost.
I think it's simpler than that. I think US intelligence is looking to make sure a secure supply chain exists for AI and really that just means NVDA's chips. I have never stated at any point this plan would work well. This is all stated in the reasoning for the CHIPS Act. That may mean pressuring people to use the foundry but I don't actually think the concern was chiefly to win back jobs. The funding from the CHIPS Act was actually withheld since Intel wasn't making satisfactory progress. Also the warrants I mentioned are executable only if Intel drops it's stake in the foundry. I believe this was added since there was talk of Intel spinning that out. So the government seems very interested in the viability of the foundry and less so in jobs.
So my point is that I think US Defense is motivated by national security interests but that doesn't mean this plan is going to work well or that we haven't already lost the AI war. It's probably too little too late. I am just pointing out over and over that I don't think grandstanding is the motive. I am sure that will happen but I think at some point it hit US Defense that relying on Taiwan put's us in a precarious situation.
The issue is that Intel manufacturing chips in the US wouldn’t have solved the chip problems with cars for instance.
What TSMC traditionally does is keep trailing edge fabs online that are fully depreciated and use those to produce chips that don’t need to be leading edge. It wouldn’t make sense to create a new fab for trailing edge chips.
Car manufacturers aren’t going to all of the sudden start using 2mm expensive chips for their cars.
Even for TVs, the BOM for the “smarts” need to be under $10.
14nm is mature and would suit this purpose fine, and they have existing capacity. The business, tools, and everything else around would need to get built out.
Yes. But Intel doesn’t have any customers and do they even have 14nm fabs online and how long will take to move customers to it in the case of a disruption?
To have customers they need to do the actual work of closing deals, building the customer-facing support teams, building all the tooling integrations (PDK, simulation, etc). On the manufacturing side they have to figure out who will do all the stuff besides fab, I think they have 14nm currently in the US and Ireland but the packaging might all still be Asia. It's not something to be done in case of disruption, it's essentially starting 80% of a new company to serve customers who want a US and Europe based supplier. Government customers could work, or public/private joint venture to build commodity parts, but either way they need patient customers who can help work out the problems and pay a premium to do it.
Yes, everything we have out there can already be done on 28nm chips, that doesn't mean that the goal stays idle. And in a car you have hundreds of subsystems to control and monitor too.
The chip shortage only came about because everyone cancelled their chip orders and then had to re-queue in a different order and they found themselves at the back of the line.
Their lack of planning doesn't constitute an emergency on the public's part
Yeah, behind all the partisan chaff, serious people think falling behind in AI could be disastrous. Getting locked out of it altogether because you lost your only source of advanced chips would be even worse.
I always hear about Taiwan and TSMC for Nvidia, but what I never heard until recently is that all these forbidden and banned chips are still assembled into GPUs in China. I am not sure how the US beleives any of this will do much good when the the chips are still sent to China to be completed into GPUs and other AI devices.
I mean obviously it's about chip production, but shitting on the chips act is a political stunt and nothing more.
Building fabs takes lots of money and time.
Intel also doesn't have customers except themselves and have fallen far behind in the fab business and has a decade+ or mistakes to make up for.
What we have here is picking a winner and potentially insider trading/market manipulation with Trump shitting on Intel leading up the "deal".
That was what I was arguing against. It seems like people cannot stop themselves from making this about Trump. I guess he does that himself though. The problem with saying he was shitting on the CHIPS Act is that Biden himself didn't even pay out the money. It's because Intel made no progress on the fab. It's pretty clear behind both Biden and Trump is a desire to have Intel's foundry working. With Intel making no progress on it, I am assuming the call to take a stake in Intel was done to mitigate all the benchmarks Intel said they would make but failed to do. Perhaps the government figured they could pass the money to Intel without giving up the reigns this way. Either way, I am very convinced there is a national security motive under all of this and neither Trump nor Biden went down this path to grandstand on it.
On the one hand, I strongly agree with this article. This kind of state ownership never brings anyhing good. I don't see how this is different.
On the other, it is hard to deny how impressive the new wave of Chinese manufacturing is. No longer are they just making knock offs of Western products with stolen IP. BYD for example seems genuinely innovative, a top product. There are many other examples.
Now, these are clearly not state-ran enterprises, but equally the state is heavily involved. Or, Nvidia is concerned because China can mandate that the whole country pivots to using Chinese GPUs, seemingly with no deteiment to their AI research, while amazingly benefitting their own chip production ability.
> On the one hand, I strongly agree with this article. This kind of state ownership never brings anyhing good. I don't see how this is different.
There's short term stable and long term stable.
Having a BDFL can, when the BDFL is genuinely concerned with the welfare of whatever they are managing, result in something much better than what would be created if designed by committee. This is equally true for software projects and nation-states. China, Singapore, Linux, Python, etc.
In the long term, having a BDFL really relies on that "B" being there, and especially when a nation state is involved, the tendency of human nature to corrupt will likely eventually take over.
Basically, while China is acting with great coordination from the now with good results, they are doomed to eventually either fall to pieces when the diktat is bad, a la "Great Leap Forward", or else transition to a more stable (less authoritarian) system.
They can only do things like:
> China can mandate that the whole country pivots to using Chinese GPUs
so many times before getting it wrong disastrously, and the longer it goes the more likely someone will get it wrong.
They've lifted a literal billion people out of third world, no-indoor-plumbing poverty in the last 30 years.
And, to the point of the article, SMIC is already doing 5nm manufacturing.
Political systems are more complex than dictator/freedom, there are lots of stakeholders. The USA stakeholders tend to be short-term focused financial engineers, this is separate from whether we have checks and balances or what color tie the President wears.
The comments you made about political systems indicate you don't really grasp my point.
- Governments are formed of people. People make mistakes.
- Power tends to corrupt, and the likelihood of corruption scales with the quantity of power and the quantity of people passing through the role (that is, one person may truly have best interests at heart, but will their successor? Or their successor?)
The result of the above is that when assessing long term stability of systems, problems that can happen inevitably will. If a system allows massive sweeping changes, then they will happen, and eventually an incorrect one will be made.
For example, let's take the scenario above, where Chinese companies were ordered to begin using Chinese GPUs. Did that work out? Yes. Could it have gone poorly? Yes.
Will every similar decision go as well? No. Thus, a situation where the "you must use Chinese GPUs" dictation is possible, is less stable than one where it is not.
You brought up a comparison to the US, because the US and China always get compared I guess? The US does this sort of thing more weakly, so gains less instability from this particular source of instability. Whether it's currently more unstable in other ways is left as an exercise for the reader.
Im saying that people live in a culture, and that sets the parameters of what's conceivable.
You're commenting from the post-reagan consensus, which inevitably leads to Intel's current situation. But it doesn't have to be like that, America had a different consensus from 1930-1970.
(BTW, deepseek was trained on nvidia.)
Xi doesn't personally set every industrial policy in China, its a ton of people all over the country. Culture.
I think we're kind of talking past each other maybe.
What I'm saying reduces down to, "the scale of effect that humans are able to have on a system, will eventually lead to problems of that scale on a system".
If you can dictate that all industries within a country must do some thing, that will eventually cause problems with all industries within the country.
Culture doesn't really have anything to do with it. Whether the person making that dictation is Xi or Trump or some random bureaucrat doesn't really have anything to do with it.
Yeah, but that is a continuum and not binary. Xi isnt personally in a room pulling levers that control everything.
There are thousands of bureaucratic orgs and corporations making their own calls, deepseek and qwen were both trained on nvidia hardware, while several chip startups and SMIC ramp up.
The nature of those calls is influenced by culture. If you have a culture of MBAs, you get Intel's actions over the last 15 years.
> No longer are they just making knock offs of Western products with stolen IP. BYD for example seems genuinely innovative, a top product. There are many other examples.
I think many people really underestimate this part. If you watch Back to the Future, they sort of deride Japanese goods as cheap knock offs. Later Japanese became an innovation powerhouse. Same thing happened with China. Previously derided for low quality knock-offs is now known for innovation.
No one seems to have the state-run enterprise explanation for Japan but everyone does with China. Because of Chinese Law. While state help is necessary for companies to succeed that alone is not enough.
In the long term small improvements can enable innovation. But if you get stuck on coasting on laurels for a long time it leads to decline in innovation and especially motivation. And when I mean not only in releasing new products but also in manufacturing and other related areas.
I didn’t even know BYD existed until I was visiting Australia, riding in my cousin’s Tesla, and he pointed to the dealership. I’d never seen one because they don’t sell in the US due to tariffs and the general economic environment. I found it striking that I’d been completely sheltered from this company and its products without even realizing it.
People who think that china makes crap products has probably never been in china in the last 5+ years and their knowledge about their products end up with Shein or Temu crap.
Yeah folks judge Chinese output by 1$ usb cables, ignoring how ie DJI came to the market and ate everybody's lunch including US companies like gopro who basically had to cancel whole drone product pipeline overnight, thats how badly behind they were.
When I picked up my DJI drone many years ago the amount of polish was top notch - hardware worked flawlessly, software was fast and without any glitch. I was looking for any signs like 'designed in Germany' or similar but nope, all Chinese.
People think about 3rd world countries and somehow end up thinking about the very definition of permanent incompetence - russia and its satellites. Like they still put chips from stolen wash machines into their ballistic missiles. When China is in comparison more like a humiliated, smart, deeply focused, hard working, ignoring some pesky human rights group of people who grokked well they don't need to bow to any foreign powers anymore if they focus and work hard on specific goals.
The US government can, for example, discourage using Chinese chips using various policy levers without taking direct corporate ownership. That sort of thing is not that unusual.
Xi is a return towards Communism, or at least Communist-style control. And things have slowly gotten worse over his tenure. I think zero-Covid and the Shanghai debacle lost a lot of trust, too.
I don’t foresee the Party choosing someone more hardline than Xi, though. China has always been authoritarian, but collective ownership was new and an unmitigated disaster. They are too smart to go back that direction, although if they did, I could see that happening.
I really wonder, why so much noise about this case. I agree, semiconductors are extremely important in current world, but did you know, Volkswagen AG is partially owned by State of Lower Saxony (~ 11.8%)?
Also worth to remember cases of Rolls-Royce, Ericsson, and some other unfortunate Western companies, important for many humans, but once became unable to stay economically viable. (BTW it make me laugh, when I got info, Bentley now under WAG, when RR under BMW, as technically, they many decades was one entity)
WAG case is different from Intel case (and other I mention), but there are also many similarities, because of which I think, Intel case may be special for US, but is not too special for West.
And I think, such cases are bad, they are great shame, but also they are signs, we must do something, to make Western produced semiconductors more competitive.
France and The Netherlands have a combined stake of almost 40% in Air France - KLM. It's not unheard of. 10% seems very reasonable for such a critical company for US interests.
I'm confused why you mentioned Rolls-Royce and then in relation to BMW.
The government intervention of RR was nothing to do with the cars.
The original Rolls-Royce company, which included the car division, was nationalized by the British government in 1971 due to financial issues with its aerospace business.
The car division was separated in 1973.
The parent company, Rolls-Royce plc (nothing to do with cars), was sold to the public in a share offering in 1987, meaning it was no longer government-owned.
> I'm confused
...
> The original Rolls-Royce company ...due to financial issues with its aerospace business.
Well, it is because you do not understand economy of business. Unfortunately, main goal of any business is to be viable, not mean profitable, just be good enough to pay expenses need to run things defined as goals.
By definition, ALL old automotive companies started as hybrids - car division to make profits and motors division to make use of outstanding knowledge gathered when making consumer cars (as highest technology of that time). There are nearly no exceptions - Daimler began as Daimler plus Maybach; BMW began as motorized vehicles garages production plus motors business; Renault began as aviation motors business, made automobiles to make additional cash.
When Rolls-Royce divided to aerospace motors and cars, it was already semi-dead business, because their aerospace behavior was non-viable without donations from car division.
To be exact, I don't mean, aerospace impossible to be viable, just RR was.
And returning to our ontopic, Intel was caught in same hole - they lost their superiority and cannot survive without external help, absolutely as RR business.
I think the main counter example to this in the case of Intel is Global Foundries success after splitting from AMD. However GF had to find their own niche downmarket to the cutting edge nodes that AMD requires. So in the case of RR, it’d be like if the turbine segment gave up on SOTA aero engines and instead transitioned into electricity generation turbines (or some less sexy end market).
My personal bias is that in the long term, keeping the different divisions as one whole makes both sides less fragile in the long run.
The other problem I think you’re getting at that being on the cutting edge of a market that is extremely capital intensive is a tough sell to the banks & financiers. I feel like every industry outside of finance is increasingly squeezed out like humanity can survive on securities arbitrage alone.
> Global Foundries success after splitting from AMD
As I know, in ~1990th HBR written article about constantly under-loaded semiconductor fabs and concluded, it is unprofitable to tightly couple them to R&D.
Counter-argument was, that Intel used ties to fabs, to achieve extreme level of scalability, to fill market demand fastest, so marketing won.
What really happen, appeared few new specialized classes of semiconductors - signal, accelerators, high-power (high-current), and low-power (energy effective), and independent fabs made universal pipeline, to fill all market demand, but Intel stuck on desktop CPUs and failed all other classes (as example, Intel was unsuccessful in try to got niche on smartphones SoCs - still have not made cellular modem and nearly failed on GPUs).
To be more exact, Nvidia in reality is most software company from hardware companies, and AMD with their GPU division constantly competes to Nvidia literally head-to-head.
And what was gamechanger - when AMD struck to limits of reliable transistors on one die, they decided to switch to chiplets - they made 2.5D multiple-die design with silicon interimposer, while Intel used their manufacturing superiority to make huge dies with all included.
- Once appeared, with chiplets, AMD could achieve much better performance on weaker but much cheaper technology and won.
So my point - Intel suffered from too tightly couples with fabs, so once they have to adapt their designs and marketing to semiconductors, when AMD successfully avoided this trap. BTW, for this exist much better example - similar problem once killed Atari and Commodore.
BTW, Bentley was part of RR business model, as basically, Bentley was luxury-sports line of RR, in all other properties very similar to RR.
So, when first Bentley separated from RR, Bentley become rival of RR, and now Bentley and RR divide same market. And this is very bad for their economy, very much like Volkswagen Golf GTI eat market from SEAT performance models, but VW already killed SEAT to avoid unnecessary internal rivalry, and RR-Bentley cannot do this, because they are now different business entities and their coordinated moves prohibited by regulations.
Unfortunately, auto industry is core industry of modern economy for a long time. - Semiconductors and computers become core industry much later.
But core industries are just head of iceberg, you may not hear, typically 90% of iceberg are deep under water surface, very much like core vs non-core.
Any way, if large entity from core industry goes under, this could lead to killing domino effect for many "underwater" entities.
That is really big problem, which president Trump tried to avoid, when bought share of Intel.
And no, I disagree about battleground for now. What really important, really good strategists know, wars win by economy, not by military, as military could not withstand if they have not enough money for weapons and equipment.
So, basically, now US is stronger than China, so Chinese tops decide to not begin war which will not be profitable, while US is strong.
When and if China will feel competitive to US economically, they will be much more confident to begin war, so now the best what could do US tops to avoid war - to make China weaker and US stronger ECONOMICALLY.
Current situation very similar to space race, which was started when Soviets launch first satellite in 1957, because ICBMs are basically space scale rockets.
Unfortunately, now China already could make space scale rockets, so competition moved to other space - to computers and semiconductors (and possible branch to nano-industry or bio-nano, or something similar).
> just like everything else being ran by the Federal Government
Well, I don't like when something ran by Federal Government, but I have similar example: when somebody ill by flu, I don't like to use antibiotics, but sometimes must use antibiotics as fast measures to save life.
That is. Previous pro-semiconductor measures was not fast enough, and Intel was in real trouble and need to use something fast, and now we have bought time to do right but slow things.
antibiotics work albeit being shitty for you in the long run. gov never works in short or long term (and especially long term since every 4 to 8 years everything one party did the other one destroys the day after inauguration)
The noise is 99% due to who is president. If President Bernie Sanders were doing exactly the same thing, most of the people complaining about it would be singing praises to his foresight, and most of the people cheering for it would be screaming about socialism. It's completely team-based.
To be honest, regardless of the government involvement or not, I have little hope for intel. Maybe they can, over time, have an AMD-esque comeback, but given their track record of the past few years I'm not hopeful.
The Pentium -> Core2Duo was a great era for intel, but I feel like ever since then they've started a decline in both price/value proposition as well as just general hardware.
The i-series was arguably pretty good for gaming, but then they started exploiting that position by having relatively poor price-to-performance, thinking they wouldn't have any competition.. and they kept the 'we are winning' mindset even while AMD was hot on their heels.
And Core was a lucky happenstance for Intel as they were not innovating at all and fell behind, thank goodness their isreal lab was doing something other than P4 work.
Even recently, we've seen that all intel can do is increase cores and increase power consumption, and they still can't compete. This is itanium all over again, because that is how intel functions.
I wouldn't call chips that fault and/or fail after mere months of operation when run within Intel-specified power and thermal parameters to be "fine".
Intel may be trying out more things than AMD, but perhaps they shouldn't? Maybe they shouldn't be trying to chase ARM envy with mixed-performance cores and disabling MT and the like and just stick to making reliable CPUs.
Honestly, the only thing of Intel's that I'm interested in are their video cards; and that's not because they're good, but because Intel hasn't (yet) all but abandoned their video card business for "AI accelerators"... so there's room for them to become good.
Well, they do have N100 & co. which are very nice low power x86 devices... Not all is bad that carries their name. But the main question is can they succeed as foundry? We will see in a few years I guess.
To be honest, for most Chinese people, the reason we haven't taken action regarding Taiwan is not because of TSMC, but rather our patience with the current will of the Taiwan people. However, this patience has its limits. Even if TSMC has better chips now, China mainland will surpass them next 10 years. You can compare the gap in chip technology between Chinese companies in 2015 and that projected for 2025 to see this trend. As for Intel, we don't really care about it.
China mainland surpassing Taiwan in chip manufacturing seems like it would be very bad for Taiwan. At that point the Chinese have little incentive to “be gentle” with an invasion of the island. It’s in Taiwan’s interest to ensure both China and the US have a dependency on its manufacturing sector.
I think western media overstate TSMC's importance in China/Taiwan relationship. China doesn't care. It's a nice bonus. But ultimately, TSMC doesn't matter to China. Taiwan is ideological for China way before TSMC became important.
Do you think an invasion of Taiwan brings risk of a new, worse status quo? I think that's primarily why China doesn't invade. If it were possible to just achieve an easy, total victory then there is no reason to wait for Taiwanese people to change their mind about joining China.
Im also confused why you say China's inaction on Taiwan isnt about TSMC its about patience, but patience is running out because China wont need TSMC in 10 years. That seems to contradict itself.
Do you think an invasion of Taiwan brings risk of a new, worse status quo? I think that's primarily why China doesn't invade. If it were possible to just achieve an easy, total victory then there is no reason to wait for Taiwanese people to change their mind about joining China.
In my humble opinion, if China wanted to, they could win it now. China's vast resources and manpower will be overwhelming. Doesn't matter if they lose a few battles or takes a few years.
The reason China doesn't want to is because they want a peaceful reunification. They want to wait when it's so obvious that Taiwan would lose and lose quickly that Taiwan simply gives itself up.
> They want to wait when it's so obvious that Taiwan would lose and lose quickly that Taiwan simply gives itself up.
I agree they prefer a peaceful resolution but that would be in the form of Taiwan wanting to become part of China and deciding to reunify. It makes no sense to surrender without being forced to.
China has no reason nor any incentive to invade Taiwan. They are moving ahead with a strategy of overwhelming force and patience. In short China will simply continue to greatly expand its Navy and overall military size. It will do so until its so overwhelming that Taiwan will simply end up voting to join back with China as it will be in its own interest. China has no need to speed this process up and can simply do exactly what it is doing now.. and just watch how things will change in the next 5-10-15 years.
But why would Taiwan vote to join China if China isn't going to actually attack it? Makes no sense. China could have 10x the military of the US and park it right outside Taiwan everyday for 100 years but if they dont do anything to Taiwan it has no incentive to reunify.
The scenario where Taiwan peacefully reunifies is where they decide they want to be part of China of their own interest.
> companies in 2015 and that projected for 2025 to see this trend
It's easy to grow very fast when you are starting from a very low base. Especially when you are chasing someone.
It's a bit like China's GDP per capita. If it continued growing at the same pace as between 2000 and 2020 it might have had a chance to catch up with US in a few decades or so from now. Certainly Western Europe.
Yet based on current trends they will never close the gap (then again who knows what will change in the next 10-20 years or so).
Of course demographic collapse is not that far either. US and Europe at least have immigrants propping them up.
The problem with predicting that China won't catch up on GDP per capita with the West is that the West too went through those growth phases about a century or two ago. It will take a 100-200 years, but China, and the rest of world will catch up. Just a matter of time. A long time no doubt. But it will happen.
I think you point out the most important difference between China and most of the western world, or at least the United States.
China is patient. They seem to be taking a long term, intentional approach. Their goals are long term. In other words, they’ve been planting trees for decades and those trees are now beginning to provide shade. Americans, in the other hand are more concerned with their own self interest and the next financial quarter.
Without going into the lack of military capabilities to mount the largest amphibious invasion post-WW2 up until recently (debatable), I think you’d be hard pressed to find a group of people in the world that would be excited at the idea of being put under foreign occupation (not dissimilar to the “excitement” the Taiwanese had to be occupied by the Republic of China after WW2).
Regardless, TSMC wouldn’t survive annexation Taiwan being annexed by China in any capacity
I think that the difficulty for Intel is that they don't seem to attract the best talent anymore like they did 20 years ago. A big part of the job of running a leading edge fab is solving a lot of very tricky technical problems, and a lot less of those people work at Intel than used to. There are feedback loops in these things. The top people want to work with other top people. To some degree you can try to find those people and just offer them tons of money, which is what seemingly happened with Jim Keller (on the logic rather than the fab side, but still), but then he went and quit shortly thereafter.
Without the right people at the company, you can dump almost infinite money at a problem and still not solve it.
Maybe it's worth noting that the new CEO's explosive statement, Intel would give up development of leading edge nodes (14A and beyond) unless they find a large external customer in advance, hardly got any attention on Hacker News or other websites. But that was almost certainly the reason the US administration got involved. This blog post thankfully makes this point clear.
In the past, most people (including myself) just assumed the worst case was merely Intel selling its chip manufacturing division to some other US company which would then continue to develop new advanced nodes like 14A.
But that was not at all what Lip Bu-Tan (the new Intel CEO) suggested at the earnings call. He said Intel would simply stop developing new nodes and just use the existing 18A fabs as long as there is demand. And then, presumably, closing all the fabs and fully switching to TSMC, becoming another AMD.
The problem with leading edge fabs is they require obscene amounts of capital to develop and are apparently (based on Intel's experience) extraordinarily risky to build.
the president unilaterally extorting 10% ownership out of a company isn't going to build the kind of system that competes with anyone. Big business can't really thrive under this kind of thing any more than corner stores can thrive under a protection racket.
I'm seriously not getting something about the entire argument in this blog post. How does a 10% equity stake make Intel more stable? At best it props up the stock price for a minute. If Intel continues to founder, then what? Federal government will buy more shares? Sell them? How does it affect the company's performance or decisions? Gov is not taking a board seat.
Didn't the US pay $9.8 billion? Intel's market cap is $106 billion, so $9.8 billion for 10% is buying at a slight discount.
If that data is correct, how did the US "extort" ownership?
Look, I'm as terrified of Trump's overreach as the next guy. I could easily see him extorting partial ownership of companies. But I don't see this as being that.
It was because Intel likely wasn't going to get the rest of the grant money, because Lip-Bu Tan openly told the world he won't develop 14A without commitments from customers.
If Intel is going to cease semiconductor development, then why should they get the rest of the taxpayer money? Even under Biden and Pat Gelsinger, the government was signaling to Intel that they may not get the full money if they don't make progress.
What was the legal basis for this "purchase"? Because as I understand it, Trump came in, saw a law he didn't like (CHIPS), and unilaterally "altered the deal"
I don't think it's fair to characterize this as some kind of standard stock sale, as the terms were never set out as such from the start. (And to be fair, there are lots of valid criticisms of CHIPS)
Instead, funding was voted for by Congress... and then a third party came in, threatened to kill it on a dubious legal basis, and extracted protection money (well, shares). That's textbook extortion.
The US Government wanted companies to build fabs in the US so it offered them money to do it.
Intel, which was one of those companies, but not the only one, took them up on the offer and was paid to begin construction on a fab in the US.
Normally when we pay businesses to do things we don't demand equity stakes in the businesses afterwards.
Notably, the biggest shareholders in Intel appear to be retirement funds of Americans - so Trump has just pilfered some money from the retirement accounts of Americans.
This is the correct answer. All the news articles seem to be lacking in details, but the deal did indeed waive the profit-sharing and claw-back provisions:
Why take issue with Trump alone then? Go ask Bernie Sanders. This is a peak at what socialism looks like in America. The country taking a stake is the people taking a stake. Strange bedfellows, perhaps, but anyone far anti-Trump should actually take this as a model of sorts.
I read all of Bernie's platform in 2016 when it was most thoroughly developed, and he didn't call for state ownership of companies like Intel. The closest he got to what you are thinking was calling for public ownership of utilities, which is standard in most capitalist countries, namely buying out/converting private electricity utility monopolies into either public or cooperative ownership.
Also, socialism means whatever the ruling class says it means. For example in China they've redefined socialism to just mean nationalism, which is the opposite of the original intent. Read about "Xi Jingping Thought" and "Socialism with Chinese Characteristics". It seems when ideas like socialism become popular, they are co-opted and stripped of meaning.
I’m confused. Why is equity required when the current loan guarantees were perfectly adequate? The only answer is that the USG wanted more control and leverage than was required to achieve national security objectives. Kinda negates the whole approach to the article in my opinion.
Don't underestimate the pettiness of the current administration. They didn't like the old deal because they didn't make it. It is really as simple as that.
Were the current loan (and grant) guarantees perfectly adequate? Citation needed.
In some investors view they were not.
> "The deal certainly has the appearance of the government clawing back the remaining portion of the previous grant, as the government is getting equity not previously contemplated for dollars already committed," Morgan Stanley analysts
"The trade-off, in our view, is that the company will have the flexibility to optimize its own business model without commitment to public service objectives, which may or may not include foundry services at 14A as articulated on the last earnings call
Fair enough. In reality though they have absolutely committed to “public service objectives” which is a weird way to say “doing whatever the administration asks otherwise they rapidly liquidate their stake”
Not sure how many times people will keep repeating this mistake assuming they won’t be hit up for protection money again later…
I'm not an expert, but I would of vastly preferred a fund to start a bunch of smaller fab companies.
Most systems don't need start of the art processors. Get some minimal fabs set up for RISC V chips. If we removed the profit motive, how much does this cost ?
Alternatively...
Even a refurbished GameCube can probably run a basic rest API server.
If anything we have enough EWaste that we can probably just recycle what we have. At least for most applications.
My ideal situation is one where anyone can fab simple processors at home the same way you can 3D print almost any small object with under $5000 in total expenses.
This article says its steel-manning the equity stake but its actually an argument for Intel being "too big to fail" and then conflating that with an equity stake.
I do find his argument for Intel being "too big to fail" compelling, for whatever it's worth. But it was kind of surprising to only see 1 sentence at the end claiming the equity stake is necessary. I thought we were actually going to get an analysis on the deal and the dynamic it would create.
Key graf: "The problem facing the U.S. is not simply the short-term: the real problems will arise in the 2030s and beyond. Semiconductor manufacturing decision-making does not require nimbleness; it requires gravity and the knowledge that abandoning the leading edge entails never regaining it."
Foundries aren’t the only special case. The test should be, if we can’t afford for it to fail, it shouldn’t be left to the market. Another example? Farms. Also healthcare (expect to hear more on this front in the next few years as more and more hospitals go under, especially in rural areas).
Well, "the market" is just a descriptive model that represents the aggregated pattern of economic activity within society -- there is no "outside" of the market, and everyone, including political states, are just market participants.
Arguing against things being "left to the market" in the abstract is not sufficient to address the particular incentives that are producing undesirable outcomes, and does not offer any viable mechanism for shifting those incentives.
Specific proposals that attempt to operationalize what you're arguing here always seem to gravitate toward giving monopolistic power to a specific institution that invariably demonstrates that its own incentive structures are riskier than those in the broader market, and its failure modalities far more destructive.
To add on, the fundamental question is which risk is more palatable for something we "can't afford to fail?"
Is the risk of a hospital closing for purely financial reasons more or less acceptable than the risk of a state-run hospital being inefficient but guaranteed to exist? For critical infrastructure, I think that's a conversation worth having, and it's one that hand-waving about an all-encompassing 'market' obscures; dismissing a legitimate critique by framing the market as an all-encompassing force is just a rhetorical move.
Your comment seems to suggest that any attempt to change the market results in unfavorable results, but this doesn't hold up to scrutiny. I think you replied with a valid philosophical point, but you leaned too much on using it to challenge that anything could be done (when you yourself presented the idea that a mechanism was needed).
There is no such unmanipulated free market anywhere:
Perfect Competition: In reality, we have monopolies, oligopolies, and immense barriers to entry.
Perfect Rationality: Behavioral economics has thoroughly demonstrated that people do not act like perfectly rational, self-interested computers.
Perfect Information: There is almost always a significant knowledge gap between a seller and a buyer.
Since no truly free market exists, every economy is already a managed one. The real debate isn't whether we should intervene, but how we intervene and whose interests those interventions serve. I read selimnairb's point as that, for essential services, the rules should serve the public interest of stability and access, not just the private interest of profit.
We can examine the risks case-by-case. Here, the government is investing in a foundry. We could view the leverage this gains the US government as increasing the risk for political engineering above the previous risk of financial engineering. In financial engineering, Intel might prioritize its obligation to shareholders. In political engineering (if Intel were nationalized), Intel might keep an inefficient fab open to save jobs or just to win votes.
In the category of financial engineering as a risk, you might lump activity like stock buybacks put above R&D as exemplar of Intel. In fact, a criticism of CHIPS and this new government intervention often centers around the idea that Intel's leadership should not be rewarded.
Finally, a related case on the topic of Intel and national security: China's state-directed economy prioritizes national goals over private profit. After entering "the market," part of its core strategy has been to compel service to national interests rather than shareholders, and it seems that strategy has arguably driven its recent economic rise.
> TSMC’s foundries — and Samsung’s — are within easy reach...
To be honest, every foundry is in easy reach of something that can take it out. If there's a conflict that results in missiles hitting Korean factories, someone will be drone-bombing the power interconnects or driving trucks into water purifiers or whatever and taking out foundries in Texas.
It doesn't take much to ruin semiconductor foundry throughput. Wafers spend weeks or even months progressing from stage to stage. If you can cause a power failure, for example, you can scrap the whole content of the line and there will be no output until the pipeline refills: https://www.forbes.com/sites/tomcoughlin/2019/07/05/nand-fab...
Perhaps process robustness is better now, but in the constant scrambling state of semiconductor manufacturing, I doubt it is better enough to be able to shrug off concerted, deliberate attacks rather than just accidents, fuckups and bad luck.
I’m not sure why what he's saying is so outlandish to many ( at least to some of the papers he’s quoting ): we’re in a world which looks increasingly like the cold war all over again, and my immediate reaction when I saw the headline was ‘ah yes China this makes sense’. We’re not talking private capital - it’s national interests being pushed, for long term reasons, and probably a bit late.
Now I’m European so this seems obvious to me, coming from a culture of high government intervention but I might be very wrong!
The underlying logic is flawed though, there is no deeper action plan since they will still have 0 control over the company and any of its bigger decisions. Also nobody buys from Intel foundries, and for good reasons, this won't change any of that.
We have already seen some pretty blatant insider trading moves from current government, so I wouldn't rule that one out. But its probably way more petty - chips and manufactured war with China is all the rage in media, we all still remember covid situation, so its an easy area to get some political points, while spending other's money.
Most European government interventions, like French literally taking ownership of their common car manufacturers aren't considered any sort of success story to emulate after.
This was always going to be the logical conclusion to US hostile policy regarding the the proliferation of IC fabrication. The US, not cost, was the primary factor that discouraged many countries from pursuing their own IC fabrication capabilities. Had they not been so hostile, many countries would have had enough capacity to cover for the US until it rebooted its own industry.
This is also the same trap that China is barrelling into right now and they will absolutely find themselves in the same position eventually.
They are a threat to American supremacy, and almost all Americans - republicans and democrats - think that supremacy is good for them. It's nearly impossible to convince them otherwise, USA#1.
Look the united states is incredibly bloodthirsty and in my relatively short lifetime has killed absurd quantities of people in wars of choice. China hasn't invaded anyone as far as I know. I'm not saying they won't or don't want dominance but idk why we pretend that somehow China are the warmongers
I mean, to claim china isn't expansionist overlooks their extremely violent formation. That said, they haven't been very expansionist for many many hundreds of years.
China wants to be number one and they have a good chance of doing it. Every nation’s leaders and people want that. It affords luxury and influence. The US understandably doesn’t want to lose their spot. It also helps making this an issue to give it a sense of urgency so things can get done — be it policy or innovation. There’s some game theory in there — e.g Prisoners Dilemma. Treating them as the enemy won’t lead to the optimal result, but if the US doesn’t and they do, it will lead to the worst result for the US. History is not filled with nations singing Kumbaya. I wish it was.
One could argue China may have already surpassed the US or at least equalled it on the world stage as of now. It will be interesting to see how historians view the rise of China and write about the emergence of a new super power.
Just a hunch and I am really going out on a limb here but I could see China wait another year or two and then step in and force a peace settlement in Ukraine. This would really show the world who the new super power is, as the US and Western powers have struggled with this conflict, a patient China could step in and reach a peace deal as they hold significant leverage over Russia.
Yes, this is the attitude I'm referring to. The people who run this country (emphatically including people who frequent this forum) are far more my enemy than anyone in china could even pretend to be.
I also don't think Americans realize how quickly we will slide from relevance once our grip on the world slacks. We could have built this world into something amazing but instead we just got fat.
To be fair though, China has its morons too. If you can't deal with Republicans where you share a common language/culture/history, how are you gonna deal with a Chinese Trump on the other side of the world?
In the last election, Latinos voted 50-50 for Trump. That should have been a massive warning sign.
I like liberals, but they're way too passive. They really need to play the Prisoner's Dilemma in high school until they learn what to do when someone refuses to cooperate.
OT: am I the only one who thinks booting Gelsinger was a huge mistake? Semiconductor business is not one you steer in few years, everything is planned years ahead and he had the right ideas imho.
US has ASML- lots of the patents are ultimately owned by US entities, a great deal of the research and development is done on US soil, and the Netherlands aren't rocking the boat on sanctions, etc.
The EUV light source in ASML’s lithography tools is designed and manufactured by Cymer, based on research funded by the DoE in the 1990s and conducted at various national labs.
Doubtful. It's also doubtful this is about national security, protecting strategic manufacturing or anything else to benefit American people. This is a mafia shakedown.
for all this talk about intel struggling, they seem to be quite capable to continue producing very competitive CPUs and other IP.
my understanding is that they are still doing well in the datacentre world, unless that has changed?
its worth keeping in mind Intel is quite a big company... and naturally, the parts that are chugging along just fine are not going to be making headlines (or much noise at all really.)
In my experience over the last 5 years the vast majority of companies I have worked with have moved to AMD for server purchases. Intel is not competing well on the home PC or server market in recent times at least that is what I am seeing.
100%. I’m seeing all of the new capacity in public clouds shift towards AMD. It’s hard to beat faster for cheaper. ARM has an even stronger value proposition, albeit with the requirement of compatibility. The switch would happen faster if there were enough equipment to go around… we switched all of our CI fleet to the latest AMD generation C4D‘s and got 36% faster builds, but had to go back a generation because GCP kept running out of boxes for us.
There is a lot of doom and gloom regarding Intel, but there are also signs of life. Intel is starting to show off products made on 18a and is slated to ship at least one product on that process this calendar year. Meanwhile TSMC has been stuck on 3nm for quite some time and it appears that there will not be a product with TSMC 2nm this year. If both of these prove true, Intel will have roughly caught up in terms of process. There is a lot more work to be done, but do not underestimate how quickly Intel's fortune can change if they manage to start hitting their mark and TSMC falters even slightly.
The book "Apple in China" by Patrick McGee focuses on this point in early 2000 top 5 contract manufacturers were in north america. By around 2010 the top one was foxconn which was larger than the next 4 combined. This is going to play out everywhere and result in extreme circumstances.
I think the issue is not just that that its capitalism causing wage issues, its the fact that people think they can control the painless socioeconomic transition that comes with incomes increasing with matching productivity gains, or worst halt and try and reverse it. One or more things will eventually cause a pop/crash/revolution:
- Endless high returns on capital: Wealth accumumlation for < top 50% of the people causes high enough inflation as these highly capitalized groups look to buy every single asset (think blank street day care and paying 200$ per month for trash disposal) to turn them into rent seeking ones.
- Large debt countries moment of reckoning: At some point a black swan event leading to higher inflation with no leg room for more borrowing like 2008. Bond markets will dictate fiscal tightening and politicians will likely take control of monetary and fiscal policy ending capitalistic bedrocks for them. This will feed into the Endless high return on capital cycle. Government will bow out of every service to service the debt through taxes.
- People not seeing any upward progress in their economic status or careers: Large populations find high upfront cost/headwind to enter into new economies. Failure to adapt, political choices become extreme.
- Deflationary effects due to progress of china, korea, japan etc due to cost of innovation crashing: At some point large economies become advanced enough that cost of highly specialized goods exported by private companies in highly indebted countries will fall causing non dollar currencies to experience deflation and undermine reserve currencies.
The only countries with leverage left would be the ones the ones with technology that is highly integrated into the society at a level that its people can rapidly change behaviors and adapt without losing wealth/landing on the street. After all you can convince a person he wasn't cheated by God/Demagogue, but you cannot convince them that they are not hungry.
Some of this is already happening in fits-and-jerks motion relative to pace of progress since industrialization. Add things like climate change to the mix and you might not be able to ask "how fast?".
The problem with that is that Huawei makes world leading products in a lot of categories and Intel's remaining dominance is slipping. I don't see how this stake impacts any of that
My understanding is the piece argued state support as investor and customer might turn intel around.
Huawei started with much worse product and foundation than intel, but the state sponsorship kept it going, plus they have ultra hard working people and occasionally some shameless thieves, which made them where they are.
I didn’t realize steelmanning requires strawmanning the opposing view.
A 10% stake does what? Nothing. The U.S. doesn’t even get decision making capabilities.
OTOH, the CHIPS Act created an incredible amount of semiconductor manufacturing capacity from a wide variety of manufacturers including both TSMC and Intel.
So the real question is what does getting a 10% stake do, that the CHIPS act which Trump is trying to retroactively destroy, isn’t doing much better?
"Corporate" in that quote refers to groups consisting of something like entire industries, including employees and employers, like a guild. It doesn't refer to a business legally recognized by the state as the word is commonly used today.
But when you link evidence that hitler had secret meetings with capitalist business leaders to bankroll him, the entire mefo bill nonsense, etc to the "were nazis socialist?" argument you get downvoted.
If you wanted to tax capital via equity stakes, you'd simply have demanded a much larger stake.
What we're doing is starting down the road of "capitalism with Chinese characteristics". It's a tacit admission that the Chinese model can be effective at achieving a nation's strategic economic goals. (More effective than the model we previously championed.)
The real flip side in all of this is that everyone else sees what we're doing for what it is, and they also implement capitalism with Chinese characteristics. Which in and of itself wouldn't be bad. But what if nations like India or Indonesia turn out to be just flat out better than us at it?
Or, God forbid, the nightmare scenario, which would be nations like Brazil being better than us at it?
10% is not a controlling stake, and US already controls Intel via regulation.
Most importantly, Intel's market cap is minuscule $100 bln, it doesnt allow control over meaningful amount of capital
Socialism with Chinese characteristics - it reduces private wealth and curbs control of oligarchs like Jack Ma. I feel like US is the opposite, where oligarchs directly control the government already
I didn't mean the intent is to control Intel's capital.
I meant controlling capital flows. In this particular case, controlling the flow of capital in a strategic sector out to TSMC et al. The idea is that regulation, state backed companies, etc etc all concert to oblige the market to keep those capital flows inside of your jurisdiction.
China does the same. It's extraordinarily difficult to exfiltrate capital from China. One of the only ways to do it is to turn the capital into products and exfiltrate those products out of China in place of the capital.
I think, long term, the US wants the same sort of environment over here.
Nationalized companies don't necessarily mean socialism or fascism but fascists did like giving the state fairly tight ownership and control of companies. It depends on how they handle that - if you see Trump loyalists embedded in lots of boards or top down instructions given to industry that might be a sign.
I'd suspect Trump would model his on Saudi Arabia's PIF rather than Norway's fund. The PIF invests in companies worldwide, including Uber and Blackstone, as well as providing capital for mega-projects like NEOM.
Honestly the fact that we don’t have a sovereign wealth fund invested in US equities is just silly. I get that you don’t want too much central interference in the economy but it feels like leaving money on the table
> President Donald Trump’s announcement on Friday that the U.S. government will take a 10 percent stake in long-struggling Intel marks a dangerous turn in American industrial policy. Decades of market-oriented principles have been abandoned in favor of unprecedented government ownership of private enterprise.
Really? A decade and a half ago the US government owned a 60.8% of GM and none less than Barack Obama was directing management changes.
The US has a long and well established history of being a mixed-market economy to varying degrees.
Yes, along with a number of other US companies. This was done to stabilize the economy in the wake of the 2008 economic crisis. It was a very hot political topic at the time.
I don't understand how they can say Democrats are Communists while they do this. It's going to be interesting hearing everyone who spent decades spilling volumes about the evils of communism and the failure of the USSR quickly pivot to being champions of state capitalism.
I think you are putting too much faith in the belief that people actually understand or care about what is behind some of these labels. They are ultimately just a way to create an "us" vs "them" dichotomy.
You're mixing up communism and nationalization[1]. I suppose those are related concepts, but since communism ostensibly serves the working class, I'd expect to see nationalization under communism/socialism to start with things like health-care, civilian infrastructure, and agriculture, whereas under fascism (which famously also nationalizes), I'd expect the industries which help the state expand (military and military infrastructure) or control its own population (surveillance, telecom, police) to be prioritized in nationalization efforts.
I don't think the person you replied to is mixing them up, but instead, criticizing others who use "communism" as a blanket term for most any government involvement in the market.
I actually think the model here isn't communism, it's fascism/corporatism. They aren't nationalizing directly, they're intimidating private enterprises into compliance and cooperation.
I think that's an incorrect framing. A more proper framing is that some industries are key to ensuring a nation is not dependent on another for key products that ensure a dominant (not supplicant like say Ukraine) position with regard to defence and therefore independence.
This is recognized by the current administration but is also a continuation of the previous administration's pivot toward undergirding and supporting key industries. I hope it's also recognized by any subsequent administration.
I think even neocons now recognize the "new world order" is not sustainable if some players don't play by the rules that they all agreed on.
No country with an ability to avoid it wants to be subject to being held by the neck.
> A more proper framing is that some industries are key to ensuring a nation is not dependent on another for key products that ensure a dominant (not supplicant like say Ukraine) position with regard to defence and therefore independence.
That was why they passed the chips act to direct this money to Intel. It has nothing to do with Trump forcing them to dilute shareholder value in order to get money that they had already been allotted by congress.
One of the key features of fascism is keeping up the illusion of private property and other individual rights. When such abrogation of rights ultimately results in disasters, our intellectuals will lay the blame at the foot of capitalism without having ever really understood what it was and why the current administration is not pro-capitalist and neither is the GOP.
I mean both sides are guilty. ‘08 saw us bail out banks and now the likes of Fannie Mae and Freddie Mac are GSE’s.
The difference with Intel vs the banks, is Intel has assets that take decade plus to procure (foundries), and not something easily replaceable.
I think the US messed up big time in terms of national defense by not having some Gov program that does semiconductor manufacturing owned 100% from the start by the DoD. Now we need to do some grey area purchase of a failing company.
> I mean both sides are guilty. ‘08 saw us bail out banks and now the likes of Fannie Mae and Freddie Mac are GSE’s.
George W Bush (also a Republican) was POTUS in 2008 and it was his administration that oversaw the bank bailouts (the program continued under the Obama administration but was designed and implemented by the Bush admin) and the nationalization of Fannie and Freddie.
> now the likes of Fannie Mae and Freddie Mac are GSE’s.
Uh.. they've been GSEs since their founding. (12 U.S. Code § 1717)
"Yeah but in 2008 the government bought shares in th.." Doesn't matter. Still GSEs before that. "But they were privatiz.." Doesn't matter. Still GSEs after that.
Every time someone says "both sides are the same" a billionaire flooding media with 'both sides' messaging in order to distract from what is going on's taint twitches.
> Government involvement in private business almost always ends badly.
I don't say this to argue with the author or try to refute anything they are saying, but this bit toward the end is a very interesting position that I think displays the level of anti-regulation, anti-taxation, anti-government propaganda we are bombarded with by corporations.
People just kind of assume that the government can't function or work with private enterprise in any way when it does that all the time.
China is the elephant in the room of a counterexample. Who built the largest high speed rail network in the world and who owns them? Or how about the US military industrial complex? Or how about SpaceX? What about the time when the US government ordered factories to build Jeeps in WW2?
I don't really agree with...well...anything that the current administration is doing, but owning part of Intel isn't really horrendous. The horrendous part is that it came out of nowhere with apparently no congressional appropriation of funds/approval of such an endeavor.
If the US did go all the way with 100% ownership, would that even be a bad thing? American companies would have access to cutting edge chips which would presumably be able to be sold near cost at least on the domestic vs export market. No where on earth would be able to offer as competitive a margin. Innovation in so many categories would be spurred and would happen stateside.
> Intel fell behind TSMC, who was powered by massive orders from Apple in particular
> the China concerns are real, Intel Foundry needs a guarantee of existence to even court customers, and there really is no coming back from an exit. There won’t be a startup to fill Intel’s place. The U.S. will be completely dependent on foreign companies for the most important products on earth, and while everything may seem fine for the next five, ten, or even fifteen years, the seeds of that failure will eventually sprout, just like those 2007 seeds sprouted for Intel over the last couple of years. The only difference is that the repercussions of this failure will be catastrophic not for the U.S.’s leading semiconductor company, but for the U.S. itself.
You know, we can just provide critical industries with direct assistance in the form of subsidies. There’s no need for the US government to take an equity stake.
Nationalizing companies - and that is essentially what we’re starting with Intel - worked out horribly for the Brits last century.
Intel is dead to me for capitulating to narcissistic, authoritarian, inhuman, apathetical Donald Trump.
There is no one in the Trump administrator that has the balls to tell Donald Trump he is and idiot and doesn't know what he is talking about. Intel will bend over backwards and fail because of this mentality. Donald Trump knows better than all the engineers at Intel according to his followers. Just like when stated he knows more about dish washers than anyone else in the world.
Intel will need to hide the actual course their are taking to actual product a viable solution. This scenario seems to mirror the development of the MP43/MP44. Government was against it because the administration was too dumb to understand it. Government will also like short versus long term gains because the short gains allow for quick propaganda usage.
Let me just say, for those of us who remember the 1990s and 2000s, Intel's drop off has been something nobody would've predicted. It's hard to overstate just how dominant they were (other than the fairly brief but significant Athlon64 era). And even when they were behind on consumer CPUs, which they were until the Core Duo/Centrino platform (which was really the Pentium 3) saved them from the Pentium 4 disaster, their fab ability was second to none.
So what happened? Capitalism happened. More specifically, financialization happened. Everything US companies does comes down to simply cutting costs and increasing profits for short-term financial performance. There is (now) absolutely no long term thinking. CEOs get parachuted in and stay just long enough to collect a huge golden parachute before the merry-go-round continues. And who are approving these massive CEO pay packets? Other CEOs who sit on the board.
We've seen this exact same thing happen with Boeing. The only things holding Boeing together are the inertia from earlier successes, the 737 type rating monopoly for budget airlines and defense contracting. Just look at the Starliner project to see Boeing actually try to build anything.
An example of this financialization is the likes of Dell, Gateway, IBM, HP, Compaq, etc all started to cut costs by offshoring parts of their operations to Taiwan. At first it was just assembly and then it was certain parts (eg motherboards) and at some point they had completely funded the Taiwan PC industry and created Asus, Acer, MSI, etc. US computer manufacturers completely paid for the Taiwan PC industry by short-term profit seeking.
There are multiple ways to describe China's economy but the most accurate and relevant for this topic is that it's a command economy and the coming years will show just how much more devastatingly effective this will be. Really the only thing stopping Chinese companies from destroying Western competitors is trade barriers (eg BYD).
So I think the US government should take equity interests in companies they bail out rather than just giving them gifts or even loans. The government should (IMHO) also take equity stakes in any extraction companies (eg oil and gas). China shows this can work.
So why won't it work here? Because the administration is both corrupt and incompetent. Everything done by the administration is to line the pockets of politicians and the wealthy on a very short-term basis. You see it in Congressional stock trades (eg buying up Intel ahead of the announcement).
As for the author, I suspect he represents the American corporate view that any kind of government intervention (beyond bail outs) cannot work because they don't want that long term. It would reduce profits and/or make a few people slightly less wealthy. They spend a lot of money on propaganda to convince ordinary people that corporatism is good and collectivisim of any kind is bad, that governments aren't capable of anything, etc.
All Western companies and billionaires want is public-private partnerships because they're a massive wealth transfer from the government to the wealthy. They don't want the government taking away profits from private hands.
Counterexample: AMD almost died and see where they're now.
Intel needs a major shakeup, it has been brewing for a long time, but coffers were too full. Cushion is gone now, urgency is now understood by everyone; now it takes a visionary and some successful execution, for once.
If you say corruption is the difference, maybe - but I wouldn't be so pessimistic... yet.
"Doc Burford contends that the true danger facing teams today isn’t competition, disruption, or lack of capital—it’s leadership devoid of expertise, decision-making dominated by superficial metrics, and a culture that values appearances more than actual value creation. Sustainable success comes from building things people want, not engineering facades to appease investors or the market. Relying solely on executive titles or data without understanding the craft or customer rapidly leads to collapse."
Have to agree and think this encapsulates alot of what we have been living through in the US over last few decades.
I'm surprised I haven't seen this before. Thanks for mentioning it. It is long and I did skim some sections but I read large chunks. I'd actually be curious to know the author's politics because that is a deeply anti-capitalist essay (which I agree with, for the record).
The Bungie grenade example was funny because I've seen this exact same ignorant data fuckery. Blizzard does this with World of Warcraft now because they're tuning talents that classes have based on how much they're used, which ignores how often people just copy builds and how some abilities are just inherently fun (as the grenades apparently were). The net result is they just keep nerfing anything people like.
When he was talking about Valve and Steam and EA and sports exclusivity, he may as well have just said "enclosures" (in the capitalist) sense because that's exactly what he means.
Every modern corporation is just looking for a formula that they can repeat ad nauseum. He talks about this with media properties and the Marvel and Star Wars slop (my word, not his) that we get as a result. This is fundamentally incompatible with creative projects, be it movies or games.
One of the most destructive ideas to come out of the 20th century is this idea that a good business leader can manage anything. So we get a lot of "leaders" who end up running things they know nothing about and in large companies, "leaders" get shuffled around every 6-12 months on purpose, to avoid them ever failing because they're never anywhere long enough to see the consequences of their actions.
You see that with the VP shuffle at any large tech company.
I also appreciate that he was anti-NFTs as I was for the exact same reasons: it doesn't actually solve any problems or give consumers anything they actually want.
Yeah, one of the paradoxes I found was on the one hand talking about being responsible for projects making large sums of money, but, well...it doesn't seem like he's seen much of it.
But indeed I feel like at some level there's been a pendulum swing from, let's say "stories" to "data" - indeed he touches on sabermetrics/McNamara. I like how he torches this: data is important but it's not enough (the map is not the territory) -- I started wondering about this a lot for example with Windows. "Oh, we removed this feature because telemetry showed it wasn't used." Well, why? Because it wasn't useful? Because it wasn't discoverable? Because it wasn't intuitive?
And that assumes the numbers are even any good: I remember from one of Sinofsky's Windows engineering blog posts, in which he talked about some feature and the percent of sessions in which it was used. And I thought, well, hold up. I hibernate and rarely restart, whereas many less sophisticated users shut down their computer entirely. So does that mean they effectively are counting those non-power users a lot more than me because they have more sessions?
And then there are other second order effects. If you lose your power users, do they then stop recommending your product, and what then? I see your net promoter score and raise you Goodhart's law (once a measure becomes a target it ceases to become a useful measure)
> There are multiple ways to describe China's economy but the most accurate and relevant for this topic is that it's a command economy
That brings up an interesting point. It seems to be a conventional wisdom that centrally planned economies don't work (and did not work in cases where they were tried) as well as Western-style capitalism because of the communication and command bottlenecks.
But what if those bottlenecks have been greatly increased in the information age of Internet, other global communication networks, and data collection? The western-capitalist system has the problem of getting stuck in local minima, being driven as a network of actors. What if the downsides of that are finally greater than the performance hit due to central planning bottlenecks?
First, as you say, because of communication bottlenecks. 300 small bakeries (number made up) keep a better eye on how much bread is needed in Manhattan than a technocrat in DC, or even Albany. As you say, we now have the communication technology to overcome that.
But second, there is the command problem. You may be able to get the data there, but who's going to make the decisions? They were made by 300 (or however many) bakery owners; now they're going to be made by one or a few people. They may have the data, but do they know what to do with it? Do they know enough about bakeries and bread? Do they have the mental capacity to replace 300 people?
This gets worse as you get bigger scale. What if you're not just trying to do the bakeries of Manhattan? What if you're trying to do all the food supply in Manhattan? All of retail in Manhattan? All of retail in the whole country?
The other problem with a commander is that they can decide that they want something, whether or not the data supports it. And their subordinates may decide that they'll get better promotions (or at least keep their jobs) if they 1) do what the commander says and 2) tell the commander what he wants to hear.
Better ability to communicate the data does not fix the second problem at all.
You don't really micromanage things, just like managers in a company shouldn't micromanage things. You don't make decisions on how much bread should be made by each of the 300 bakeries; you decide that making bread itself is important so you give subsidies. You decide that making bread locally is important so subsidies are only available to locally made and not imported bread. You decide that whole wheat bread is more important than white bread so you give subsidies only to whole wheat bread.
What is "conventional wisdom"? It's propaganda, basically.
You might be tempted to think of academics as if they're operating independently, almost as if they're in an Ivory Tower where they bless us with missives occasionally as they make deep, apolitical discoveries. But that's just not the case.
There is an entire ecosystem of think tanks and funding to push the neoliberalism agenda. This is entirely self-interested. And it's not necessarily that funding is buying particular opinions. It's that anyone who contradicts this narrative simply gets self-selected out of the academic grants pipeline.
I stend to refer to this as the Tyranny of Austrian Economists [1].
There is an entire industry built to convince people that capitalism is good and collectivism of any kind is bad. It also misattributes the wealth of the developed world to capitalism when it's really about exploitation (eg slavery), colonialism and imperialism.
It's really no different to all the industry funded tobacco research that "proved" how safe smoking was.
Africa isn't poor. The people might generally be poor but Africa is not. It's simply been looted by the West. You don't commit resources to an imperial project that is poor.
If command economies are so unsuccessful why do they need to be isolated and starved (eg Cuba)? Won't they just fail on their own? The whole point is to punish any contradiction to capitalist dogma and to engineer their failure to prove that point.
> So I think the US government should take equity interests in companies they bail out rather than just giving them gifts or even loans.
The US government never gave bailout and gifts to Intel. The original agreement was profit-sharing with Intel through the CHIPS act is standard with any business wanting the funds. All Trump did specifically for Intel was alter the deal to be an equity stake instead, which will still only be beneficial is Intel is profitable.
Your entire comment is faulting on this premise. Please stop spreading this lie.
This is a bailout to Intel. It's essentially the US government pfoviding guarantees to Intel and its customers. How would you describe that as anything but a bailout?
But really I was talking generally, such as the bank bailouts in 2008. When a bank normally fails the FDIC comes in and takes control of it including ownership. The shareholders are SOL. In my mind, this is exactly what should've happened to all the banks that were essentially insolvent.
As another example, the US government bailed out LTCM in the 1990s when there was a willing buyer (Warren Buffett).
> Recipients who receive more than $150 million in direct funding "will be required to share with the U.S. government a portion of any cash flows or returns that exceed the applicant’s projections by an agreed-upon threshold," the department said.
> Companies winning funding are also prohibited from using chips funds for dividends or stock buybacks, and must provide details of any plans to buy back their own shares over five years. The department will consider an "applicant’s commitments to refrain from stock buybacks."
> So what happened? Capitalism happened. More specifically, financialization happened. Everything US companies does comes down to simply cutting costs and increasing profits for short-term financial performance. There is (now) absolutely no long term thinking.
Blaming real-world problems on nominalized abstractions is quite unhelpful, especially when those abstractions are all-encompassing ones like "capitalism" or "financialization" which mostly represent patterns of behavior that have always been present.
Identifying specific shifts in incentives or intentions that resulted in different motivations or intentions becoming dominant is difficult, but there's really little point in engaging these conversations without at least making an attempt to do so.
> As for the author, I suspect he represents the American corporate view that any kind of government intervention (beyond bail outs) cannot work because they don't want that long term. It would reduce profits and/or make a few people slightly less wealthy. They spend a lot of money on propaganda to convince ordinary people that corporatism is good and collectivisim of any kind is bad, that governments aren't capable of anything, etc.
"Corporatism" is collectivism, and much of the critique of these kinds of interventions stems from the correct recognition that political incentives (a) are deeply entwined with commercial ones, not a counterbalance to them, and (b) often have even worse failure modalities than prevailing economic incentives.
How is this ‘equity stake’ different than nationalization? (The thing that soviet socialism did to russian property and business a hundred years ago). After all the government prints the money. So instead of just taking control of a company the govt prints the money to buy it. Isnt it the same thing?
And where is the example of a successful govt run business?
Why dont we encourage businesses here w free trade zones?
All of these questions seem more like claims. And I largely agree in spirit. Im not a fan of the government buying stock with the money that would have been given as grants. However,
>How is this ‘equity stake’ different than nationalization?
Ownership scope and control. A nationalized company is owned and run by the government. This equity stake is the US buying stock in Intel instead of issuing the money as grants. I would agree this creates conflicts of interests for both parties. And that it shouldnt happen. But this is wildly different than nationalization.
It is a minority stake so they won't "control" Intel in the way we typically associate with "nationalized" businesses.
> And where is the example of a successful govt run business?
This is a bit of a loaded political question until you first define "success" and "business". Most of the reasons you'd even want a company to be run by the government in a mixed-market economy are precisely because you want it to be run differently than a private company.
The USPS is a really good example. Most of its modern problems are exclusively the result of politicians sabotaging it - given the constraints it operates under it's wildly successful. Even some foreigners I know have a positive view of the USPS because of their interactions with it (shipping goods to the US).
It offers good service to everyone in the US - even people living in the middle of nowhere - with fairly good delivery speeds and strong reliability. I can't remember the last time I had a package or mailpiece get lost, and I think I've had a package get damaged exactly once in my entire life.
> And where is the example of a successful govt run business?
If you look at the list of largest companies by revenue [1], 4 of the top 6 are state-owned. (I'm not saying I support this move by Trump - and natural resources are probably different than technology, etc.. But just to answer the question).
I wouldn't read too much into it. I think this is just the Trump administration buying the dip. they're gonna invest heavily into Intel to reduce TSMCs political leverage, the stock will go up 1000%, and Trumps friends & co. (& everyone who 'got the signal') get rich off it, US semiconductor industry is revived (maybe?), and everybody(?) wins.
This isn't unprecedented - I think Trump really set the tone with TRUMPcoin saga, which was very wild-west. a lot of people lost money, and others got awfully wealthy in a flash. but ultimately, it was legal: both winning, and losing.
Then you had Trump dipping the S&P and telling everyone "nows a great time to buy!", which IMO was even more diabolical than the trumpcoin stuff.
I think the signal is clear: the concept of "securities fraud" has become the financial equivalent of arranged marriage & dowries, and in its place we welcome the "free & open market", double edged and all.
hold it carefully or you'll cut yourself!
like it or not it seems to be working. the wealth disparity between the US and everyone else is growing (to the US favour). I think if the US starts arguing 'youre either with us or against us', most people today will go full FOMO into the US - even the most ardent patriots will quietly shift all their assets into the US side.
now we hear that Trump will allow 600k Chinese students to study in the US - has there ever been a greater inditement against the CCP? What does it say about the "Chinese Century", when their brightest minds are clamouring to get into Stanford or MIT?
Pax Americana for yet another century, I'm all in.
>ntel making decisions for political rather than commercial considerations
> Intel’s board prioritizing government interests over their fiduciary duties
How about Disney, Mozilla and every major corporation? You must hire right people (including this lame CEO and board), or no loans and contract for you!!!
US government pushed really really hard their agenda onto ALL industries without any lube for past 40 years!
If US gov actually directly express what they want, and just buy 10% of strategic company on open market, it is super refreshing!!
To have a conversation about the US government buying a stake in Intel, and the threats of China in that space, requires one to have a conversation about both politics and ideology. It’s disingenuous to claim anything else. And to point out the irony of the passing fad on straws but deep love of fast fashion highlights the hypocrisy of US society in general and why we are incapable of having nice things or getting anything meaningful done at a scale of other countries such as China, Taiwan or even South Korea. And love or hate DEI you also can’t say companies like Target jump on and off that band wagon at shareholder will, when they aren’t ever jumping on the “we should invest in R&D and the next generation” because why would they, we haven’t asked them to so why would any other company Intel included.
The purpose of HN is to discuss things in the spirit of intellectual curiosity. To respond to an article about chip manufacturing with such a generic ideological flamebait line as "You can’t build a foundry on DEI, but you can feel good about yourself as you virtue signal about straws as you buy fast fashion" is the opposite of intellectual curious discussion. If the topics of DEI, straws and fast fashion are mentioned in the article or are relevant to the content of the article, sure, write them into the comment in a way that is relevant to the content of the article. The way you've invoked these themes, without any clear relevance to the article's content, is just what we're trying to avoid on HN. This is not new or difficult; the guidelines have been in place for many years and make it clear what we're trying for here.
I’ll be honest: there is a very good chance this won’t work .... At the same time, the China concerns are real, Intel Foundry needs a guarantee of existence to even court customers, and there really is no coming back from an exit. There won’t be a startup to fill Intel’s place. The U.S. will be completely dependent on foreign companies for the most important products on earth, and while everything may seem fine for the next five, ten, or even fifteen years, the seeds of that failure will eventually sprout, just like those 2007 seeds sprouted for Intel over the last couple of years. The only difference is that the repercussions of this failure will be catastrophic not for the U.S.’s leading semiconductor company, but for the U.S. itself.
Very well argued. It's such a stunning dereliction the US let things get to this point. We were doing the "pivot to Asia" over a decade ago but no one thought to find TSMC on a map and ask whether Intel was driving itself into the dirt? "For want of a nail the kingdom was lost" but in this case the nail is like your entire metallurgical industry outsourced to the territory you plan on fighting over.
If I may add my view as a formerly high-achieving semiconductor worker that Intel would benefit greatly from having right now, a lot of us pivoted to software and machine learning to earn more money. My first 2 years as a software engineer earned me more RSUs than a decade in semiconductors. Semiconductors is not prestigious work in the U.S., despite the strategic importance. By contrast, it is highly respected and relatively well remunerated in the countries doing well in it.
From this lens, the silver lining of the software layoffs going on may be to stem the bleeding of semiconductor workers to the field. If Intel were really smart, they’d be hiring more right now the people they couldn’t get or retain 3-5 years ago
We have developed an economy oriented around selling one another websites, and we are only belatedly noticing that none of our enemies seem to have followed.
It’s ridiculous. It’s so easy to find VC funding for software but heaven forbid you try and make agricultural innovations. Biotech is slightly better but still a struggle. Hardware only counts right now if it’s defense tech but even then people would rather have another SaaS.
I'd say that VC funding may be an inappropriate tool for that. VCs want you to either grow fast, or fail fast. Not necessarily to bring profit fast, but to visibly capture the market (see Uber). Move fast, break things, rework things every week, trigger that wave of sign-ups.
Agriculture is much slower, every iteration may be is a year, or (in tropical climates) half a year. Microelectronics is comparably slow, and even more unforgiving about making mistakes. Building robots does not scale ls easily as producing chips, let alone software.
These areas need a different model of investment, with a longer horizon, slower growth, less influence of fads, better understanding of fundamentals. In some areas, DARPA provided such investment, with a good rate of success.
Yeah, it's almost as if prioritizing returns on investment over EVERYTHING!!! else has bad side-effects for the economy as a whole.
What country are you thinking when you say that? It doesn't sound like the US. Through the zero-interest rate era they've been absurdly tolerant of companies offering no- to little- returns on investment. They've basically been operating investor-led charities.
It is still unsettling seeing Uber turning a profit, but even with that they're not turning a net profit over the lifetime of the company yet and won't be for a few years. Hopefully no-one pops up to compete with them now the sector has profits in it.
Their sentiment and their phrasing ("it's almost as if... ") is a Reddit-level meme I see all the time on that site that's then blindly upvoted, so I don't think they're thinking of any country besides the US in particular when they say that.
It seems really unlikely so many elements of American society decided to prioritize returns simultaneously… but more like those who didn’t… eventually couldn’t compete anymore and left the market.
Leaving behind only those completely focused on returns.
I'd reframe that slightly. There is a vast foundation of stable, optimized businesses that are in commoditized/low-growth ares. They function as the underpinnings of the American economy.
When turning the spotlight to capital that is seeking returns, it is true that these areas may be mediocre places to deploy fresh capital, but it doesn't mean that these players aren't competing, and they will probably be cranking out sheet metal and port cargo logistics optimization well after 90% of the AI startups fold.
The caveat is of course Private Equity, which is about 10 trillion in assets. They can derive high returns from these areas, but it requires leverage.
Not only leverage, but also destabilizing those optimized businesses to harvest the capital assets from their balance sheets to pay for the leverage, while destroying the underlying business.
PE is arguably much worse than VC. VC's business model is well understood and by taking VC funding, you are committing to their expected returns.
PE is, usually, unsolicited and is designed to exploit what appears to be a "lazy" balance sheet, but which is actually a stable business producing output and providing a reasonable ROI.
PE has very few redeeming features.
PE played a part in manufacturing leaving the US. Often the buyouts were of sick companies, and it was just the optimum way to monetize their death. But without PE not all of them wouldnhave eventually died, and it would have given policy makers more time to react to what was happening.
It’s just natural that nobody wanted to pay for outdated machines and tooling in developed countries.
Labor costs, permits, fees, etc., means that buying used just doesn’t make sense unless it’s almost free.
Whereas developing countries were willing to pay a lot more, sometimes as much as 50 cents on the dollar compared to brand new equipment and they would send a team to rip it out too.
I’ve heard that applied to almost everything too heavy to move by forklift during the 80s, 90s, and 2000s.
They're very much yin and yang. PE's operating model is to take businesses that are operating inefficiently, squeeze all the inefficiencies out, sell off assets that would be more productive under other management, and basically strip the company bare. If it kills the company, that creates fertile ground for new startups funded by VC.
Think of PE as the decomposers of capitalism, and VC as its seeds. Most people don't like to think of it that way because they don't like to be reminded that death is a part of life. But if you view capitalism as a living ecosystem and your role within capitalism as someone to accelerate growth and then accelerate death so that new growth can take its place, it all makes sense. And you can probably profit pretty handsomely from it, because most people don't view capitalism like that and instead seek stability in the dying parts.
Okay, "logistics optimization"???
In the US there have been a few, i.e., apparently less than 20, universities with an applied math program up to date in and teaching optimization.
Sooooo, anyone at all seriously interested, long, for decades, would, could, should visit some of those math programs, meet some of the profs, get recommendations for their former students, call them, chat, and offer a job better than their current lawn mowing, fast food restaurant kitchen cleaning, or car washing. Instead of just the US, might also consider Waterloo in Canada. Actually the Chair of my Ph.D. orals committee specialized in optimization in logistics. After sending 1000+ beautifully written resume copies and hearing back nothing, can begin to conclude that optimization is not a hot field and for highly dedicated optimizers who want to sleep on a cot in a single room, forgo bathing, most days eat bread, other days peanut butter, have no children, wife, or family contact, don't own a car, and must get any needed medical care from some of the last resort special clinics. Ah, real optimization!
It shouldn’t be that way though. Venture capital is only for SaaS? It should be for technology in general. But the IRR demands are too much so it concentrates to SaaS.
VC capital is like a detonator. It seeks explosives, and when it finds them, produces spectacular fireworks that illuminate the entire industry, or even the entire world. It also ends up with a lot of duds, but it's OK by them.
What VC capital is not interested in is regular fuel, which can burn steadily and expand gradually, without a shock wave. Such companies can be quite important. Say, GitHub was such a company for many years, before it took a large VC investment and got acquired MS. Investing in such companies requires much more diligence and foresight, maybe too much predictive power to work at mass scale.
VCs' math only works because a single 1000x hit easily pays for a hundred of duds. If ROI per hit is 2-3x, and research required is 10x more deep, the prospects likely start to seem too bleak for folks with billions seeking return.
People in this thread act like VC is the only way to raise capital. Ever heard of getting a business loan? Even a lot of companies in the Valley could probably get one more easily than they might think, if they're profitable. You don't have to give up equity either.
Yeah, but how does one get a business loan, with real stuff at stake, when VCs are burning money like there’s no tomorrow?
I especially dislike the way VC funded startups use VC dollars to effectively be a “loss leaders” for years to choke out the rest of the market.
Who wants to risk their own capital or privately pooled funds against THAT?
>how does one get a business loan, with real stuff at stake
Show them your finances and collateral to demonstrate that you'll be able to pay off the loan.
>I especially dislike the way VC funded startups use VC dollars to effectively be a “loss leaders” for years to choke out the rest of the market.
It's a fair point, but it's a point which does not apply to the industries we are discussing, which do not receive VC investment.
I actually really like your point about Masayoshi Son-style investments which are just an attempt to entrench a monopoly. I'm no socialist, but if socialists called for identifying and taxing such investments, I wouldn't object. The trick is to distinguish between the WeWorks of the world, and the Boom Supersonic type companies which genuinely need gobs of capital for breakthrough innovation.
Wouldn't being aggressive about antitrust chill auch investments in the first place? Uber wouldn't have been so eager to overcome lyft if it knew that it would mean getting broken up or fined into unprofitability.
That's another approach. However, I think it's worth distinguishing if a company acquires market dominance because of merit, vs because it got a big infusion of cash.
I somewhat dislike antitrust because it requires judgement calls on the part of regulators. I prefer simple, elegant rules. Just like in software development. Law should ideally be elegant, just like code.
Nobody will give you a regular business loan if you need the cash to R&D your (especially non-software) product in the first place. Even more so without personal liability or in the amounts to compete for engineers in VC-funded companies.
Early on, with a good technical background, I guessed that, of course, the key to success in technology was some good technology but soon discovered that VCs just want to make money, a lot of money, quickly, and otherwise will hear from the investors in their fund.
Just heard of Palmer Luckey. Hmm! Money? No big staff, not much equipment, essentially just one person?? $1B+, quickly? Example: Taylor Swift. Did she ever hear of Linux???
Addition: Omitted the reports that Swift is worth $1B from her singing.
Probably because the US let software be a breeding ground for monopolies. People invest there because they understand that's the best sector to, if the company works out, get unreasonable returns. As an example, the current AI valuations make no sense if the industry doesn't solidify around one or two companies.
If you have money, the returns you'll get elsewhere are much less attractive, and can only be justified if they're very safe investments.
Yeah seeing the innovations DJI is making in agriculture makes me wonder why VCs do not want to fund other startups like it. I know the margins are worse and it takes way more capital to fund hardware companies, but that has to be better than funding another chat-gpt wrapper. I guess that is why I am not a VC though lol.
To fund a software start-up you need 5 people and 5 laptops to get to tens of millions of value.
To fund a similar sized hardware start-up you need a full lab andddd already the proposition is dead.
I've seen US startup people deal with manufacturing. There is a class gap that leaves no real space for skilled blue-collar work to exist and also be business critical, and fully integrated into the team. That is how a three-week turnaround for a milled prototype part ends up being tolerated.
You're completely ignoring the vast amounts thrown into a marketing funnel in an attempt to acquire customers for their usually meh products.
And engineering teams usually scale up with revenue as well.
I feel like your numbers are the myth that gets told not what actually often happens
They're just hard. What is the US robotics startup that you would use as an example of success? iRobot? It barely broke even.
How is boston dynamics doing? They do very cool stuff but it feels like they struggle commercializing their technology. I remember they were once bought by google I think? And then spat out...
South Korea got to it: https://www.hyundai.com/worldwide/en/brand-journal/mobility-...
Too bad Hyundai is betting on hydrogen... Thats basically dead in the water.
They also have battery electric cars. The Hyundai Ioniq and Kia EV vehicles are quite popular.
Hyundai is a massive conglomerate doing a ton of different things. Having a side bet on hydrogen isn't bad, especially considering it's potential potential in applications such as aviation.
Anduril?
Skild, Physical Intelligence
The infrastructure to rapidly iterate and manufacture just isn’t here anymore, so everything costs significantly more to the point where we’re noncompetitive. Even VCs with no experience see the top line numbers for hardware startups and nope out.
Contrast this with biotech venture capital which has been doing well for decades, often investing more capital in a year than software VCs. The difference is that all the research, clinical trial, and manufacturing expertise is already here and concentrated in a few localities like South San Francisco, San Diego, and Boston.
Yeah that makes a lot of sense. Way easier to iterate when you have access to a machine shop vs having to upload a CAD file and have a part shipped from another country.
There isn't even anyone here competing with eg JLCPCB just for PCBs let alone all the other prototyping stuff. It makes sense, somehow China is able to do it for less than the materials cost.
I think that's why most people just aren't that upset about tariffs. It would be nice to be able to participate in our own economy other than by grifting off real estate or software.
Fully agree.
I feel like anything relevantly practical is denied investment.
But when it comes to anything flashy and hip, a train of dump trucks filled with cash couldn’t deliver money as quick as the VC dollars that flow into to startups with no business model and no hope of being profitable…
Yeah, I get that startups should invest profits and not actually make profits for a while… But when they’re on their 4th round of funding with thousands of employees… shouldn’t they at least try to be a bit more financially responsible?
A16Z gets a lot of guff for their bad politics, but their "American dynamism" portfolio, if a little defense heavy, seems great
You forgot the most important thing about A16Z portfolios: they look great at the beginning of a bubble, and then... https://www.wsj.com/articles/andreessen-horowitz-went-all-in...
only in software there's a clear, tried and tested multiple times path for 1000x ROI for an investor. thermodynamics themselves limit ROI for anything physical.
Thermodynamics is also the limiter in AI these days.
Not necessarily the real limiter, right now, is finding a combination useful and profitable application. Simply charging money for generalized AI access is never going to be the ideal profit center.
>Simply charging money for generalized AI access is never going to be the ideal profit center.
Exactly. Margins are dropping rapidly: https://ethanding.substack.com/p/openai-burns-the-boats
...and to quote a classic, "your margin is my opportunity".
It limits token generation, but not token utility.
AI is two things.
- The chatbot people have a personal attachment to
- The processing tool.
In the second, you only care about the result. Something like Claude Code can call any other provider if that's cheaper and visa-verse. Once I have the result, my dependency / lock-in is no more than a brand of toilet paper. The providers will have to do the 'capitalism thing' and compete.
It's almost like WeWork's, valuated at IT levels by being in the style, only for investors to eventually figure out the marginal production costs are not reducible to near 0, and you can't just bully out competition / network-effect to get a monopoly.
And this applies to any company that wraps and re-sells AI.
Something the tech-VC world is so unfamiliar with, it's scrambling to present the truth of what is 'econ-101' for the rest of the world.
It's about risk / reward, and patient capital. Within 10 years I am probably going to sell my SaaS business a very rich man, and I am going to self-fund a new company in hardware and / or manufacturing. America has made so many talented people wealthy very quickly over the past 2 decades, and as the low-hanging software fruit is ever-harder to find, the skilled entrepreneurs will look for new things do to, and more of us will get into hardware.
So many of the VC's doing the funding got rich of software and web stuff.
They don't know anything else.
They should plan more long term. In an economic downturn like after 2000, all these nonsense valuations for vaporware are going to go to the center of the earth. And all signs point to another downturn for the next decade.
https://www.currentmarketvaluation.com/models/s&p500-mean-re...
VCs are happy to send a vast majority of their investments in search for billion-dollar company. There is no chance to get an agricultural startup to billion dollar valuation, agricultural innovations don't scale at a click of a button.
I don't see any reason in principle why a $1B+ exit wouldn't be possible.
This YCW18 ag company was acquired less than 3 years in by John Deere for $250M: https://techcrunch.com/2021/08/05/john-deere-buys-autonomous...
We need regulation around how VCs work. They are in a house flipping game and nothing more, slapping on a bad kitchen remodel and then handing the hot potato onto the next sucker.
Why not just let it play out in their own arena? We already had the major unwind with the interest rate hikes. The tide went out and the players with their pants off were exposed for the most part.
That said, allowing VC into 401ks and such I would agree is an abominable idea, because this stuff isn't marked properly until it is in distress. Actually, that area could use better regulation. Volatility laundering is already a systemic risk. Many of these vehicles have creative ways to not mark to their market value, which makes pension fund managers and leered participants happy because it greatly improves the perceived risk metrics and performance, at the equal expense of cloaked fragility.
But perhaps just let them have a thunderdome, and if they want to breach the walls and enter areas like retirement funds where society agrees standard are higher, there is a strong set of filters/regulations that must be adhered to.
Letting them have their own thunderdome is regulation. It means they don't get to pee in our pool. I am all for a freemarket, but it needs to be kept in a cage match.
Because, despite all the belated narratives from a lot of people perusing this very website, Venture Capitalism is not a driver of innovation. It's an efficiency filter to supercharge capitalism and speed up the concentration of wealth into the pockets of the VCs themselves. Software is nimble, has less overhead, can be optimized for profit faster, can be recombined, pivoted, repurposed way faster. Ergo, the market economics of VC are terrible at naturally selecting for innovation with a societal benefit, because that’s absolutely not in their firmware.
Let’s not forget here that Chinese companies operate some of—if not the—most popular social networks in the world. WeChat and TikTok/Douyin are enormous.
(Also, in neither country is the majority of its GDP comprised of websites.)
Yes but the Chinese state is much more willing to direct capital to where it thinks it should go. The argument w.r.t. geopolitics is usually that the US is late to doing this and now lacks production capacity which is useful for competing.
I think this is an "and," not a "but." Your statement and mine aren't in conflict.
They may be the most popular but more importantly how profitable are they
The countries producing semiconductors and manufacturing other goods are also producing SaaS services. It's not unique to the United States.
The number of countries producing leading edge semiconductors is actually small. The number of companies doing this work is very small, too. Although much of the economy needs chips to operate, those leading chips are concentrated in the production of a very small number of companies.
We have a massive and diversified economy - I suspect you are overgeneralizing from things adjacent to your niche in it.
These ads ain't gonna show themselves.
So the greatest military force in the world now needs to fight the war on
...
adblockers?
Yes, which is why people who use and advocate for "general purpose computing" will find themselves on terrorist watchlists.
I'm p convinced that this push for age verification using govt IDs & debit/cc tx is the death rattle of the rampant ad fraud that has sustained the tech bubble
What 'enemies'?
Exactly. If any, the US is one of those countries everybody else is afraid of. Americans may be proud of that, but that’s pure bullying.
>Americans may be proud of that, but that’s pure bullying.
It's slightly weird to me how foreigners seem to look on the Trump era as personifying the US to a greater degree than e.g. the Biden or Obama eras. Trump is not especially popular right now: https://www.economist.com/interactive/trump-approval-tracker
And for some reason Europe is always excused from that standard, despite Orban, Fico, Meloni, Wilders, Nawrocki, Erdogan, etc etc.
We're meant to believe that the 49%-to-48% election of Trump is some deep window into the eternal American psyche, but Orban's fifteen-year drive into corrupt, racist autocracy, endorsed by the voters at every turn, is just some sort of very temporary oopsie that says nothing at all about Europe.
When Meloni uses her pulpit as a popular Italian prime minister to attack gay families, you don't see anyone claiming this reflects the bullying nature of the Italian people, but that's par for the course for coverage of Americans and Trump. Swathes of Poland declaring themselves "gay free zones" is an aberration from European values, whereas anything that happens in deepest Alabama is the truest reflection of the American spirit.
It's mere hypocrisy.
Don't forget France.
The far-right party is most popular by far: https://www.politico.eu/europe-poll-of-polls/france/
The majority of second-round polling has the far right winning the next presidency in France, potentially even by a landslide: https://en.wikipedia.org/wiki/Opinion_polling_for_the_2027_F...
For that reason, it's rather ironic to me when I see Europeans rally around Macron. France is poised to rug-pull Europe. Sorry guys.
BTW, guess which party is most popular in the UK? It's not particularly close: https://www.politico.eu/europe-poll-of-polls/united-kingdom/
At least AfD is merely a very close #2 in Germany: https://www.politico.eu/europe-poll-of-polls/germany/
Europe is sleepwalking.
I share your pessimism.
Le Pen's far-right National Rally (RN) has had ties with the Kremlin for a long time. That alone should have discredited this party a long time ago, but no, it is ranking as high as ever, even after russia's overt invasion of Ukraine in 2022.
Mélenchon's far-left "France Insoumise" party ranks very high too, and is similarly pro-russian, anti-EU, anti-NATO.
In the town where I live, more than half the votes have gone to the RN these past elections. I often feel like a Cassandra.
Don't worry, you'll have the pleasure of being blamed for the votes of your neighbors before much longer ;-)
It is easy to be in opposition and complain about everything. The contrarian parties tend to get very popular in the years between election cycles as the governing party can't deliver on everything and has to compromise.
Because you do know that Labour in the UK won a landslide victory a year ago and the last date for holding a new general election is in 2029.
The Scandinavian experience is that these parties crash as soon as they get to real power and have to compromise. Suddenly they had to be responsible.
If we do see these Trumpian parties win the majority in these elections in more rather than one-offs then we have a problem. But you're just fearmongering because you can't accept how completely wacko Trump is and need to blame it on "everyone does it!!!".
>The contrarian parties tend to get very popular in the years between election cycles as the governing party can't deliver on everything and has to compromise.
So what happened in Hungary, or Italy, or other examples mentioned by troad?
Are you aware that RN, at this very moment, has by far the most seats of any party in the French parliament? Those far-right sentiments didn't magically disappear on election day.
>The Scandinavian experience is that these parties crash as soon as they get to real power and have to compromise. Suddenly they had to be responsible.
>If we do see these Trumpian parties win the majority in these elections in more rather than one-offs then we have a problem.
The "majority" comparison is meaningless in this context because the US only has support for two parties. (Imagine Germany had a contest between AfD and Die Linke only. That's akin to the situation in the US right now.) "Governing coalitions" aren't really formed here, so the notion of "they get to real power and have to compromise" doesn't exist in the same way.
So: Even assuming we grant your argument, Trump's power in the US has more to do with quirks of our political system than something fundamental about American culture.
>you can't accept how completely wacko Trump is
I never said he wasn't completely wacko. I simply said he doesn't personify the US any more than Biden does.
> Are you aware that RN, at this very moment, has by far the most seats of any party in the French parliament? Those far-right sentiments didn't magically disappear on election day.
And the Social Democrats has been the largest party in Sweden since the early 1900s. Given that the left, with all parties combined, haven't held a majority since 2006 while managing to rule with a minority government from 2014 to 2022.
You make a lot of noise for understanding quite little.
Yes. The US has a broken political system, and you the American people haven't done jack shit to fix it.
> So: Even assuming we grant your argument, Trump's power in the US has more to do with quirks of our political system than something fundamental about American culture.
Trumps power in the US is entirely because he is what the American psyche wants or tolerates.
You keep attempting to dodge the outcome and blame it on everyone else. But you need to own it.
Trump is personifying America, which is quite evident given how he has won twice. The American people wants him.
DeSantis says a lot about Florida, less so the USA. Pritzker says a lot about Illinois, less so the USA. Abbott says a lot about Texas, less so the USA. Newsom says a lot about California, less so the USA.
Understand why your argument is a very poor one? If not, I have 46 more of these examples.
> but Orban's fifteen-year drive into corrupt, racist autocracy, endorsed by the voters at every turn, is just some sort of very temporary oopsie that says nothing at all about Europe
Yes, Orban says nothing about Europe. It says plenty about Hungary though. Europe not being a country, and the EU being very heavily decentralised, that makes sense.
>Orban says nothing about Europe.
Hungary is literally in Europe. If Orban says nothing about Europe, then nothing can ever say anything about Europe.
Your country is choosing to stay in a union with Orban's. If EU membership is meaningless, as you imply, it should be easy for your country to quit in order to make a point about Hungary.
> Hungary is literally in Europe. If Orban says nothing about Europe, then nothing can ever say anything about Europe.
so are the Vatican and Andorra and Belarus, so all of Europe is theocratic and/or a kleptocracy?
> Your country is choosing to stay in a union with Orban's
Because the benefits far outweigh the association with that pigshit, who will also die some day. Also, the EU can and does exert influence over countries, so some of Orban's excesses can be curbed.
>so are the Vatican and Andorra and Belarus, so all of Europe is theocratic and/or a kleptocracy?
All of the places we're discussing are part of Europe, so insofar as any place can be said to "say something about" Europe, each says something about it.
>Because the benefits far outweigh the association with that pigshit, who will also die some day. Also, the EU can and does exert influence over countries, so some of Orban's excesses can be curbed.
One could make similar arguments for staying in the US. Trump is 79; Orban is 62.
What Trump is and his values aren't particularly different from the usual right-wing populism elsewhere, hell for most of the "global south" people like him or the norm if not the majority of voters.
What's the point of democracy if people are absolved by simply claiming "not my president". Trump isn't a surprise elected first time.
>What's the point of democracy if people are absolved by simply claiming "not my president".
I don't believe collective punishment or collective guilt was ever the point of democracy, sorry.
What's the point of moral reasoning, if people can blame others for events they didn't cause, simply by saying the word "democracy"?
> It's slightly weird to me how foreigners seem to look on the Trump era as personifying the US to a greater degree than e.g. the Biden or Obama eras.
That's easy to explain. Trump is so much out there in being aggressively obnoxious, criminal, racist and senile. His platform was a list of nonsense combined blatant diminishing of rights and social progress. The fact that a majority of voting Americans chose him is irredeemable.
Biden, Bush, Obama were normal candidates with pros and cons, where depending on your views, you could pick one or the other, and you could understand others who voted otherwise.
Trump? I cannot understand anyone who voted for him. They were either extremely narrowly self-centred and thought they could make a buck at everyone else's expense, extremely misinformed and/or dumb, or just hate specific groups of people they know will get hurt. There's nothing redeemable in any of those. He and his voters are the personification of the "fuck you, I've got mine mindset".
>extremely narrowly self-centred
It's normal for countries to prioritize their own self-interest. The unusual thing is the degree to which the US attempted to take responsibility for world affairs for as long as it did, to the point where other countries took the US for granted. Now other countries interpret America's failure to take responsibility for their problems as aggression. See here: https://news.ycombinator.com/item?id=45035076
> It's normal for countries to prioritize their own self-interest
I'm not talking about countries, I'm talking about Trump voters. An "America first" approach is totally fine, nobody outside of the US cares about.
An "America first" approach by a convicted criminal that is obviously senile, that results in arbitrary tariffs, threats of invasion of various allies, and a million other absurd consequences, is a problem for everyone. It's a problem for US partners, allies, and also the US for it's short and medium term future. Nobody will trust the US as a future trade and military partner.
In any case, as I said, I'm talking about Trump voters. The "extremely narrowly self-centred" ones are of the Andreessen types, the ones who think they can make a little bit more money if Trump is in power, even if objectively he's a terrible candidate on literally every level (criminal, rapist, pedophile, senile, can't string more than half a sentence, mocks disabled people, lies, doesn't comprehend realtively basic things, promises to deport millions of people while that being physically impossible, makes up stuff on the fly, wants to curb rights for women, LGBTQ folks, etc)
You say you cannot understand anyone who voted for Trump. Can you understand anyone who plans to vote for RN, the most popular political party in France by far, lead by a woman who said she shares Putin's global vision?
Do I get to blame you if RN wins the presidency? Same country, after all.
> Can you understand anyone who plans to vote for RN, the most popular political party in France by far, lead by a woman who said she shares Putin's global vision?
"by far" only if you get stuck on political party; considering there has been a united left coalition for multiple years and rounds of elections, that seems purposefully omissive. United left and RN are pretty close, polls and election results wise, with the centre-right and traditional right trailing closely behind. Neither of them have anything resembling a majority though, as is reflected in the current parliament, where each block has a bit less than 30% each.
And yes, I can understand them. RN's program contains points which cater to large amounts of French people, especially in rural disadvantaged areas. They're unrealistic or just fluff, mind you, but still sound good. RN is led by moderately charismatic people who have a good media presence - the party's head is Bardella, a young guy with a TikTok following who talks a decent talk. He's a nepo baby (son in law of Marine Le Pen), and mostly a grifter, but he can link a couple of phrases together and sound semi-convincing. Also, while Le Pen is a convicted criminal, it's "just" for stealing government and EU money, which a lot of people don't actually mind, and Bardella isn't.
Comparing to a delusional and senile old man who is literally convicted of rape, and there is plenty of credible evidence, out in the open, is also a pedophile. With a shit program with little concrete other than fucking up groups of people. After seeing his "work" his first term.
Yeah, I can understand, and probably have a discussion with an RN voter. (Those of the "black/brown people bad" variety mostly vote even further to the right, like Zemmour, those are the people I don't understand and wouldn't be able to talk with). A Trump voter? Something is seriously wrong with you to either like that, or pick your potential personal benefit over everything else.
>it's "just" for stealing government and EU money, which a lot of people don't actually mind
I think your double standard is pretty clear at this point. I won't be offering further replies to you in this subthread after this one.
>Comparing to a delusional and senile old man who is literally convicted of rape, and there is plenty of credible evidence, out in the open, is also a pedophile. With a shit program with little concrete other than fucking up groups of people. After seeing his "work" his first term.
IMO, the fundamental reason people in the US vote for Trump is because they don't trust the establishment/media. So yeah, if you uncritically believe everything that's reported about Trump in left-leaning ("mainstream") US media, of course you won't understand why people vote for him.
I'm no Trump voter, but I think conservatives have good reasons to distrust the establishment/media: https://slatestarcodex.com/2017/05/01/neutral-vs-conservativ...
> think your double standard is pretty clear at this point
What double standard?? I'm merely pointing out that people distrustful of the government/EU are fine with Le Pen stealing from them. It's not an opinion I share, but I can understand it. I can't understand those people being fine with Putin bankrolling Le Pen though.
And still a million times better than Trump who not only stole from a cancer charity, but whose corruption is directly in the open and undeniable.
> IMO, the fundamental reason people in the US vote for Trump is because they don't trust the establishment/media
Regardless of that, they can see and hear with their own eyes and ears that he cannot string two coherent sentences together, and is obscenely disturbing as a human being.
Geopolitical rivals then if you prefer that.
haven't been reading history much, have you?
I've read a lot of history, especially 1930s European history and see a ton of parallels to America in 2025.
Is that the particular one you're referring to?
How about those folks actively engaging in behavior that damages the US?
In that regard, US is obviously Europe's enemy, isn't it ? ;-) :-D
Worth distinguishing between actively engaging in harmful behavior, and "failing to help". The Europeans have taken the US for granted for so long that when the US is only Ukraine's #1 donor country in absolute terms by far, their main response is to complain that even more help should be offered, and pretend the US is somehow hurting them.
https://www.ifw-kiel.de/topics/war-against-ukraine/ukraine-s...
Keep in mind that Ukraine is literally on the opposite side of the world from us. What's Brazil doing for Ukraine? What's Australia doing?
As an American, I consistently argue that the US should not ally with Europe here on HN. But even I don't argue in favor of actively working to harm Europe. I just think we should cut Europe loose, because nothing we do for Europe will ever be enough, and Europe is a wealthy region that's plenty capable of providing for itself.
And before you say anything about tariffs (which are paid by US companies btw), read this article: https://archive.is/MxUAa See also https://archive.is/WQQ45
What's Australia doing?
Around $1.5B (AUD) so far, Bushmasters, 50 M1A1s, M113s, training, etc.
We didn't sign the Budapest Memorandum, neither are we part of NATO, but we do our part, as we did in Afghanistan, Iraq (after the lies about WMD), in the Red Sea and other international events.
Oh and on the articles you quoted, some of the biggest fines were from the UK, which is not part of the EU.
As for tariffs, the US upended 80 years of work on international trade, with Trump applying tariffs without any underlying criteria except his complete misunderstanding of the difference between a trade deficit and bad trade.
The US has maintained its currency's dominance for all of the post WW2 era, which has allowed you to borrow and spend in a currency that everyone else has to support to be able to buy things like oil.
As an American, you should realize that in the last 6 months, the US has decided to abdicate its leadership, and as oil becomes less important to world trade, the USD will start to lose its dominance over trade, which means that your debts will have to be paid back in other currencies while the tariffs do nothing but damage the US consumers and economy in general.
Very dumb on your part.
>Around $1.5B (AUD) so far, Bushmasters, 50 M1A1s, M113s, training, etc.
As a fraction of GDP, Australia is an order of magnitude below the US. See map at the top here: https://www.ifw-kiel.de/topics/war-against-ukraine/ukraine-s...
We literally gave almost 10x as much as you on a per-GDP basis, yet we're still the bad guy. This is why I'm an isolationist.
Did you know that "Kevin", a common name in the US, is one of Europe's favorite insults?
>We didn't sign the Budapest Memorandum
The Budapest Memorandum is frequently misrepresented online. There's no promise to defend Ukraine in the text. Read it here: https://treaties.un.org/doc/Publication/UNTS/Volume%203007/P...
All the US promised in the Memorandum was to seek UN Security Council assistance if Ukraine was victimized. We went far beyond that.
Think about it: why would Ukraine be so desperate for NATO membership, if the "defense promise" in the Memorandum was already broken? Because there was no meaningful defense promise in the Memorandum! That is simply a malicious lie about the US that's very widespread online. Again, this is why I'm an isolationist. I give up. Our "allies" will hate us no matter what we do. I've figured it out. I want to be Switzerland. We'll worry about our continent, and you worry about yours.
I love "US so big arguments", no one else cares!!
And then looking at per capita the US sits at number 16.
>I love "US so big arguments", no one else cares!!
The US is being targeted specifically because we've given so much. No one is bothering Japan, or Argentina, or Saudi Arabia. It's because the US has been generous (in absolute terms) that we get so much flak.
Imagine if we sent thoughts and prayers the way Kazakhstan does. That way we would get less hate. When's the last time you heard Kazakhstan criticized for lack of Ukraine support?
>And then looking at per capita the US sits at number 16.
I don't think that is accurate: https://old.reddit.com/r/europe/comments/1hd7aud/military_ai...
As I said... nothing we do for Europe will ever be enough. Better to cut them loose.
You do know that the per capita number is from your own link? Japan sits at number 19 per capita.
Was the US doing about as much as Japan the argument you wanted to make?
https://www.ifw-kiel.de/topics/war-against-ukraine/ukraine-s...
Or are just here to be a contrarian?
Maybe the US have an incentive in seeing the American built world order continue?
But hey, turn inward and let China and India win.
But don’t get mad when tariff situation with Europe etc. Is equalized over time and the American big tech is targeted to lessen the dependency.
>You do know that the per capita number is from your own link? Japan sits at number 19 per capita.
ctrl-f "per capita", nothing comes up.
I do notice that Japan is #19 in terms of % of GDP however...
I actually think your confusion here explains a lot. You don't know the difference between "per capita" and "GDP". That shows you don't speak English well. That's probably why you don't know much about the US.
The fundamental issue is that you think you know a lot, but you actually know little. You're mostly just reading what is written about the US in your native language. Probably there is lots of misinformation.
>Was the US doing about as much as Japan the argument you wanted to make?
Why is the US being harassed and not Japan?
>Or are just here to be a contrarian?
The absurdity of Europeans who complain endlessly about the US, while we've historically pursued a relatively generous foreign policy towards you, gets under my skin.
>Maybe the US have an incentive in seeing the American built world order continue?
I've very consistently stated in this thread, and on Hacker News more generally, that the US should abandon the so-called "American-built world order". It causes us no end of grief, as you are illustrating at this very moment with your comments.
>But hey, turn inward and let China and India win.
The US economy was doing amazing back when we were more isolationist. Switzerland does amazing despite rejecting memberships in multinational organizations like the EU and NATO. India is very explicit in its policy of "multi-alignment", i.e. avoiding big firm coalitions like EU/NATO.
You Europeans are so invested in the idea that America needs to protect Europe for America to succeed. As far as I can tell, this idea is total nonsense. Barely a shred of evidence is offered in favor of it.
China and India aren't exactly looking to form alternatives to NATO either. Why would a big country agree to defend a small country? It doesn't usually make sense from a national interest perspective.
>But don’t get mad when tariff situation with Europe etc. Is equalized over time and the American big tech is targeted to lessen the dependency.
You guys have been raiding big tech bank accounts for years now. You shouldn't be surprised by US retaliation. What goes around comes around. We can tell you're not actually our friends.
Oh my god. This is so funny. You truly have to stoop down to insults because you are so fragile? Who hurt you?
Sorry, the massive difference of "per capita" and "% of GDP". Which would be aligned assuming equal GDP.
Given GDP differences between the donor countries the differences aren't meaningful. But sorry, I should have specified as "% of GDP" where the US is a joke comparatively.
What is even more funny is that I have lived a year in the US, I have traveled all over the US. I have college credits in American history. You know the tiny High School course "AP US History"? Have you heard of it?
Which is also why I was not surprised when Trump won in 2016. I had seen the culture. I had seen the close mindedness.
> The US economy was doing amazing back when we were more isolationist.
You mean the roaring 20s right before the great depression? Because that is the last time the US was isolationist.
Seems like you are dreaming about something you don't have the slightest clue about.
Your response is very typical for the absolute craziness that has infected the US psyche. Donald Trump is not a one off, he is what Americans want.
It's pretty wild that you think AP US History - an introductory course aimed at school-aged children - gives you some great insight into "the US psyche". An insight you gleamed as... what, a high school exchange student?
>Oh my god. This is so funny. You truly have to stoop down to insults because you are so fragile? Who hurt you?
You were the one who started with dickish behavior. Don't dish it out if you can't take it.
>Given GDP differences between the donor countries the differences aren't meaningful. But sorry, I should have specified as "% of GDP" where the US is a joke comparatively.
Actually it does make a difference here. See the link I provided: https://old.reddit.com/r/europe/comments/1hd7aud/military_ai... Considering per capita, 8 months ago the US was more generous than almost all of Europe. Per capita is arguably the correct metric, since part of why US GDP is greater is because Americans work longer hours and take less vacation.
In any case, even if we consider the metric less favorable to the US (% of GDP), the US gives more as a fraction of GDP than almost every country outside Europe. If the US is a joke, than Spain, Ireland, France, and Italy are even funnier. We're very generous in every sense considering this isn't our war.
But since you call US aid a joke, I hope you won't miss it when it's gone. And I appreciate you confirming the points I've made, with your remark: Helping Ukraine gets us nothing but grief.
>You mean the roaring 20s right before the great depression? Because that is the last time the US was isolationist.
"Frustrated by French meddling in U.S. politics, Washington warned the nation to avoid permanent alliances with foreign nations and to rely instead on temporary alliances for emergencies... Washington’s remarks have served as an inspiration for American isolationism, and his advice against joining a permanent alliance was heeded for more than a century and a half."
https://history.state.gov/milestones/1784-1800/washington-fa...
The US economy mostly did great during that century and a half. Furthermore, the Great Depression was not simply caused by "isolationism". This is more intellectual sloppiness on your part.
I advocate a Swiss approach to foreign policy. That doesn't mean disengaging from other nations. It means not promising to help them with their problems.
Your continent, your problem. This is the approach that most of the world adopts towards Ukraine. The US was foolish to get involved. And we've been punished severely for it, by people like you. No more.
Certainly they’re the enemy of this administration.
We have met they enemy and they are ours.
Indeed. People have forgotten the word traitor.
Historically Intel has engaged in illegal wage suppression. Now we bail them out for their crimes.
This was a poor business decision for exactly the reasons you’re pointing out. The market is dictating their failure and we’re now undermining it.
I see your point, but isn't it fair to say Intel is too big to fail?
Not in the "lots of people would lose jobs" or "ripple effects would cause economic disruption" but in the true national security sense. What allied semiconductor manufacturers have significant cutting edge fabs in Europe?
IMO the company can fail. It’s the people, facilities and equipment that matter. Those can get picked up by a company or companies that know how to use them.
Secondarily, a TSMC fab on US soil seems like a better investment. In the catastrophic event that Taiwan were invaded — it’s still people, facilities and equipment that remain here.
> It’s the people, facilities and equipment that matter. Those can get picked up by a company or companies that know how to use them.
This trope keeps getting repeated on HN.
No, the point of the top level comment and article is that no US based company will replace Intel's fabs, nor will they form a "better" Intel. This stuff is intensely capital intensive, and nothing short of a government mandate will make any other company spend so much money on such a big risk.
Trust me - if they could have, they would have. Intel's fabs have pretty much been up for sale since Pat was ousted.
The only companies that know how to use the people and the equipment are not US based. TSMC already had an opportunity to buy much of Intel's fabs, and they concluded that shifting their process to match TSMCs would be cost prohibitive.
Because there’s many ways to raise capital, but very few ways to get talent.
You’re arguing about logistics under the current economic rules while simultaneously defending a change of rules.
When you put that on the table, then there’s a lot more ways to overcome the obstacles of today that aren’t being discussed.
If a company’s management becomes a risk to national interests, then giving them more money with no added oversight is not really solving anything.
Oh I agree that this may not be a solution.
Where I disagree is that if Intel fails, something better (US based) will replace them. It won't.
If we're already into the realm of the US government taking huge equity stakes and forming state corporations, maybe they could help form a new JV after a theoretical Intel failure. That's no less major a step to take.
In the scenario where Intel fails (which would primarily be centered around defaulting on the 50 billion of debt that they built up and can barely service), the US gov could offer strong tax incentives to players who want to form up a new national fab company. Give it favored status essentially (again, if the US is already crossing fairly extreme lines of having US state owned corporations, this doesn't seem so extreme in comparison).
You already have Private Equity interests that are starting to consume Intel. Ex: some of the new fabs are funded by Brookstone, and they have sold off a portion of the profit from the venture, and then collateralized the transaction with the hard assets and put Private Equity at the top of the bankruptcy cap stack.
I think that if the US gave some incentives, the pieces would fall into place extremely quickly. PE would do the actual capital funding in a heartbeat if they had sweetheart tax incentives, and Japan/SK/TSMC would also get involved. Presumably - given the style of the current admin - the "deal" would be "you get favored status by taking part in this project. We will give strong tax benefits to also drive profit. If you turn it down, expect to see tariffs and calls go unanswered while your competition has a direct line."
China taking Taiwan might finally force us to get our act together.
If they are "too big to fail" then they shouldn't exist because they are also a national security issue. Either let them fall apart and fund everyone but them, or split them apart into multiple companies with new leadership.
That sounds like you expect a competitive, free market for things as complex as the world's cutting edge CPU or nuclear weapons or fighter jet technology. I think when it gets as specialized and capital intensive as those things, a true free market is less likely to exist.
Similar, My major in university was computer engineering (as opposed to pure CS or EE) because I wasn't sure if I wanted to go into a hardware or software profession. I ended up going with software since all the interesting opportunities were there, whereas most jobs in hardware seemed to be working for stodgy old companies barely making six figures if I was lucky.
Exactly the same for me.
It's made me one of the only leaders in my Software Org that actually knows what happens below the level of the instruction set. I can talk about the power and heat implications of algorithmic decisions. But mostly nobody cares, theres always enough money to buy more servers.
That's the thing with knowing thing other people don't; they might not be able to appreciate it.
The gap between hardware and software salaries has been strangely stubborn.
I started in hardware and pivoted to software for the same reason: It's easier to find higher paying jobs.
It's been strange to see the gap persist at companies that cling to salary data for compensation decisions. Incredible to see companies complain about not being able to find good hardware talent but then also refuse to pay hardware hires at the same level as software hires.
It mirrors the 8-10x multiple that you can command in your valuation for ARR.
Amen brother! And the work-life conditions are also much better in software. I remember in grad school an executive from a big semiconductor company (I think it was ON semi) was complaining to the EE department that most students are now pursuing EE as a CS degree and very few went into hardware so they claimed the talent pool was small.
How about paying more then?
Show me the incentive and I'll show you the outcome.
When I interviewed at intel the position they were offering was to be the "owner" of a tool and I'd be on call.... Yeah no thanks, I get a PhD just to be owned by some company?
you think on call doesn't exist in software? its a common squeeze and replace w h1b tool
Worked as a SW engineer for over a decade. Never did on-call.
Not all SW jobs are web related.
Same boat. The pay was mediocre, the hours were bad and far too many, and the company used cyclical demand to keep us in perpetual fear of layoffs. Mandatory pager carry 24/7/365 unless I was on vacation out of town. Rotating weekend coverage. Rotating holiday coverage. First couple of years were 12 hour shifts on my feet, then I went to process integration and did endless meetings instead.
I loved, still love, the actual technology of semiconductor fabrication, but you’d have to pay me 8x what I was making for me to go back to the business of semiconductor fabrication.
Amen, software sucked all the talent out of the hardware room. When you write the pros and cons of software vs hardware, pretty much the only positive on the hardware side is a subjective "it's more fun".
Sometimes, there's lasers.
There are extraordinarily highly paying semi firms in the US, but neither Intel nor AMD fit that mould unfortunately.
I’ve never understood why that’s the case; they are also high leverage jobs where a few can do extraordinary work and be rewarded thus. Look at Nvidia. Their employees are well compensated and they stay and the company does fantastically.
> There are extraordinarily highly paying semi firms in the US, but neither Intel nor AMD fit that mould unfortunately.
Who pays more than Intel?
In this context, semiconductor jobs is referring to people actually involved with developing the fab - so Nvidia/Apple/AMD don't count.
I think this is more of an Intel problem than a general semi industry problem. I work for Arm and I’m compensated better than when I worked at Microsoft (although it’s partly due to stock appreciation after the IPO). But I’ve also heard that Broadcom has top-teir RSU grants as well, and even AMD is more competitive than Intel.
same - left the industry after 2 years. Made more as a startup founder while working better hours.
It's not just the pay, a fab operates 24x7x365 and how management turns that into work practices and life for employees.
I once interviewed at a fab that offered 'better work life balance'...and what they meant was you weren't allowed to access any email or information off site so they couldn't bug you as much. In reality, it just meant you had to actually go in to the plant if anythign went wrong.
Honestly, I don’t think US wages make sense any longer. We have extraordinarily profitable semi companies that don’t pay more than a third of what non profitable startups are paying software engineers.
The issue seems to be one of negotiation power as the determinate of wages taken to an extreme - leading to companies taking a monopoly position, paying poorly, then falling to foreign competition due to lack of talent.
Greed. You’re describing greed. The folks at the top of the pile in the US seemingly all have hoarding disorder. Very little of what they do appears rational… unless you concede their actions are meant to harm the general wellbeing of the US. population, while themselves being nicely insulated from all that.
"I saw the best minds of my generation writing spam filters" - Neal Stephenson
https://www.youtube.com/watch?v=TE0n_5qPmRM
Also moved from the semiconductor industry to software, 30 years ago. Much more money.
Same for me except I never started. Graduated EE and went straight into software. Not just higher pay, but also a hell of a lot more jobs available, especially to new grads.
As a former EE, it's not just pay.
The cog-in-a-machine corporate culture is not fun. Tech culture is much healthier.
There's no upside to big electronics companies here.
If Intel were well managed they would purge like 2/3rs of the managers and anyone in the bottom 50th percentile and then pay whatever it takes to get people skilled in their core industry back, training the remaining people as necessary to fill in gaps for the future.
They literally cannot have a culture that encourages the now-traditional job hopping that is so pervasive in American business culture. They can't afford it.
In every workplace I've been, I end up thinking 50% of people here could be gone tomorrow and nothing would change.
But the real trick is filtering precisely the 50% you want.
Who gets to determine the bottom 50th percentile?
it doesn't really matter as long as you retain the top 10% who do 90% of the work.
I think you glossed over the question
Generally, the answer is management via performance reviews.
So current management, who had proven incapable of running a business, will be trusted to ignore past political games and just retain talent? That's certainly a take
Presumably the same management that is proposed to be axed en masse with the 50% they are now tasked with selecting...
Let's flip it. Direct reports get to vote on whether they would be better off without their manager.
I am yet to see a round of "cut the bottom 10%" that didn't end up also cutting a bunch of top 5% staff.
> it doesn't really matter as long as you retain the top 10% who do 90% of the work.
This isn't SW. Those ratios don't exist in the HW world.
(And to be frank, it's a myth in SW too).
And welcome to the "fun" world of Stack Ranking.
Billions for fast food delivery apps, not a dime for defense or sustainable agriculture.
> Billions for fast food delivery apps, not a dime for defense or sustainable agriculture
Defense venture capital funding is literally in the billions and has resilient even in a broader VC pullback: https://www.spglobal.com/market-intelligence/en/news-insight...
Fair enough, I suppose I was being hyperbolic, but nevertheless...
It would be interesting to see the graph before 2019. For a decade, all of the investment money, talent following behind it, piled into Uber, etc.
> has resilient even in a broader VC pullback
Yes, people are starting to catch on now. Even so, investment is at best a leading indicator. In terms of existing on-the-ground domestic infrastructure, we're sorely lagging in real-world capabilities, but the better part of the last fifteen years was spent creating a vast Grubhub-type delivery infrastructure across the US while the amount of resources dedicated to peer or near-peer conflict logistics and long term agricultural production were relatively ignored.
Beyond Meat also hit 15 billion market cap at peak.
I don't consider synthetic nutrition agriculture; what I'm talking about is regenerative farming practices or high tech alternatives to pesticides i.e. Carbon Robotics.
It's only be a short term thing, because fundamentally software is more profitable because it's much less costly to scale. And individual developers have more bargaining power, because they can own the "means of production", while the means of production for hardware is much more expensive.
Well, there's a really easy and straightforward explanation for how this happened. It's just uncomfortable for everyone who's succeeded because of it. So they don't say it.
America abandoned free enterprise in favor of managed monopolies. It happened via a wave of financialization, globalization, government bailouts, mergers and consolidation that all granted immediate financial benefits to shareholders, at the cost of long term competitiveness.
That's it that's the whole story in a nutshell, look at Boeing, Intel and others, you'll see it again and again.
This is not the right way and US economics are looking more like Mussolini's every day.
Force these incumbents to compete. With fragments of each other, or with new American companies. Perhaps shelter them from some foreign competition if you really must.
That would once again unlock the unparalleled power of the 350 million enterprising souls spread between the two coasts. Which is what got America to #1 in the first place.
Give those souls something to do again that isn't meth or opiates.
Managed monopolies are not the way.
That's backwards. US companies moved manufacturing out of the US because other countries had competitive advantages (often cheaper labour), not because they weren't free enterprises but they were. Making stuff in the US doesn't make business sense. Patriotism doesn't make business sense. If you tell companies their business is to compete with each other to be the most profitable, that's what they'll do, and that's what they did.
It's not backwards. It's ECON101.
Government makes policy.
Government decides when and where to apply tariffs.
If government applies a tariff on imports from any country that has cheap labor, businesses will stop offshoring to that country because it will no longer be cheaper.
Or at least, that's what businesses do in a free market economy. In the free market where many firms compete for your dollar, they can and will compete on price when they have to.
But in a "managed monopolies" economy like 2025 America, they may just raise prices instead because they have at most 2-3 competitors, and all it takes is a few games of golf, a wink and a nod to keep prices high.
We used to call that a cartel, prosecute the shit out of those companies, and defend the free market.
America's government stopped doing that. Now our enforcement is Luigi. When and where will the next Luigi strike? How many Luigis do you want to see? I would rather have government resume serving the People, it will work better, like it did with Standard Oil and AT&T.
Patriotism is not required. Policy that puts the people first plus competent law enforcement against corporate crime is all that we need.
It is wild to see someone bringing the benefits of tariffs and free markets at the same time.
The two are kind of antithetical.
Well, an internal, relatively free market with some barriers against foreign competition is exactly the strategy that a number of Asian countries employed to get rich, and furthermore, earlier in its history the USA did exactly the same thing. Whether it is "antithetical" or not.
I think your comment is low quality. Like I made an effort here to write at length about how government and economics work in the hopes that someone would learn from it, and you strawmanned one idea and called it "wild." This is not the Hacker News way and it is not commenting in good faith.
Free markets are unnatural. Monopoly is natural.
Free markets only exist in unnaturally heavily regulated circumstances. If you let the markets to be on their own devices then you get monopoly. Regulation is ironically what makes free markets possible.
It's basically exactly the same as democracy vs feudalism.
It's such a stunning dereliction the US let things get to this point.
It's a side effect of systemically putting short term gains ahead of long term research. CHIPs act may be too little, it is certainly too late...
> systemically putting short term gains ahead of long term research
That's more the stock market than the US government though. You could argue the US government tries to play a long game, and often the way the US plays that game is to let the free market decide (hands off, small government). It's definitely a valid strategy and has worked extremely well in a number of other industries, but for this specific niche, less so, and even then you could argue it's down to Intel's mismanagement than anything the government could or should have done.
It is clear that the government and wall street are generally of one mind on this. One recent specific way the government contributed to this is via the Tax Cuts and Jobs Act (TCJA) of 2017, which increased tax burden of R&D. They've also cut a lot of their own research funding (NIH, NSF).
I can't make the argument that the government is "hands off, small government" because I simply don't see the evidence of that. To the contrary, I have seen things like TARP, stimulus checks, oh, and the government buying 10% of Intel.
The only people arguing against big government are republicans when democrats are in power, otherwise everyone is happy to expand spending.
Taking 10% of Intel. Intel was already supposed to get this money and then retroactively were told to give up 10% for it
FWIW, in exchange for less restrictions on what they do with the money and less strict clawback terms.
I don’t believe that, I believe it was in exchange for not pressuring the CEO to step down any further.
This looks like an incredibly corrupt action.
Now that we have lawmakers openly declaring they would pick capitalism over democracy if forced to choose, I have little hope that the government will be receptive to changing anything structural.
The strategy is fine, the problem is there aren’t enough domestic competing players in cutting edge semi nodes for it to work anymore. The US had many competing foundries before its semi industry was hollowed out by Japan and Korea. Now the only player in the US is Intel and, having been mismanaged for the last decade or more, it’s at risk.
I don’t think propping up Intel is going to work though, they’re a sinking ship and their management seems too risk averse and incompetent. It might be better for the US, long term, to let them collapse and sell off strategic parts to different domestic players (NVIDIA, AMD, micron, TI, etc) and use tariffs or other trade policy to force some amount of leading edge semi fabrication to use domestic manufacturing.
I would argue that federal and state governments play even shorter games than investors in the stock market. They're constantly putting their thumbs on whichever scales are politically expedient to claim they did something every 2/4/6 years when it's time for reelection.
Just as an example, the calculus for "where should I build a factory" comes down to "which politicians give the biggest tax incentives" and not any market dynamics.
This and everything else. We outsourced manufacturing of almost everything then are surprised when the people doing it for decades are better than we were.
We outsourced manufacturing because it's not very profitable. The Mag 7 make 50x as much money as TSMC. Apple and Microsoft are the most profitable businesses in history.
Intel was very profitable until it was not. They spent over $800B on stock buybacks. That will buy you some fabs, some R&D. Its true they invested in R&D but not well. Maybe the answer was to fund an independent internal competitor to keep the org focused.
Financialization is a dead end when you face a nation state determined to control steps in you value chain. How profitable will apple be if they can’t get chips?
I still think Intel missed the boat when they had the dominant process in focusing entirely on their own chips and not taking customers for third party fabbing. Samsung and especially TSMC have demonstrated conclusively that the real money is in producing chips for other companies. It might be lower margin, but the volume is undeniable and it keeps your company on its toes with node improvements.
Intel switched to a "service the stockholders before the customers" mode and they have never recovered.
TSMC does not compete with their customers. Intel would. I know that is not a new idea and there are some established mitigations. But it seems it would be better if it wasn't an issue at all.
Samsung competes with their customers and yet they still sometimes choose Samsung. Same with IBM when they were a big competitive chip manufacturer. It probably makes the sale harder but it has been a common arrangement in the past.
I worked in a CPU group that used IBM for a fab when they still had one. it was definitely an issue.
The problem is when importance is not reflected in the quarterly profit margin.
Chips are one of those things where being the best is simultaneously very important and not at all important. Making a 10% better chip gets you the entire market. But it makes practically no difference if your cellphone or laptop or server or whatever has a 10% worse chip.
> Making a 10% better chip gets you the entire market
Gets you the entire datacenter market maybe. End user (PCs, cellphones etc) stuff is much more concerned about perf/$ (up front cost) than perf/watt (long term cost), and the embedded market (electronics, appliances etc) mostly care about 'good enough' as cheaply as possible - performance isn't a concern at all for many use cases.
And the corporate market mostly cares about (perceived) reliability/liability concerns over everything else - see how hard it's been for AMD cpus to penetrate despite being measurably better in every category compared to Intel at various points in time.
The true place where the government should steer the ship of the market.
No, we outsourced it for the same reason we outsource anything else: because someone else, somewhere else, is doing it for cheaper. It has nothing to do with the profitability of the manufacturing company and everything to do with the costs of the products and services to their customers
The EU outsourced manufacturing without any Mag 7.
I'm sure it'll work out well for us...
mind you that a lot of this outsourcing is also happening inside the EU from high wage western countries to lower waged eastern countries (poland, hungary, romania etc).
The reason this pivot happened was because of the Pandemic. As soon as the Pandemic hit and China stopped sending us PPE it was a violent slap in the face and an extremely rude awakening that we are completely dependent on China and other countries for basic necessities. India also stopped sending us pharmaceuticals.
This realization means that no matter what, Americans need to make certain basic necessities, and chips are one of them. I have friends at Intel that have been there for 20 years and they basically say it's dead man walking. They have chip equipment that they paid billions for that is sitting idle because they don't have the demand, but they can't turn them off otherwise it will be destroyed. However, these machines cost hundreds of millions to keep on. Plus they are already out of date compared to TSMC. The entire thing is a disaster, but Americans need an American source of chips so they have no choice but to double and triple down on a bad investment and hope that something happens that will let them become competitive again.
> Very well argued. It's such a stunning dereliction the US let things get to this point. We were doing the "pivot to Asia" over a decade ago but no one thought to find TSMC on a map and ask whether Intel was driving itself into the dirt? "For want of a nail the kingdom was lost" but in this case the nail is like your entire metallurgical industry outsourced to the territory you plan on fighting over.
What's annoying about this is that it's the same people who drove the outsourcing and decline of American industry who are using the same framework they've been using to drive that stunning dereliction to argue that this is the wrong approach.
Perhaps then fabs should be considered important enough for the US then that a new entity, perhaps not unlike NASA, is created to create and run these.
There are already domestic semiconductor fabs dedicated to the defense industry. The issue is that military semiconductors ceased to be cutting edge in the 80s and now everything runs on old processes for the enhanced reliability. That's perfect for most applications except when you need a low power handheld supercomputer that only TSMC can make.
NASA seems to outsource a lot. Would you like Boeing to create the fab next door to you? What could go wrong??
You would still outsource running the fab to Intel, just have a government body overseeing it.
This won’t solve the biggest challenge/problem, which is lack of talent for staffing the fab. In Arizona they had to import a bunch of temp workers from Taiwan just to train the locals. We don’t have the skills. If you want to involve the government, maybe we should be training units of the military to make their own chips.
That’s the specific problem a well organized governmental body can address. Funding research through university and private R&D lab grants and spreading/licensing the knowledge to domestic companies. Fund grants for universities and scholarships to spread that further. Invest in multiple startups attacking the problem at different levels in the stack (semi manufacturing has a LOT of inputs).
There are loads of ways you can effectively steer an economy to stimulate growth while also meeting geopolitical needs through effective and liberal application of the national purse. DOGE seems to have different ideas about the value of such programs.
How many workers do we need? TSMC has 80k workers all in. 15-24 there is about 3 million US NEETs. I think that we could have a 10 year plan to get 80k people with EE/CE/NanoTech Eng/ChemEng/etc degrees. Make college free, or hell even a stipend for people to pursue "Critical Careers", heavily fund Phds in the same areas for US Citizens, and we will see workers with the skills.
This is the wrong way to look at it. The people in the US that you would want working in semiconductors aren't NEETs. They are at Facebook/Google/Jane Street/Citadel/McKinsey.
If I am a capable person working on delivering node improvements dealing with smaller and smaller challenges as the physics issues become quantum - I will eventually start to ask myself: why am I working on the hardest physics problems in the private sector for 150k/yr, when I can transition to Facebook or Jane Street, work equally (if not less) as hard and make 500k/yr?
The US has plenty of smart people. I'd argue more that the wealth inequality gap makes it _incredibly_ difficult to justify working for less, even in a field you love, when you can make top 1-4% of income doing something else.
The cost of assets (especially housing, schooling, and health care) is a huge problem, and your example is a poignant one. More funding could sway a few people in that pipeline to go towards semi-conductors, but the majority of workers aren't Jane Street quality, they are technicians and engineers doing lots of highly skilled "grunt" work.
Personally I think the other half of the problem, Big Tech paying so much might be solving itself right now, excepting really only the very very top.
This right here.
When Silicon Valley was cheap enough to live in that people could casually start a company in their garage... Then people didn't have to relentlessly optimize for short term comp.
Today you have to work at FANG to afford a garage in the Bay area.
Look at the insane salaries/equity going to AI researchers. Those at the cutting edge of semi manufacturing/design are likely completely capable of reproducing the skills sets of those people- how do they not cut and run?
If the government has to provide the funds, so be it, make those jobs valuable enough and the skills will be there.
Is that true? I thought a lot of semi-conductor work is borderline blue-collar factory work and physical labor.
What you’re describing is in the R&D area and also not physically dependent on being colocated in a fab. So we should have an easier time finding that talent, although we’re probably underpaying them now, as you point out.
The most salient issue with Intel in the past 10 year was their constant delay of the 10nm node process. While TMSC was constantly pushing down the Node size, Intel struggled and ceded a lot of ground to AMD & Apple. At the same time Intel struggled to develop a competitive 5G radio, and GPU.
These are all downstream of R&D. If your fab cannot shrink it's node size, then you won't get the most profitable orders.
I’m not sure it would have made a difference if they hit 10nm faster. Apple has always wanted to make its own chips. Some marginal efficiencies wouldn’t dissuade them from investing in themselves. And it’s not like Intel was going to start a consumer PC business…
Yep, Apple buying PA Semi was an indicator of their intention all those years back. I suspect intel was just hoping they would fail at their ambitions.
Hey... that Arc GPU is the one silver lining to what intel is doing recently. Is it perfect, far from it but it ain't bad.
It's both an example of them finally doing something right and a showcase of their failures. Who manufactures the chip in the end? Not Intel.
Top semico ppl aren't way more than 150k
Also skills from one industry do not transfer that easily to the other
Earn way more than 150k*
The US already has DARPA that does semiconductor research, particularly where it intersects the military.
I believe something similar is happening in drug development right now. It may take less than 5, 10, 15 years to see the impact to the US. But from someone who has a vantage point to see it across many parts of the industry, including having seen the evolution of Intel / TSMC, I think it is a very similar story. Right now is like 2007 (or maybe even a bit later) for therapeutics. In the future, we will look back on this year as the year we gave it up.
It could be argued that new drug development is less needed during wartime than processor manufacturing.
What's happening exactly?
Billions in grants have already been cancelled. Lots of research is losing its funding.
Agreed. Also the biotech industry is largely getting defunded. Venture funds are pointing dollars elsewhere so fewer new companies are being started, while more biotechs are being started in China.
Most new drugs come from biotechs nowadays (not all of them, not GLP-1’s). But many do. If that innovation is happening in China and not the US today then it will create an issue in several years. We will not control our supply chain for a critical set of goods.
Biotech still has a lot of basic science kinds of questions in it too. There's a lot about biology we seem to not really know in large populations. A ton of things we need to know more about before we even talk about commercial applications still.
Is it just me or is the author only making an argument for why Intel is too big to fail? He says hes steelmanning the equity stake but then he doesn't argue why it's necessary. He devotes 2 sentences to CLAIMING its necessary after aruging that Intel is too big to fail.
The article is basically like this:
> Leading edge domestic foundry companies are a national security concern. Therefor Intel is too big to fail.
OK. Many can agree with this. And I think the author makes a very good argument for it. He makes some good points:
- Startup cant replace Intel - US cant rely on TSMC alone - Artificial demand could actually improve Intel by solving the chicken and egg problem
But that doesn't answer the question, "why the equity stake?" And for more context, it's replacing what would have been grants with the equity stake. So it's, "Why replace the $XB in grants with an equity stake?"
He does touch on it but it's just a claim thrown in at the end:
>The single most important reason for the U.S. to own part of Intel, however, is the implicit promise that Intel Foundry is not going anywhere. There simply isn’t a credible way to make that promise without having skin in the game, and that is now the case.
OK, maybe. But that now needs to be argued for. The US can give them money as grants. Grants put skin in the game for the US because they require Intel to meet the terms.
Yeah he could have explained that more, maybe he's assuming familiarity with other public-private ventures around the world?
If I was explaining it I would say "a huge equity stake gives you a lot of votes and influence over the company's strategic direction", including what the returns to shareholders should look like.
Think of railways in countries where the government has say, a 50% stake.
Except what the government purchased is a block of non-voting shares as long as the government holds them. So what benefit does that provide over grants?
>The US can give them money as grants. Grants put skin in the game for the US because they require Intel to meet the terms.
It's not the same as taking part in decisionmaking? Intel could just say 'no' to grants. They don't have to accept the terms.
But they don't get to take part in the decision making with this equity stake either. The shares are non-voting while the government holds them, and revert to voting shares once sold to a private entity.
And they can say no to the government with the equity stake and the government can divest.
I'm not arguing they are exactly the same... I just think the author shouldn't state the hypothesis at the end of the article without examining it.
Frankly I think it's a good summary of why Intel may be too big to fail. It's just framed wrong.
> over a decade ago but no one thought to find TSMC on a map and ask whether Intel was driving itself into the dirt?
Over a decade ago Intel wasn't driving itself into the dirt. Their failure was just beginning approximately 1 decade ago, starting with their failure at EUV leaving them trapped on 14nm.
Huh? He talked about and linked to a series of his older articles, including this one from 2013. [1] It's been a while.
[1]: https://stratechery.com/2013/the-intel-opportunity/
That article is from before Intel started to decline. Quoting the end of that article:
> Intel is already the best microprocessor manufacturing company in the world
Intel was not driving themselves into the dirt if they are the best in their field. Instead, I'd suggest looking at when the process nodes were achieved:
Seems almost exactly a decade ago that Intel lost their lead and fell behind the competition.I would like to challenge the notion that you absolutely need state of the art fabs to win a war. Most military gear uses "proven technology" several generations behind SOTA. When push really comes to shove there is a lot you can do with the chips you already have and nationalizing the fabs under your control.
The dependence on oil from the Middle East is comparatively a bigger problem for the West (though not for the US with its shale oil reserves).
>It's such a stunning dereliction the US let things get to this point. We were doing the "pivot to Asia" over a decade ago but no one thought to find TSMC on a map and ask whether Intel was driving itself into the dirt? "For want of a nail the kingdom was lost" but in this case the nail is like your entire metallurgical industry outsourced to the territory you plan on fighting over.
There were a few of us warning about this well before it all happened in 2013 and 2014. Predicted the death of Intel, and surge of AMD and TSMC before majority of people even heard of TSMC.
I also feel a little sad about TSMC, now that they have invested a lot in US but US is actively and strategically trying to pop up Intel to compete. But TSMC is at least 2 cycle ahead, meaning 5 - 6 years time. Unless TSMC make any mistakes even in the best case scenario I dont see Intel catching up within that time frame. Especially now they have little to no cash cow. Server, GPU, Consumer CPU are all under threats.
This is the same reason France keeps propping up STMicroelectronics and their fab in Crolles, France (near Grenoble).
There is strategic importance in maintaining home-grown capability.
(it's also the same reason France keeps propping up many other industries, and sells weapons/jet fighters to other countries...)
If all advanced countries follow this reasoning, where does that leave us?
Robust and redundant manufacturing spread across the world with more opportunity for innovation?
Trillions of dollars spent just for redundancy? Most wouldn't even succeed in building a working process, forget profitable.
The world collectively (mostly the US) spends trillions on national defense, that spending is unnecessary if we all just got along. I think you're right that everyone spending money on local semiconductor industries is even more wasteful.
Unfortunately, that defense allows hoarding wealth. If the wealth was more evenly distributed globally, there would be little reason to defend against raids.
This is how places like the US despite having 4% of the population have about a quarter of the material and energy consumption. Not to single them out, I am in Australia, it is a similar ratio.
I am not defending this situation, just highlighting its role.
Not all wars are about raiding, especially in the modern era. Putin isn’t interested in Ukraine’s wealth. Nor would a Chinese invasion of Taiwan be about money.
You are right. I was far to reductionist there.
"No wars have been more ruthless and ravaging than “just” wars, fought in “defense” of religion, honor, or principle. If war must be, give me rather a war to capture an enemy’s wealth and territory, based on honest greed, in which I shall be careful not to destroy what I want to possess. " - Alan Watts
Why would a more even distribution of resources lead to less war?
Like, it might but if resources are equally distributed then raiding your neighbors for more is one of the best ways to get more of them.
Does no one study history? War wasn't invented in the 20th century.
Chimps in the damn jungle go to war with each other.
I think it depends on what the goal is. Like, lots of countries (and probably a few US state) could, I bet, do their own foundries for, like, 22nm. Process node names are bullshit of course, but we’re talking about stuff that Intel was doing in 2012, Global Foundries in 2015.
22nm is already overkill for a lot of applications. But, like, if your country gets embargoed, you should be able to make computer chips for cars and farming equipment. Top end GPUs? Not necessary. Some basic RISC-V cpu for compute appliances? That should be a capability that everybody has.
That doesn't sound unreasonable. That is Ivy Bridge/Intel Core 3rd gen capabilities. You aren't running a generative AI but can do all manner of work loads. Combined with some software efficiency gains and you could be fairly comfortable.
This part of why I have been advocating for years that the open source/free software folks should be focusing on optimization and stability/security as long term it will probably be much more useful that adding features that can be dumped on top.
Whats wrong with redundancy? Not having redundant supply of anything is a problem as human history has repeatedly shown. I think this kind of modern "more profit = more better" is just a ticking time bomb for a massive disaster, and it isn't like we haven't had any warning signs about critical supply problems for any number of resources and goods.
If you can print the money required with no bad consequences, go right ahead and build all the redundancies.
The problem with bleeding-edge fab is it's a (fast) moving target. It's not a solved problem. And customers can't simply migrate their designs to a different fab, as the designs are increasingly specific to a process.
I do think we need more fabs but not this kind. Very low cost fabs with standardized PDK and open(ish) tools, should be as simple as ordering a PCB. Not going to happen anytime soon though, needs old fabs to stop production and the bleeding-edge to hit a hard wall. Can't compete with fully depreciated legacy fabs/nodes.
Sounds like a huge infusion of cash to highly skilled workers, and supporting the building of skills that can be transferred between companies sounds like a good thing.
Starfleet code requires a second backup?
In case the first backup fails.
What are the chances that both a primary system and its backup would fail at the same time?
This is too glib: If you imagine a world where every critical industry is replicated in every large nation, often inefficiently or inadequately, that’s a world where the average person is much, much poorer.
And for what?
Maybe instead of all the wealth flowing to a couple huge companies in a couple countries wealth would be distributed more broadly.
Why? The efficiency gains are a matter of size of the average company, not a matter of the total number of companies.
If what you said were true, it would be cheaper for there to be only one flavor of soda (as Bernie Sanders might have put it) rather than dozens.
Competition is better for consumers than monopoly, and that applies even when the consumers are nations.
The premise of this thread is that efficient markets and comparative advantage won’t leave even a large nation with enough of the right competitive local industries for national security or whatever objective.
Thus to sustain those industries (semiconductor fabrication in this case) industrial policy (subsidies, tariffs, government investment, “Buy American” rules, … ) is essential.
I agree that industrial policy is essential for a nation that wants to ensure that competitive industries exist within the nation's economy.
But the justification I replied to was that the nation must inherently suffer material inefficiencies for a nation to do this, due to how economies work, which is not the case (or at least, no real justification was offered other than the heuristic that larger firms are somehow inherently more efficient, which if anything is opposite to my experience in a very large org).
A nation might well implement an industrial policy so as to pessimize its local industries that survive, but that is not required to happen either.
It’s a tradeoff between resilience and efficiency.
You can go for full efficiency if you want, but then like the US auto manufacturers learned during Covid, you don’t have any way to handle disruptions to your business
Security, perhaps.
In all seriousness, that’s basically what the Soviets thought they were doing—and why—from (at least) 1945 on.
It really didn’t work out, despite sometimes giving the appearance of a plausible alternative to the capitalist world.
I don’t think the problem with the Soviets was doing everything themselves, which seems to be working okay for China. The problem is that centralized planning doesn’t work, and the system dehumanized people and destroyed incentives for people to innovate.
People have been raising this alarm for decades as more of our domestic manufacturing is off shored. Few listened then. It's unlikely we will come back from this.
Maybe the problem for Intel is complacency exactly because there is this expectation of a bailout when things don't go to plan.
While other hardware companies got lean operationally and employee wise Intel did not. The ex-Intel employees all paint somewhat the same picture of bureaucracy, layers of (poorly managed) dependencies and reliance on paradigms that worked during late 90s / early 2000s.
If you followed sources like semiaccurate the situation at Intel is not surprising either, they've been reporting on issues there since their inception.
There's a real folly in capitalist countries thinking they can be self-sufficient walled castles. Capitalism by its nature will seek out the lowest cost be it in labor or manufacturing. That means often means outsourcing.
Our system has no breaks for this. In fact it works actively for this, hence the neolib ideal of "just move towards efficiencies, and let the chips fall where they may." This is ideal under capitalism. As long as we avoid the needed migration to socialism, this is the best we can do.
Neolib economies generally work as much as anything "works" under capitalism. The GDP of the USA, median salary, quality of life, etc was the envy of the world until the recent nationalist movement that's based on "insourcing" and tariffs. You can't go back and capitalism migrates to efficiencies, which means outsourcing. Its more efficient to export factories and keep cushy office/service jobs here and drain the profits from those factories overseas.
Nationalism/protectionism and capitalism are fundamentally incompatible, so here we are. Demagogy and populism and "return to the past" mentalities used to win political power are the actual problem here.
Also what exactly happens if intel goes under? We have to buy 'foreign' licensed ARM? Manufacture in Asia? We're already doing that. And we have AMD which is a good, if not, superior product, regardless of manufacturing locale. We don't need local fabs the same way we don't need local factories for a lot of other things. You can't just depress wages with a wave of a hand nor do tariffs work outside of some really focused edge cases.
>The U.S. will be completely dependent on foreign companies
This is true of nearly all things in nearly all countries. Recent nationalist movements won't change how capitalism works and recent tariffs and protectionism has only hurt these industries and the working class. The toothpaste is out of the tube and it cannot be put back in. What we're seeing with the government buying intel is an attempt to do that, and it will fail. Expect more tomfoolery like this until we get responsible leadership, but until then we all have to sit here and watch these various economic horrors unfold. Be it this, inflation, mindless tariffs, etc. This will fail and its obvious it will, but currently it buys political power, so we will go this route because voters, largely uninformed on how capitalism works, think this is the "one weird trick" that will make them wealthy. It won't. In fact, all recent indicators are more negative as these policies continue. It will instead make them poor.
>Also what exactly happens if intel goes under? We have to buy 'foreign' licensed ARM? Manufacture in Asia? We're already doing that. And we have AMD which is a good, if not, superior product, regardless of manufacturing locale. We don't need local fabs the same way we don't need local factories for a lot of other things. You can't just depress wages with a wave of a hand nor do tariffs work outside of some really focused edge cases.
This is the same short sighted nonsense that got us into this mess. What happens if China invades Taiwan tomorrow? They can cut off the supply of chips to most of the world and global economies will collapse overnight. You really haven't thought through the implications of having critical dependence on a single small island that a global power is incredibly invested in controlling.
What happens if there’s a global pandemic next month and every industry experiences massive labor and supply chain disruption?
It sucks for a while; the system is strong and adapts.
I appreciate fabs are multi-year, massive capital investments, but TSMC already has one up and running in Arizona. There are others (including owned by Intel) all around the world. They won’t go poof when INTC is no more.
Efficiency is in tension with resilience. I think the pursuit of efficiency at the high end results in a less efficient system because of all the second order effects.
I like that framing. I also think it’s a disservice to only think in terms of capital efficiency since who really cares how efficient your capital is if you can’t produce food when there’s a shock?
The people who own all the capital do and that's part of the problem. Nobody likes seeing red in their brokerage account.
O sure there’s no long term forethought and if you manage others’ money you’ll get fired. It’s brutal.
To quote Dave Chappelle: "I want to wear Nike shoes...I don't want to make them!"
'and I'm happy to make money off the jokes about/normalize the little girl that has to work in a sweet shop in a tropical climate doing it for basically nothing'.
Current American culture can be pretty ugly.
Unless you believe that rich countries should altruistically give resources to poor countries, this is the best we can do. If there were no cost advantages to manufacturing in poor countries, they would have been entirely left out of the global economic sphere and unable to trade anything for industrial machines and technology.
> There's a real folly in capitalist countries thinking they can be self-sufficient walled castles. Capitalism by its nature will seek out the lowest cost be it in labor or manufacturing. That means often means outsourcing.
It can mean outsourcing, but I think your broader point is undercut by the fact that the USD holds a very special place as the world reserve currency. This creates high foreign demand for the USD which pushes up the exchange rate and leads to US exports being less competitive on the international market (i.e. our manufacturing base gets hollowed out because it cannot compete). This is a large market distortion that the US actively defends because it benefits us in other ways. Tariffs and general protectionism is not a good thing in a free market, but that's not really what is happening at the international level.
This is why I swing like a pendulum between "a better world is possible" and "let the system burn itself out.".
That's the premise of neoliberalism, you need globalism or the entire idea of capitalism falls apart and every domestic company becomes a crab in a bucket... trying to recapture that lost value with nationalism won't work within the span of political term limits, they're trying to undo something that's been happening for 50 years... we literally don't even have the underlying infrastructure for re-shoring, basics like getting electricity where it needs to go become a problem
That would explain why the nationalist is strongly looking at unlimiting his term, except any plan for re-shoring is stuck in the 80s with him.
> Nationalism/protectionism and capitalism are fundamentally incompatible
Huh? France and Germany are prime counter examples of your statement.
They both have strong labor unions and/or collective bargaining agreements the USA does not have. That is to say socialist-coded policy is what is helping here, not capitalist ones.
Their benefits are almost purely from the strength of the working class, hence workers having it better there.
In France, the percentage of employees covered by a collective bargaining agreement, which is very high (around 95-98%)
In Germany, about 50% of workers are directly covered by collective bargaining agreements (CBAs)
In 2024, the union membership rate in the United States was 9.9%, representing 14.3 million workers, while 16.0 million workers were represented by a union under a collective agreement, accounting for 11.1% of the workforce.
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If American workers want a better life they need CBA's and unions, not protectionist tariffs and buying chunks of random tech companies.
I mean they are both shocking poor compared to the USA and France is still suffering from ridiculous youth unemployment.
>There won’t be a startup to fill Intel’s place.
That’s Intel management’s FUD building a moat against such startups with the government’s help.
Several billions of dollars is not a scary level of funding these days for such startups to happen. Plus CHIPS pile of hundreds of billions. Plus Nvidia, Google, Amazon, Apple and others can always form a consortium to build a foundry. A lot of options, yet all of them are being killed by the Intel management skillfully working the bronze ear. That is how a tech race is lost - by letting government instead of the market to pick winner.
Intel was the best until fairly recently. Then they still looked like the best to a non-expert observer, and then still looked at least competitive until even more recently. The modern world changes too fast for our governments to adapt to. Especially when we're talking about state of the art semiconductors and our leader was born before the invention of the transistor.
Intel hasn’t been “the best” since the world cared more about mobile in 2010. There GPUs have always been also ran. It just wasn’t a big deal until crypto and later machine learning.
Even for integrated graphics, Intel has been behind Apple’s/TSMC ARM based processor before the Mx based Macs.
The OP is talking about fabrication technology, not end products. Even years into their delays getting to 10nm, Intel had more advanced fabrication technology than TSMC until N7 reached volume in 2018.
What’s the use of having “better fabs” to make worse products that the market doesn’t need and not be a foundry for other companies that can use it?
The reason they are in the shape they are in right now is because they didn’t have the volume to invest in the next generation and even now the CEO said they aren’t going to invest in making a cutting edge foundry until they have customers committed to it.
For me it's debatable that they were "behind" on GPU because I didn't need a bleeding edge gaming GPU. I only needed a GPU fast enough for spreadsheets and code editors, provided at a competitive price and power budget. Intel actually did deliver that.
Intel also had adequate software for their GPUs. They didn't mess about using binary blobs for them.
To a first approximation, no one cares about open source drivers when most PCs are running Windows and servers running Linux don’t care about Intels GPUs
I have said that their benchmark to power a desktop with Google Maps in 3D. Anything beyond that was a bonus.
Mobile as cellphone chips? I guess you are right, they were never really all that close to best.
Intel was very competitive in laptops until Apple started coming out with the M-chips. Now, AMD is doing pretty good. Has Microsoft released their Snapdragon surfaces? Haven’t heard much on that front.
Intel dropping the XScale ARM was the beginning of the end. Their iGPU's where fine so long as the peak of usage was google Earth/Maps. But it was wildly under supported and they ended up missing the boat, that could go for a lot of their products.
Well on desktop and server they pretty much had no competition until the late 2010s or so. So they were the best by default.
And it took a long time for mobile CPUs to be considered important. Arguably mobile CPUs still aren't considered more important than desktop, even though they obviously sell more.
Mobile CPUs are almost a commodity these days and fairly low margin especially compared to server chips. Most people really don't care what chip does their phone has and its almost always "good enough" relative to the price.
IMO that's much less of a case for laptop and desktop (let alone server). Even if people don't understand the technical details e.g. Apple's superior performance per watt (or its implications at least) is something a lot more people notice.
This is demonstrably not true. TSMC is ahead because of the volume of mobile and that happened on the back of a lot of investment from Apple - who does make high end chips.
Intel focus on low volume high end chips is another reason they are behind.
> This is demonstrably not true.
In what way?
TSMC doesen't design or sell the chips. If they have limited capacity they will of course charge more for manufacturing mobile chips if they can sell the capacity to Nvidia/AMD/Apple instead.
ARM chips (and that's pretty much by design based on ARM's business model) are close to being a commodity.
Apple is of course an exception but they are not directly part of the CPU market. And ARM and Qualcomm are barely bothering trying to compete with them because there doesen't seem to be a lot of point. They themselves are pivoting to datacenter because there is just more money to be made there.
> Intel focus on low volume high end chips is another reason they are behind.
I guess that's complicated. It seems like an optimal strategy if you are a chip designer (e.g. Nvidia or AMD vs Qualcomm). Not so much if you are a fabricator. Of course Intel being both makes things a lot harder for them.
Datacenter is not a monolith, and neither is it guaranteed to generate more profit or revenue.
IIRC intel makes 2-3x in client sales what it does in datacenter.
> TSMC doesen't design or sell the chips. If they have limited capacity they will of course charge more for manufacturing mobile chips if they can sell the capacity to Nvidia/AMD/Apple instead
That’s the entire point. Intel is behind because their vertical market strategy of using their own fabs only for their own chips doesn’t give them enough volume compared to TSMC who has volume because they are a foundry.
> ARM chips (and that's pretty much by design based on ARM's business model) are close to being a commodity.
ARM doesn’t manufacture chips. The entire argument is that it’s a strategic interest for Intel to manufacture chips in the US. ARM is irrelevant to this conversation.
> Apple is of course an exception but they are not directly part of the CPU market. And ARM and Qualcomm are barely bothering trying to compete with them because there doesen't seem to be a lot of point. They themselves are pivoting to datacenter because there is just more money to be made there.
Apple, Nvidia and to a lesser extent all of the companies that are designing chips and using TSMC as a foundry are more relevant than x86 chips.
Between phones, tablets, watches, and Macs, Apple, etc alone sells more devices with Arm chips than PCs and servers sold by Intel.
They have enough scale to fund leading edge processing.
Qualcomm is a bigger seller of processors than anyone since every mobile cellular chip that I’m aware of except for the very few designed by Apple for the low end 16e is sold by Qualcomm.
> I guess that's complicated. It seems like an optimal strategy if you are a chip designer (e.g. Nvidia or AMD vs Qualcomm). Not so much if you are a fabricator. Of course Intel being both makes things a lot harder for them.
That’s exactly the issue. Intel the chip designer would be better off if they used TSMC and Intel the fabricator would have a lot more funding if other chip designers trusted them enough to use them as a foundry.
Every company that both tries to be vertically integrated and a “platform” fails at one or the other.
Google - The Google Pixel is an also ran hobby project. But they are relatively successful with their products across iOS and Android
Apple - a great vertically integrated product. But no one uses Apple Music on Android unless they are an iPhone family with the one off Android user. iTunes has sucked from day one on Windows and Safari for Windows was rapidly abandoned.
Microsoft - the Surface laptops have gained some traction. But sales are miniscule in the grand scheme of things.
But you notice in the case of Google and Microsoft, they aren’t crazy enough to manufacture their hardware.
My only point was that mobile chips are pretty much a commodity these days and not a particularly lucrative market if you want to maximize margins and growth. The fact that there are way more ARM chips sold in a year than x86 servers doesen't prove much.
> Qualcomm is a bigger seller of processors
Yes, even for their highest end mobile chip (Snapdragon 8 Elite) the estimated OEM price seems to be under <$200.
A midrange AMD EPYC 9004 chip is $4000-6000. Presumably the gross margin is also higher. So hardly a fair comparison. Of course Intel seems to be propping up it's server marketshare by dropping its margins, so I wouldn't be surprised if they are lower than Qualcomm's.
> But you notice in the case of Google
They design their own mobile SoCs though which seems like a fairly serious effort for a hobby project (although being an off the shelf design like almost all ARM chips besides Apple's maybe not)
> every mobile cellular chip that I’m aware of except for the very few designed by Apple for the low end 16e is sold by Qualcomm
Not sure on volume, but Samsung and Mediatek are major players too. I dont think Google has used anything from Qualcomm since Pixel 5 (2020).
Reminds me of the desktop/server processor space in the late 90's. At least this time we have a dozen vendors that are all using ARM instead of x86/POWER/DEC Aplha/MIPS/IA-64 & ARM. More chance of surviving together rather than making multiple moats.
AMD definitely gave them a scare several times before that.
I had a Duron chip that, for like two full years in the early '00s, would've required an Intel chip about double the price to beat it. That was wild. I assume the Celeron line in particular only hung on through that period via contract-inertia and brand recognition, because it was a total joke next to Duron, on a bang-for-your-buck basis.
Like I did (at the time) high-end gaming on it, back when gaming used to sometimes tax your CPU and not only your GPU, and in that entire time I didn't ever feel like I would have benefitted at all from an upgrade, it was so far ahead of the curve. And that was AMD's budget chip line! They simply didn't deliberately cripple it nearly as much as Intel did their Celerons.
We've been back to gaming (even of the first/third person kind !) taxing CPUs too for several years now.
(Though I blame developers being lazy with optimisation as well as games also being released on console for this.)
> "The single most important reason for the U.S. to own part of Intel, however, is the implicit promise that Intel Foundry is not going anywhere."
If the last 8 Months of this year has shown something, it's that every decision the US takes could be considerate, but as likely also completely random and reversed and bent at any moment in the future.
Accepting those risks in order to sell in the US-market (assuming it would be required) requires that the US-market also provides the commercial rewards.
For now I don't see that this is secured in sufficient volume to justify such an investment, considering that it will take YEARS for Intel to actually become a viable foundry and have a customer product ready to be produced there. And I'm not even talking about the potential cost-increase vs. an established high-volume foundry...
> every decision the US takes could be considerate, but as likely also completely random and reversed and bent at any moment in the future.
This my main problem with this investment. I can certainly appreciate the benefit of US government investment to ensure "homegrown" production capabilities. However, this depends a lot on a level of understanding, intelligence, and planning from the US federal government which is monumentally lacking. If no one trusts Intel now, I cannot begin to imagine how anyone would view Intel plus the current US government as more trustworthy.
Just look at the current approach to tariffs as a good example for how current "industrial policy" is being carried out. Unpredictable, vengeful, and declared with little plan or forethought. Why should we expect any differently from other policies?
Add to this the fact that given the government is now propping up a poor performing company there's no possible reason to try to create a new domestic competitor. If you do and you start becoming successful, the government can just increase their "investment" in your chief competitor and shut you down. It's ludicrous.
The point of the article was that there's never going to be a new domestic competitor. It would take hundreds of billions in investment to get off the ground and build a fab from scratch, and they'd be in an even worse position than Intel is currently. No external customer would want to risk using them, and they don't have the internal demand of x86 to keep going on their own.
There are other alterntives to the US Gov taking a 10% stake (and it must be noted that this is for money already distributed to Intel via the CHIPS act, so it's tough to say how the gov having a 10% stake is really helping Intel here, there's no new investment involved and Intel needs ca$h). I agree with the article that there's a significant geopolitical risk to the status quo. I think it would've been better for the president & his economic staff to arrange a meeting of US companies that need foundry services and try to get them to a "come to Jesus" moment re the geopolitical risk to their current operations relying so heavily on Taiwan. The government role here shouldn't be to own Intel (or other companies) but to incentivize those large fab customers (Apple, Nvidia, AMD, Broadcom, etc) to make a significant investment into Intel foundry services. Not sure what those incentives would look like - perhaps tax incentives. There's also the possibility that some kind of 3rd party consortium could be setup to run Intel. This way they're not trying to start from scratch (which would take too long and too much capital), but also allows those other investing companies to have some kind of control at a distance.
"Never" is a very strong statement... or do you expect the USA or the need for chips to stop existing in a time frame as short as half a century ?
I frankly look forward to see whether the US will actually CARE how Intel will conduct its business, instead of simply trying to just reap benefits from it.
Everything can for now be put under the umbrella of "US semiconductor sovereignty", but actually making this happen involves much more strategic planning and investment from the government.
For example, I doubt that Intel has sufficient experience as a foundry to support design-finalization for ARM, they are JUST starting NOW with this.
So who will pay for closing such gaps? Would they force e.g. Apple to use Intel as foundry and swallow all the associated cost, or would they rather accept Apple to source from a TSMC fab (which is built in US for the big customers like Apple and nVidia)
> If no one trusts Intel now, I cannot begin to imagine how anyone would view Intel plus the current US government as more trustworthy.
Because people making these decisions aren't chronically online....
This is relevant how? You can be the most dyed-in-the-wool old school businessman who only reads physical newspapers and the first thing you’d think of is the way all of your suppliers are reporting unpredictability and your buyers are talking about reduced demand. Businesses like predictability and between the chaotic massive tax hikes and aggressively politicizing the federal reserve, they don’t have a stable environment.
I actually think that if we're going to tax-privilege capital gains to a huge degree over wages, it's entirely appropriate for the government to claim some small chunk of non-voting, least-privileged (both to avoid conflicts of interest and fucking up the regular equities & debt markets) shares of every corporation over some size, probably with some other implementation details in there (graduated percentage as company revenue size grows or whatever, that kind of thing). I also think we should consider going back to things like having some parts of the defense industry outright government-operated, like we used to do, which these days might include a chip foundry or two. Not saying we should definitely do it, but I think it should be seriously considered.
... this ain't that, though. It's a one-off, not a reliable broadly-applicable policy, and it's not clear what kind of strategy it represents in the bigger picture. I also doubt the ownership structure is as hands-off as I'd prefer, though I admit I've not looked into the details (if there even are details yet—we've had a lot of reporting on things as if they've happened, that then sometimes go on to never actually happen, lately)
[EDIT] I further think it would be better than the status quo to acknowledge that we have an economy dominated by Zaibatsu now, and to use the government to leverage them for public benefit the way the "Asian Tigers" do/have, though I don't think this is that happening, either. I think we're currently picking the worst of three options, of "intentionally use them to their fullest; break them up; do nothing" (we've been on the "do nothing" track so far, having abandoned "break them up" in the '70s).
Best case, we get President Vance before 2028 and things settle down.
Well given Vance's connection to Peter Thiel I don't think it would be less destructive
It would be less mercurial, I think, although Vance is such a a political chameleon I don't totally know what he would do if he got his brass ring.
> Vance is such a political chameleon
What makes you say that?
He's reported to have many more liberal friends when he was in college, used to be vocally anti trump, wrote a book criticizing rural Americans and their culture before running on a base of them. That kinda stuff.
At minimum he's made a never Trump - maga pivot for political expediency but it also seems like his positions are tied to whatever Peter thiel wants
I'm not so sure that things would settle down if trump was out of the picture. Trump is obviously an active force, but even if he is gone, the forces that led to his rise will still exist. In other words, even without trump there is a strong anti-elite, anti-expert, nationalist/isolationist movement in the US. Waiting for trump to die or go away is foolish.
Sure, but the thing is, from appearances Trump seems to lack the ability to think strategically, to plan, and importantly, to find and listen to people who know things.
Even setting aside most of the culture-war stuff, which is so white-hot right now that it clouds matters, I think almost any other politician other than Trump, AOC, MTG, and probably a couple more I'm forgetting, would be more likely to do that last thing.
Trump's main issue is that he gets all excited and makes rash decisions based on the last person he talked to, compounded by the fact that he chooses who to talk to overwhelmingly based on chump change "campaign contributions" (bribes), family nepotism, or just his existing network of sycophants.
I'm saying all this neutrally toward ideology and left/right. Frankly I think life was fine domestically under both G. W. Bush and Obama, because both of them weren't impulsive and easily swayed to erratic decisions.
The other day when the US's stake in Intel was announced, people assumed it was a political stunt. I suspected it was because of national security interests. The CHIPS act probably didn't get the result US Defense wanted quickly enough. Some details that were glossed over include that there was a chip shortage a few years ago as a result of COVID and TSMC supply chain disruptions that led to a shortage in electronics and automobiles even. This started to look like a national security interest back then.
Second, there is an AI race going on. US intelligence is taking it very seriously and views supremacy of our AI as very important. Recently, the US was pushing NVDA to start using Intel's foundry. I assume it's for national security reasons.
Finally, a couple of details from the Intel deal that were not widely discussed is that the US is taking a passive seat[1]
The government’s investment in Intel will be a passive ownership, with no Board representation or other governance or information rights. The government also agrees to vote with the Company’s Board of Directors on matters requiring shareholder approval, with limited exceptions.
There are also warrants being given whose status is based on Intel's foundry. That suggests the foundry was the interest all along.
[1]: https://www.intc.com/news-events/press-releases/detail/1748/...
> The CHIPS act probably didn't get the result US Defense wanted quickly enough.
It might have helped if they actually distributed the authorized funds. CHIPS act was passed just over 3 years ago now, and Intel never received their grant money (which has now turned into the cash for equity deal of dubious legality).
> Recently, the US was pushing NVDA to start using Intel's foundry. I assume it's for national security reasons.
The real reason is simple, if you've been following IFS: Intel's foundry has no large customers. The free market has spoken and almost every single customer prefers TSMC or Samsung silicon. America was boxed-out of serious world-class chip manufacturing ever since Intel swerved on EULV. If it was for natsec reasons then I doubt the fed would waste their time taking a passive seat when they could claim Intel as eminent domain.
It's not about national security whatsoever; this is part of a last-ditch effort to force Apple and Nvidia to buy American silicon.
I'm not sure they need to claim Intel as eminent domain and that type of move is beyond what I know about but I suppose they could've done that previously but opted instead for market based solutions like with the CHIPS Act. That is really what led to the equity stake. The purpose of the CHIPS Act had more to do with the AI Cold War and securing the supply chain than it did trying to save one particular business. So I believe national security is the major concern and not saving one particular business.
> The purpose of the CHIPS Act had more to do with the AI Cold War and securing the supply chain than it did trying to save one particular business
I just don't think we're ever going to see eye-to-eye if this is your belief. In realpolitiks terms, Intel hasn't been a player on the AI board since Gaudi. And even that was a total flop.
If securing AI compute was the goal, buying Intel is about as large of a mistake as you can possibly make. Even Samsung has more skin in the game at this point. The only logical explanation, given Intel's history, is that they're desperate for customers and need help from the fed. If this is our plan to win the "AI cold war" then we've already lost.
I think it's simpler than that. I think US intelligence is looking to make sure a secure supply chain exists for AI and really that just means NVDA's chips. I have never stated at any point this plan would work well. This is all stated in the reasoning for the CHIPS Act. That may mean pressuring people to use the foundry but I don't actually think the concern was chiefly to win back jobs. The funding from the CHIPS Act was actually withheld since Intel wasn't making satisfactory progress. Also the warrants I mentioned are executable only if Intel drops it's stake in the foundry. I believe this was added since there was talk of Intel spinning that out. So the government seems very interested in the viability of the foundry and less so in jobs.
So my point is that I think US Defense is motivated by national security interests but that doesn't mean this plan is going to work well or that we haven't already lost the AI war. It's probably too little too late. I am just pointing out over and over that I don't think grandstanding is the motive. I am sure that will happen but I think at some point it hit US Defense that relying on Taiwan put's us in a precarious situation.
But NVidia chips are now part of national security, I suppose.
And to China with a 10-15% tax
The issue is that Intel manufacturing chips in the US wouldn’t have solved the chip problems with cars for instance.
What TSMC traditionally does is keep trailing edge fabs online that are fully depreciated and use those to produce chips that don’t need to be leading edge. It wouldn’t make sense to create a new fab for trailing edge chips.
Car manufacturers aren’t going to all of the sudden start using 2mm expensive chips for their cars.
Even for TVs, the BOM for the “smarts” need to be under $10.
14nm is mature and would suit this purpose fine, and they have existing capacity. The business, tools, and everything else around would need to get built out.
Yes. But Intel doesn’t have any customers and do they even have 14nm fabs online and how long will take to move customers to it in the case of a disruption?
To have customers they need to do the actual work of closing deals, building the customer-facing support teams, building all the tooling integrations (PDK, simulation, etc). On the manufacturing side they have to figure out who will do all the stuff besides fab, I think they have 14nm currently in the US and Ireland but the packaging might all still be Asia. It's not something to be done in case of disruption, it's essentially starting 80% of a new company to serve customers who want a US and Europe based supplier. Government customers could work, or public/private joint venture to build commodity parts, but either way they need patient customers who can help work out the problems and pay a premium to do it.
Modern cars are powering multiple (as in 3+) screens at the same time, including games, streams and videoconferencing.
which can already be done with >7nm chip.
Yes, everything we have out there can already be done on 28nm chips, that doesn't mean that the goal stays idle. And in a car you have hundreds of subsystems to control and monitor too.
What subsystem you mean?
Your infotainment tracks everything from temperatures, lighting, temperature, car asset, etc.
The chip shortage only came about because everyone cancelled their chip orders and then had to re-queue in a different order and they found themselves at the back of the line.
Their lack of planning doesn't constitute an emergency on the public's part
Yeah, behind all the partisan chaff, serious people think falling behind in AI could be disastrous. Getting locked out of it altogether because you lost your only source of advanced chips would be even worse.
I always hear about Taiwan and TSMC for Nvidia, but what I never heard until recently is that all these forbidden and banned chips are still assembled into GPUs in China. I am not sure how the US beleives any of this will do much good when the the chips are still sent to China to be completed into GPUs and other AI devices.
I mean obviously it's about chip production, but shitting on the chips act is a political stunt and nothing more.
Building fabs takes lots of money and time. Intel also doesn't have customers except themselves and have fallen far behind in the fab business and has a decade+ or mistakes to make up for.
What we have here is picking a winner and potentially insider trading/market manipulation with Trump shitting on Intel leading up the "deal".
That was what I was arguing against. It seems like people cannot stop themselves from making this about Trump. I guess he does that himself though. The problem with saying he was shitting on the CHIPS Act is that Biden himself didn't even pay out the money. It's because Intel made no progress on the fab. It's pretty clear behind both Biden and Trump is a desire to have Intel's foundry working. With Intel making no progress on it, I am assuming the call to take a stake in Intel was done to mitigate all the benchmarks Intel said they would make but failed to do. Perhaps the government figured they could pass the money to Intel without giving up the reigns this way. Either way, I am very convinced there is a national security motive under all of this and neither Trump nor Biden went down this path to grandstand on it.
I am torn on this.
On the one hand, I strongly agree with this article. This kind of state ownership never brings anyhing good. I don't see how this is different.
On the other, it is hard to deny how impressive the new wave of Chinese manufacturing is. No longer are they just making knock offs of Western products with stolen IP. BYD for example seems genuinely innovative, a top product. There are many other examples.
Now, these are clearly not state-ran enterprises, but equally the state is heavily involved. Or, Nvidia is concerned because China can mandate that the whole country pivots to using Chinese GPUs, seemingly with no deteiment to their AI research, while amazingly benefitting their own chip production ability.
I'm not sure how I reconcile these two.
> On the one hand, I strongly agree with this article. This kind of state ownership never brings anyhing good. I don't see how this is different.
There's short term stable and long term stable.
Having a BDFL can, when the BDFL is genuinely concerned with the welfare of whatever they are managing, result in something much better than what would be created if designed by committee. This is equally true for software projects and nation-states. China, Singapore, Linux, Python, etc.
In the long term, having a BDFL really relies on that "B" being there, and especially when a nation state is involved, the tendency of human nature to corrupt will likely eventually take over.
Basically, while China is acting with great coordination from the now with good results, they are doomed to eventually either fall to pieces when the diktat is bad, a la "Great Leap Forward", or else transition to a more stable (less authoritarian) system.
They can only do things like:
> China can mandate that the whole country pivots to using Chinese GPUs
so many times before getting it wrong disastrously, and the longer it goes the more likely someone will get it wrong.
They've lifted a literal billion people out of third world, no-indoor-plumbing poverty in the last 30 years.
And, to the point of the article, SMIC is already doing 5nm manufacturing.
Political systems are more complex than dictator/freedom, there are lots of stakeholders. The USA stakeholders tend to be short-term focused financial engineers, this is separate from whether we have checks and balances or what color tie the President wears.
Yes, they have had great success.
The comments you made about political systems indicate you don't really grasp my point.
- Governments are formed of people. People make mistakes.
- Power tends to corrupt, and the likelihood of corruption scales with the quantity of power and the quantity of people passing through the role (that is, one person may truly have best interests at heart, but will their successor? Or their successor?)
The result of the above is that when assessing long term stability of systems, problems that can happen inevitably will. If a system allows massive sweeping changes, then they will happen, and eventually an incorrect one will be made.
For example, let's take the scenario above, where Chinese companies were ordered to begin using Chinese GPUs. Did that work out? Yes. Could it have gone poorly? Yes.
Will every similar decision go as well? No. Thus, a situation where the "you must use Chinese GPUs" dictation is possible, is less stable than one where it is not.
You brought up a comparison to the US, because the US and China always get compared I guess? The US does this sort of thing more weakly, so gains less instability from this particular source of instability. Whether it's currently more unstable in other ways is left as an exercise for the reader.
Im saying that people live in a culture, and that sets the parameters of what's conceivable.
You're commenting from the post-reagan consensus, which inevitably leads to Intel's current situation. But it doesn't have to be like that, America had a different consensus from 1930-1970.
(BTW, deepseek was trained on nvidia.)
Xi doesn't personally set every industrial policy in China, its a ton of people all over the country. Culture.
I think we're kind of talking past each other maybe.
What I'm saying reduces down to, "the scale of effect that humans are able to have on a system, will eventually lead to problems of that scale on a system".
If you can dictate that all industries within a country must do some thing, that will eventually cause problems with all industries within the country.
Culture doesn't really have anything to do with it. Whether the person making that dictation is Xi or Trump or some random bureaucrat doesn't really have anything to do with it.
Yeah, but that is a continuum and not binary. Xi isnt personally in a room pulling levers that control everything.
There are thousands of bureaucratic orgs and corporations making their own calls, deepseek and qwen were both trained on nvidia hardware, while several chip startups and SMIC ramp up.
The nature of those calls is influenced by culture. If you have a culture of MBAs, you get Intel's actions over the last 15 years.
> No longer are they just making knock offs of Western products with stolen IP. BYD for example seems genuinely innovative, a top product. There are many other examples.
I think many people really underestimate this part. If you watch Back to the Future, they sort of deride Japanese goods as cheap knock offs. Later Japanese became an innovation powerhouse. Same thing happened with China. Previously derided for low quality knock-offs is now known for innovation.
No one seems to have the state-run enterprise explanation for Japan but everyone does with China. Because of Chinese Law. While state help is necessary for companies to succeed that alone is not enough.
In the long term small improvements can enable innovation. But if you get stuck on coasting on laurels for a long time it leads to decline in innovation and especially motivation. And when I mean not only in releasing new products but also in manufacturing and other related areas.
I didn’t even know BYD existed until I was visiting Australia, riding in my cousin’s Tesla, and he pointed to the dealership. I’d never seen one because they don’t sell in the US due to tariffs and the general economic environment. I found it striking that I’d been completely sheltered from this company and its products without even realizing it.
People who think that china makes crap products has probably never been in china in the last 5+ years and their knowledge about their products end up with Shein or Temu crap.
Yeah folks judge Chinese output by 1$ usb cables, ignoring how ie DJI came to the market and ate everybody's lunch including US companies like gopro who basically had to cancel whole drone product pipeline overnight, thats how badly behind they were.
When I picked up my DJI drone many years ago the amount of polish was top notch - hardware worked flawlessly, software was fast and without any glitch. I was looking for any signs like 'designed in Germany' or similar but nope, all Chinese.
People think about 3rd world countries and somehow end up thinking about the very definition of permanent incompetence - russia and its satellites. Like they still put chips from stolen wash machines into their ballistic missiles. When China is in comparison more like a humiliated, smart, deeply focused, hard working, ignoring some pesky human rights group of people who grokked well they don't need to bow to any foreign powers anymore if they focus and work hard on specific goals.
My perception changed when the iPhone came out. But even before tbat alot of stuff was made on China and it cant all be crap!
The US government can, for example, discourage using Chinese chips using various policy levers without taking direct corporate ownership. That sort of thing is not that unusual.
> Or, Nvidia is concerned because China can mandate that the whole country pivots to using Chinese GPUs
The US can do that too, it's not the ownership structure that is stopping them.
In fact, the US used to do a lot of that before the 70s.
Hasn’t the US already done that? Huawei’s AI processors are banned in the US, with an effort made to ban them in US allies worldwide.
The thing the US should fear the most, ironically, is China moving further and further away from communism.
If something happened to Xi and the party elected a hard nosed communist, China would unravel itself.
Xi is a return towards Communism, or at least Communist-style control. And things have slowly gotten worse over his tenure. I think zero-Covid and the Shanghai debacle lost a lot of trust, too.
I don’t foresee the Party choosing someone more hardline than Xi, though. China has always been authoritarian, but collective ownership was new and an unmitigated disaster. They are too smart to go back that direction, although if they did, I could see that happening.
I really wonder, why so much noise about this case. I agree, semiconductors are extremely important in current world, but did you know, Volkswagen AG is partially owned by State of Lower Saxony (~ 11.8%)?
Also worth to remember cases of Rolls-Royce, Ericsson, and some other unfortunate Western companies, important for many humans, but once became unable to stay economically viable. (BTW it make me laugh, when I got info, Bentley now under WAG, when RR under BMW, as technically, they many decades was one entity)
WAG case is different from Intel case (and other I mention), but there are also many similarities, because of which I think, Intel case may be special for US, but is not too special for West.
And I think, such cases are bad, they are great shame, but also they are signs, we must do something, to make Western produced semiconductors more competitive.
https://en.wikipedia.org/wiki/Volkswagen_Group
France and The Netherlands have a combined stake of almost 40% in Air France - KLM. It's not unheard of. 10% seems very reasonable for such a critical company for US interests.
I'm confused why you mentioned Rolls-Royce and then in relation to BMW.
The government intervention of RR was nothing to do with the cars.
The original Rolls-Royce company, which included the car division, was nationalized by the British government in 1971 due to financial issues with its aerospace business.
The car division was separated in 1973.
The parent company, Rolls-Royce plc (nothing to do with cars), was sold to the public in a share offering in 1987, meaning it was no longer government-owned.
In 1998, BMW purchased Rolls-Royce Motor Cars.
> I'm confused ... > The original Rolls-Royce company ...due to financial issues with its aerospace business.
Well, it is because you do not understand economy of business. Unfortunately, main goal of any business is to be viable, not mean profitable, just be good enough to pay expenses need to run things defined as goals.
By definition, ALL old automotive companies started as hybrids - car division to make profits and motors division to make use of outstanding knowledge gathered when making consumer cars (as highest technology of that time). There are nearly no exceptions - Daimler began as Daimler plus Maybach; BMW began as motorized vehicles garages production plus motors business; Renault began as aviation motors business, made automobiles to make additional cash.
When Rolls-Royce divided to aerospace motors and cars, it was already semi-dead business, because their aerospace behavior was non-viable without donations from car division.
To be exact, I don't mean, aerospace impossible to be viable, just RR was.
And returning to our ontopic, Intel was caught in same hole - they lost their superiority and cannot survive without external help, absolutely as RR business.
I think the main counter example to this in the case of Intel is Global Foundries success after splitting from AMD. However GF had to find their own niche downmarket to the cutting edge nodes that AMD requires. So in the case of RR, it’d be like if the turbine segment gave up on SOTA aero engines and instead transitioned into electricity generation turbines (or some less sexy end market).
My personal bias is that in the long term, keeping the different divisions as one whole makes both sides less fragile in the long run.
The other problem I think you’re getting at that being on the cutting edge of a market that is extremely capital intensive is a tough sell to the banks & financiers. I feel like every industry outside of finance is increasingly squeezed out like humanity can survive on securities arbitrage alone.
> Global Foundries success after splitting from AMD
As I know, in ~1990th HBR written article about constantly under-loaded semiconductor fabs and concluded, it is unprofitable to tightly couple them to R&D.
Counter-argument was, that Intel used ties to fabs, to achieve extreme level of scalability, to fill market demand fastest, so marketing won.
What really happen, appeared few new specialized classes of semiconductors - signal, accelerators, high-power (high-current), and low-power (energy effective), and independent fabs made universal pipeline, to fill all market demand, but Intel stuck on desktop CPUs and failed all other classes (as example, Intel was unsuccessful in try to got niche on smartphones SoCs - still have not made cellular modem and nearly failed on GPUs).
To be more exact, Nvidia in reality is most software company from hardware companies, and AMD with their GPU division constantly competes to Nvidia literally head-to-head.
And what was gamechanger - when AMD struck to limits of reliable transistors on one die, they decided to switch to chiplets - they made 2.5D multiple-die design with silicon interimposer, while Intel used their manufacturing superiority to make huge dies with all included.
- Once appeared, with chiplets, AMD could achieve much better performance on weaker but much cheaper technology and won.
So my point - Intel suffered from too tightly couples with fabs, so once they have to adapt their designs and marketing to semiconductors, when AMD successfully avoided this trap. BTW, for this exist much better example - similar problem once killed Atari and Commodore.
BTW, Bentley was part of RR business model, as basically, Bentley was luxury-sports line of RR, in all other properties very similar to RR.
So, when first Bentley separated from RR, Bentley become rival of RR, and now Bentley and RR divide same market. And this is very bad for their economy, very much like Volkswagen Golf GTI eat market from SEAT performance models, but VW already killed SEAT to avoid unnecessary internal rivalry, and RR-Bentley cannot do this, because they are now different business entities and their coordinated moves prohibited by regulations.
If Volkswagen goes under, the Lower Saxony government likely loses an income stream.
If Intel goes under, Taiwan becomes the battleground for WW3.
Unfortunately, auto industry is core industry of modern economy for a long time. - Semiconductors and computers become core industry much later.
But core industries are just head of iceberg, you may not hear, typically 90% of iceberg are deep under water surface, very much like core vs non-core.
Any way, if large entity from core industry goes under, this could lead to killing domino effect for many "underwater" entities.
That is really big problem, which president Trump tried to avoid, when bought share of Intel.
And no, I disagree about battleground for now. What really important, really good strategists know, wars win by economy, not by military, as military could not withstand if they have not enough money for weapons and equipment.
So, basically, now US is stronger than China, so Chinese tops decide to not begin war which will not be profitable, while US is strong.
When and if China will feel competitive to US economically, they will be much more confident to begin war, so now the best what could do US tops to avoid war - to make China weaker and US stronger ECONOMICALLY.
Current situation very similar to space race, which was started when Soviets launch first satellite in 1957, because ICBMs are basically space scale rockets.
Unfortunately, now China already could make space scale rockets, so competition moved to other space - to computers and semiconductors (and possible branch to nano-industry or bio-nano, or something similar).
we must do something, to make Western produced semiconductors more competitive.
and letting Federal Government in on this is sure to make this happen - just like everything else being ran by the Federal Government
> just like everything else being ran by the Federal Government
Well, I don't like when something ran by Federal Government, but I have similar example: when somebody ill by flu, I don't like to use antibiotics, but sometimes must use antibiotics as fast measures to save life.
That is. Previous pro-semiconductor measures was not fast enough, and Intel was in real trouble and need to use something fast, and now we have bought time to do right but slow things.
antibiotics work albeit being shitty for you in the long run. gov never works in short or long term (and especially long term since every 4 to 8 years everything one party did the other one destroys the day after inauguration)
To be fair, US government is pretty good at strategic weapons; best in history. So if you view chips through that maybe it all works out.
this is being ran at about 9,800% waste which is why our department of offense budget is equal to 976 GDPs of Germany… very very bad example
The noise is 99% due to who is president. If President Bernie Sanders were doing exactly the same thing, most of the people complaining about it would be singing praises to his foresight, and most of the people cheering for it would be screaming about socialism. It's completely team-based.
To be honest, regardless of the government involvement or not, I have little hope for intel. Maybe they can, over time, have an AMD-esque comeback, but given their track record of the past few years I'm not hopeful.
The Pentium -> Core2Duo was a great era for intel, but I feel like ever since then they've started a decline in both price/value proposition as well as just general hardware.
The i-series was arguably pretty good for gaming, but then they started exploiting that position by having relatively poor price-to-performance, thinking they wouldn't have any competition.. and they kept the 'we are winning' mindset even while AMD was hot on their heels.
And Core was a lucky happenstance for Intel as they were not innovating at all and fell behind, thank goodness their isreal lab was doing something other than P4 work.
Even recently, we've seen that all intel can do is increase cores and increase power consumption, and they still can't compete. This is itanium all over again, because that is how intel functions.
This is just doomerism.
Intel's current chips are "fine" and competitive with AMD chips. If anything, Intel is trying out more things than AMD is.
I wouldn't call chips that fault and/or fail after mere months of operation when run within Intel-specified power and thermal parameters to be "fine".
Intel may be trying out more things than AMD, but perhaps they shouldn't? Maybe they shouldn't be trying to chase ARM envy with mixed-performance cores and disabling MT and the like and just stick to making reliable CPUs.
Honestly, the only thing of Intel's that I'm interested in are their video cards; and that's not because they're good, but because Intel hasn't (yet) all but abandoned their video card business for "AI accelerators"... so there's room for them to become good.
Well, they do have N100 & co. which are very nice low power x86 devices... Not all is bad that carries their name. But the main question is can they succeed as foundry? We will see in a few years I guess.
To be honest, for most Chinese people, the reason we haven't taken action regarding Taiwan is not because of TSMC, but rather our patience with the current will of the Taiwan people. However, this patience has its limits. Even if TSMC has better chips now, China mainland will surpass them next 10 years. You can compare the gap in chip technology between Chinese companies in 2015 and that projected for 2025 to see this trend. As for Intel, we don't really care about it.
China mainland surpassing Taiwan in chip manufacturing seems like it would be very bad for Taiwan. At that point the Chinese have little incentive to “be gentle” with an invasion of the island. It’s in Taiwan’s interest to ensure both China and the US have a dependency on its manufacturing sector.
I think western media overstate TSMC's importance in China/Taiwan relationship. China doesn't care. It's a nice bonus. But ultimately, TSMC doesn't matter to China. Taiwan is ideological for China way before TSMC became important.
The path from 'opinion of most Chinese people' to [action taken by the Chinese military] is even more tenuous than the corresponding path in the US.
The path is in the opposite direction altogether.
Do you think an invasion of Taiwan brings risk of a new, worse status quo? I think that's primarily why China doesn't invade. If it were possible to just achieve an easy, total victory then there is no reason to wait for Taiwanese people to change their mind about joining China.
Im also confused why you say China's inaction on Taiwan isnt about TSMC its about patience, but patience is running out because China wont need TSMC in 10 years. That seems to contradict itself.
The reason China doesn't want to is because they want a peaceful reunification. They want to wait when it's so obvious that Taiwan would lose and lose quickly that Taiwan simply gives itself up.
> They want to wait when it's so obvious that Taiwan would lose and lose quickly that Taiwan simply gives itself up.
I agree they prefer a peaceful resolution but that would be in the form of Taiwan wanting to become part of China and deciding to reunify. It makes no sense to surrender without being forced to.
It makes sense if it's inevitable.
China has no reason nor any incentive to invade Taiwan. They are moving ahead with a strategy of overwhelming force and patience. In short China will simply continue to greatly expand its Navy and overall military size. It will do so until its so overwhelming that Taiwan will simply end up voting to join back with China as it will be in its own interest. China has no need to speed this process up and can simply do exactly what it is doing now.. and just watch how things will change in the next 5-10-15 years.
But why would Taiwan vote to join China if China isn't going to actually attack it? Makes no sense. China could have 10x the military of the US and park it right outside Taiwan everyday for 100 years but if they dont do anything to Taiwan it has no incentive to reunify.
The scenario where Taiwan peacefully reunifies is where they decide they want to be part of China of their own interest.
> companies in 2015 and that projected for 2025 to see this trend
It's easy to grow very fast when you are starting from a very low base. Especially when you are chasing someone.
It's a bit like China's GDP per capita. If it continued growing at the same pace as between 2000 and 2020 it might have had a chance to catch up with US in a few decades or so from now. Certainly Western Europe.
Yet based on current trends they will never close the gap (then again who knows what will change in the next 10-20 years or so).
Of course demographic collapse is not that far either. US and Europe at least have immigrants propping them up.
The problem with predicting that China won't catch up on GDP per capita with the West is that the West too went through those growth phases about a century or two ago. It will take a 100-200 years, but China, and the rest of world will catch up. Just a matter of time. A long time no doubt. But it will happen.
I think you point out the most important difference between China and most of the western world, or at least the United States.
China is patient. They seem to be taking a long term, intentional approach. Their goals are long term. In other words, they’ve been planting trees for decades and those trees are now beginning to provide shade. Americans, in the other hand are more concerned with their own self interest and the next financial quarter.
> this patience has its limits
Without going into the lack of military capabilities to mount the largest amphibious invasion post-WW2 up until recently (debatable), I think you’d be hard pressed to find a group of people in the world that would be excited at the idea of being put under foreign occupation (not dissimilar to the “excitement” the Taiwanese had to be occupied by the Republic of China after WW2).
Regardless, TSMC wouldn’t survive annexation Taiwan being annexed by China in any capacity
I think that the difficulty for Intel is that they don't seem to attract the best talent anymore like they did 20 years ago. A big part of the job of running a leading edge fab is solving a lot of very tricky technical problems, and a lot less of those people work at Intel than used to. There are feedback loops in these things. The top people want to work with other top people. To some degree you can try to find those people and just offer them tons of money, which is what seemingly happened with Jim Keller (on the logic rather than the fab side, but still), but then he went and quit shortly thereafter.
Without the right people at the company, you can dump almost infinite money at a problem and still not solve it.
Maybe it's worth noting that the new CEO's explosive statement, Intel would give up development of leading edge nodes (14A and beyond) unless they find a large external customer in advance, hardly got any attention on Hacker News or other websites. But that was almost certainly the reason the US administration got involved. This blog post thankfully makes this point clear.
In the past, most people (including myself) just assumed the worst case was merely Intel selling its chip manufacturing division to some other US company which would then continue to develop new advanced nodes like 14A.
But that was not at all what Lip Bu-Tan (the new Intel CEO) suggested at the earnings call. He said Intel would simply stop developing new nodes and just use the existing 18A fabs as long as there is demand. And then, presumably, closing all the fabs and fully switching to TSMC, becoming another AMD.
The problem with leading edge fabs is they require obscene amounts of capital to develop and are apparently (based on Intel's experience) extraordinarily risky to build.
That's a hard thing to sell in any environment.
Well it's easy to sell if you are the one currently ahead of the competition (TSMC) and very hard to sell if you are behind (Samsung, Intel).
> But that was almost certainly the reason the US administration got involved
Now the US government can coerce Nvidia, Apple or someone to use Intel's fabs with no real political repercussions...
They already could do that previously (with tariffs).
the president unilaterally extorting 10% ownership out of a company isn't going to build the kind of system that competes with anyone. Big business can't really thrive under this kind of thing any more than corner stores can thrive under a protection racket.
I'm seriously not getting something about the entire argument in this blog post. How does a 10% equity stake make Intel more stable? At best it props up the stock price for a minute. If Intel continues to founder, then what? Federal government will buy more shares? Sell them? How does it affect the company's performance or decisions? Gov is not taking a board seat.
Didn't the US pay $9.8 billion? Intel's market cap is $106 billion, so $9.8 billion for 10% is buying at a slight discount.
If that data is correct, how did the US "extort" ownership?
Look, I'm as terrified of Trump's overreach as the next guy. I could easily see him extorting partial ownership of companies. But I don't see this as being that.
Can you make a convincing argument otherwise?
It was a grant (free money). Then the terms were (mostly) unilaterally changed to be an equity investment. Right?
No. It was a grant with profit sharing. The profit sharing was turned into equity.
https://www.intc.com/news-events/press-releases/detail/1748/...
It was because Intel likely wasn't going to get the rest of the grant money, because Lip-Bu Tan openly told the world he won't develop 14A without commitments from customers.
If Intel is going to cease semiconductor development, then why should they get the rest of the taxpayer money? Even under Biden and Pat Gelsinger, the government was signaling to Intel that they may not get the full money if they don't make progress.
What was the legal basis for this "purchase"? Because as I understand it, Trump came in, saw a law he didn't like (CHIPS), and unilaterally "altered the deal"
I don't think it's fair to characterize this as some kind of standard stock sale, as the terms were never set out as such from the start. (And to be fair, there are lots of valid criticisms of CHIPS)
Instead, funding was voted for by Congress... and then a third party came in, threatened to kill it on a dubious legal basis, and extracted protection money (well, shares). That's textbook extortion.
The US Government wanted companies to build fabs in the US so it offered them money to do it. Intel, which was one of those companies, but not the only one, took them up on the offer and was paid to begin construction on a fab in the US.
Normally when we pay businesses to do things we don't demand equity stakes in the businesses afterwards.
Notably, the biggest shareholders in Intel appear to be retirement funds of Americans - so Trump has just pilfered some money from the retirement accounts of Americans.
All in so far it is $11.1 billion
As much as I dislike Trump, he didn’t extort anything. He renegotiated the profit-sharing terms for an equity stake in Intel.
This is the correct answer. All the news articles seem to be lacking in details, but the deal did indeed waive the profit-sharing and claw-back provisions:
https://www.intc.com/news-events/press-releases/detail/1748/...
Why take issue with Trump alone then? Go ask Bernie Sanders. This is a peak at what socialism looks like in America. The country taking a stake is the people taking a stake. Strange bedfellows, perhaps, but anyone far anti-Trump should actually take this as a model of sorts.
I read all of Bernie's platform in 2016 when it was most thoroughly developed, and he didn't call for state ownership of companies like Intel. The closest he got to what you are thinking was calling for public ownership of utilities, which is standard in most capitalist countries, namely buying out/converting private electricity utility monopolies into either public or cooperative ownership.
Also, socialism means whatever the ruling class says it means. For example in China they've redefined socialism to just mean nationalism, which is the opposite of the original intent. Read about "Xi Jingping Thought" and "Socialism with Chinese Characteristics". It seems when ideas like socialism become popular, they are co-opted and stripped of meaning.
> and he didn't call for state ownership of companies like Intel.
But during the CHIPS act debate, he was against the Act unless the US gets a piece of the company.
In general, this is in line with his views.
I’m confused. Why is equity required when the current loan guarantees were perfectly adequate? The only answer is that the USG wanted more control and leverage than was required to achieve national security objectives. Kinda negates the whole approach to the article in my opinion.
Don't underestimate the pettiness of the current administration. They didn't like the old deal because they didn't make it. It is really as simple as that.
Were the current loan (and grant) guarantees perfectly adequate? Citation needed.
In some investors view they were not.
> "The deal certainly has the appearance of the government clawing back the remaining portion of the previous grant, as the government is getting equity not previously contemplated for dollars already committed," Morgan Stanley analysts "The trade-off, in our view, is that the company will have the flexibility to optimize its own business model without commitment to public service objectives, which may or may not include foundry services at 14A as articulated on the last earnings call
https://www.investopedia.com/intel-stock-keeps-getting-a-boo...
Fair enough. In reality though they have absolutely committed to “public service objectives” which is a weird way to say “doing whatever the administration asks otherwise they rapidly liquidate their stake”
Not sure how many times people will keep repeating this mistake assuming they won’t be hit up for protection money again later…
I'm not an expert, but I would of vastly preferred a fund to start a bunch of smaller fab companies.
Most systems don't need start of the art processors. Get some minimal fabs set up for RISC V chips. If we removed the profit motive, how much does this cost ?
Alternatively... Even a refurbished GameCube can probably run a basic rest API server.
If anything we have enough EWaste that we can probably just recycle what we have. At least for most applications.
My ideal situation is one where anyone can fab simple processors at home the same way you can 3D print almost any small object with under $5000 in total expenses.
Unfortunately that seems far away.
I imagine if you could get it under a million, it enters the extreme higher end of the hobbyist range.
Not like everyone can personally design a chip anyway, but if a small city has at least one fab it can be something in an emergency situation.
Recycling is probably a better solution here thought.
Try watching DYI CPU videos on YouTube. It’s VERY far away.
But what's the point of that?
There are smaller fabs already
This article says its steel-manning the equity stake but its actually an argument for Intel being "too big to fail" and then conflating that with an equity stake.
I do find his argument for Intel being "too big to fail" compelling, for whatever it's worth. But it was kind of surprising to only see 1 sentence at the end claiming the equity stake is necessary. I thought we were actually going to get an analysis on the deal and the dynamic it would create.
Standard Silicon is a nice name. Maybe they should use it.
Other possibilities:
- Standard Circuit
- Standard Semiconductor
- Standard Microchip
Standard Silicon sounds really great, would be shortened to SS or StaSi..
I hereby appoint you National Secretary of Child Naming
Key graf: "The problem facing the U.S. is not simply the short-term: the real problems will arise in the 2030s and beyond. Semiconductor manufacturing decision-making does not require nimbleness; it requires gravity and the knowledge that abandoning the leading edge entails never regaining it."
Foundries aren’t the only special case. The test should be, if we can’t afford for it to fail, it shouldn’t be left to the market. Another example? Farms. Also healthcare (expect to hear more on this front in the next few years as more and more hospitals go under, especially in rural areas).
Well, "the market" is just a descriptive model that represents the aggregated pattern of economic activity within society -- there is no "outside" of the market, and everyone, including political states, are just market participants.
Arguing against things being "left to the market" in the abstract is not sufficient to address the particular incentives that are producing undesirable outcomes, and does not offer any viable mechanism for shifting those incentives.
Specific proposals that attempt to operationalize what you're arguing here always seem to gravitate toward giving monopolistic power to a specific institution that invariably demonstrates that its own incentive structures are riskier than those in the broader market, and its failure modalities far more destructive.
To add on, the fundamental question is which risk is more palatable for something we "can't afford to fail?"
Is the risk of a hospital closing for purely financial reasons more or less acceptable than the risk of a state-run hospital being inefficient but guaranteed to exist? For critical infrastructure, I think that's a conversation worth having, and it's one that hand-waving about an all-encompassing 'market' obscures; dismissing a legitimate critique by framing the market as an all-encompassing force is just a rhetorical move.
Your comment seems to suggest that any attempt to change the market results in unfavorable results, but this doesn't hold up to scrutiny. I think you replied with a valid philosophical point, but you leaned too much on using it to challenge that anything could be done (when you yourself presented the idea that a mechanism was needed).
There is no such unmanipulated free market anywhere:
Perfect Competition: In reality, we have monopolies, oligopolies, and immense barriers to entry.
Perfect Rationality: Behavioral economics has thoroughly demonstrated that people do not act like perfectly rational, self-interested computers.
Perfect Information: There is almost always a significant knowledge gap between a seller and a buyer.
Since no truly free market exists, every economy is already a managed one. The real debate isn't whether we should intervene, but how we intervene and whose interests those interventions serve. I read selimnairb's point as that, for essential services, the rules should serve the public interest of stability and access, not just the private interest of profit.
We can examine the risks case-by-case. Here, the government is investing in a foundry. We could view the leverage this gains the US government as increasing the risk for political engineering above the previous risk of financial engineering. In financial engineering, Intel might prioritize its obligation to shareholders. In political engineering (if Intel were nationalized), Intel might keep an inefficient fab open to save jobs or just to win votes.
In the category of financial engineering as a risk, you might lump activity like stock buybacks put above R&D as exemplar of Intel. In fact, a criticism of CHIPS and this new government intervention often centers around the idea that Intel's leadership should not be rewarded.
Finally, a related case on the topic of Intel and national security: China's state-directed economy prioritizes national goals over private profit. After entering "the market," part of its core strategy has been to compel service to national interests rather than shareholders, and it seems that strategy has arguably driven its recent economic rise.
> TSMC’s foundries — and Samsung’s — are within easy reach...
To be honest, every foundry is in easy reach of something that can take it out. If there's a conflict that results in missiles hitting Korean factories, someone will be drone-bombing the power interconnects or driving trucks into water purifiers or whatever and taking out foundries in Texas.
It doesn't take much to ruin semiconductor foundry throughput. Wafers spend weeks or even months progressing from stage to stage. If you can cause a power failure, for example, you can scrap the whole content of the line and there will be no output until the pipeline refills: https://www.forbes.com/sites/tomcoughlin/2019/07/05/nand-fab...
Perhaps process robustness is better now, but in the constant scrambling state of semiconductor manufacturing, I doubt it is better enough to be able to shrug off concerted, deliberate attacks rather than just accidents, fuckups and bad luck.
I’m not sure why what he's saying is so outlandish to many ( at least to some of the papers he’s quoting ): we’re in a world which looks increasingly like the cold war all over again, and my immediate reaction when I saw the headline was ‘ah yes China this makes sense’. We’re not talking private capital - it’s national interests being pushed, for long term reasons, and probably a bit late.
Now I’m European so this seems obvious to me, coming from a culture of high government intervention but I might be very wrong!
The underlying logic is flawed though, there is no deeper action plan since they will still have 0 control over the company and any of its bigger decisions. Also nobody buys from Intel foundries, and for good reasons, this won't change any of that.
We have already seen some pretty blatant insider trading moves from current government, so I wouldn't rule that one out. But its probably way more petty - chips and manufactured war with China is all the rage in media, we all still remember covid situation, so its an easy area to get some political points, while spending other's money.
Most European government interventions, like French literally taking ownership of their common car manufacturers aren't considered any sort of success story to emulate after.
This was always going to be the logical conclusion to US hostile policy regarding the the proliferation of IC fabrication. The US, not cost, was the primary factor that discouraged many countries from pursuing their own IC fabrication capabilities. Had they not been so hostile, many countries would have had enough capacity to cover for the US until it rebooted its own industry.
This is also the same trap that China is barrelling into right now and they will absolutely find themselves in the same position eventually.
Note that all our issues with china would be solved if we stopped pretending like they're our enemy.
They are a threat to American supremacy, and almost all Americans - republicans and democrats - think that supremacy is good for them. It's nearly impossible to convince them otherwise, USA#1.
Oh yes, that nice warm fuzzy China that definitely doesn't speak regularly about war and conflict with the West.
Look the united states is incredibly bloodthirsty and in my relatively short lifetime has killed absurd quantities of people in wars of choice. China hasn't invaded anyone as far as I know. I'm not saying they won't or don't want dominance but idk why we pretend that somehow China are the warmongers
I mean, to claim china isn't expansionist overlooks their extremely violent formation. That said, they haven't been very expansionist for many many hundreds of years.
China wants to be number one and they have a good chance of doing it. Every nation’s leaders and people want that. It affords luxury and influence. The US understandably doesn’t want to lose their spot. It also helps making this an issue to give it a sense of urgency so things can get done — be it policy or innovation. There’s some game theory in there — e.g Prisoners Dilemma. Treating them as the enemy won’t lead to the optimal result, but if the US doesn’t and they do, it will lead to the worst result for the US. History is not filled with nations singing Kumbaya. I wish it was.
One could argue China may have already surpassed the US or at least equalled it on the world stage as of now. It will be interesting to see how historians view the rise of China and write about the emergence of a new super power.
Just a hunch and I am really going out on a limb here but I could see China wait another year or two and then step in and force a peace settlement in Ukraine. This would really show the world who the new super power is, as the US and Western powers have struggled with this conflict, a patient China could step in and reach a peace deal as they hold significant leverage over Russia.
China has always been a powerhouse economy. It's really just a blip where they were surpassed in the last two hundred years.
Yes, this is the attitude I'm referring to. The people who run this country (emphatically including people who frequent this forum) are far more my enemy than anyone in china could even pretend to be.
I also don't think Americans realize how quickly we will slide from relevance once our grip on the world slacks. We could have built this world into something amazing but instead we just got fat.
To be fair though, China has its morons too. If you can't deal with Republicans where you share a common language/culture/history, how are you gonna deal with a Chinese Trump on the other side of the world?
In the last election, Latinos voted 50-50 for Trump. That should have been a massive warning sign.
I like liberals, but they're way too passive. They really need to play the Prisoner's Dilemma in high school until they learn what to do when someone refuses to cooperate.
Yea, but american voters have never acted rationally. It's all aesthetics.
OT: am I the only one who thinks booting Gelsinger was a huge mistake? Semiconductor business is not one you steer in few years, everything is planned years ahead and he had the right ideas imho.
Does the US need a domestic Intel more than domestic ASML (or Zeiss for that matter)?
US has ASML- lots of the patents are ultimately owned by US entities, a great deal of the research and development is done on US soil, and the Netherlands aren't rocking the boat on sanctions, etc.
The EUV light source in ASML’s lithography tools is designed and manufactured by Cymer, based on research funded by the DoE in the 1990s and conducted at various national labs.
Doubtful. It's also doubtful this is about national security, protecting strategic manufacturing or anything else to benefit American people. This is a mafia shakedown.
ASML has a large factory in Wilton. & Zeiss is further away from missiles. So they're less concerned about that.
The USA already owns the important part of ASML (the IP). ASML is a Dutch company purely at the USA's leisure.
Care to elaborate?
As an aside, this guy really feels out of his depth post-pandemic. I get a lot more value out of folks writing more generally about macroeconomics.
could you expand upon this?
If semiconductors are so vital to US military, the US military should invest in research to build them on their own.
for all this talk about intel struggling, they seem to be quite capable to continue producing very competitive CPUs and other IP.
my understanding is that they are still doing well in the datacentre world, unless that has changed?
its worth keeping in mind Intel is quite a big company... and naturally, the parts that are chugging along just fine are not going to be making headlines (or much noise at all really.)
In my experience over the last 5 years the vast majority of companies I have worked with have moved to AMD for server purchases. Intel is not competing well on the home PC or server market in recent times at least that is what I am seeing.
100%. I’m seeing all of the new capacity in public clouds shift towards AMD. It’s hard to beat faster for cheaper. ARM has an even stronger value proposition, albeit with the requirement of compatibility. The switch would happen faster if there were enough equipment to go around… we switched all of our CI fleet to the latest AMD generation C4D‘s and got 36% faster builds, but had to go back a generation because GCP kept running out of boxes for us.
There is a lot of doom and gloom regarding Intel, but there are also signs of life. Intel is starting to show off products made on 18a and is slated to ship at least one product on that process this calendar year. Meanwhile TSMC has been stuck on 3nm for quite some time and it appears that there will not be a product with TSMC 2nm this year. If both of these prove true, Intel will have roughly caught up in terms of process. There is a lot more work to be done, but do not underestimate how quickly Intel's fortune can change if they manage to start hitting their mark and TSMC falters even slightly.
The investment from Nvidia, instead of the government, would give Intel a better chance to survive.
Mariana Mazzucato has been doing a good case for it: https://www.ted.com/talks/mariana_mazzucato_government_inves...
I guess we just forgot about the US bailout of the big-3 auto manufacturers
The book "Apple in China" by Patrick McGee focuses on this point in early 2000 top 5 contract manufacturers were in north america. By around 2010 the top one was foxconn which was larger than the next 4 combined. This is going to play out everywhere and result in extreme circumstances.
I think the issue is not just that that its capitalism causing wage issues, its the fact that people think they can control the painless socioeconomic transition that comes with incomes increasing with matching productivity gains, or worst halt and try and reverse it. One or more things will eventually cause a pop/crash/revolution:
- Endless high returns on capital: Wealth accumumlation for < top 50% of the people causes high enough inflation as these highly capitalized groups look to buy every single asset (think blank street day care and paying 200$ per month for trash disposal) to turn them into rent seeking ones.
- Large debt countries moment of reckoning: At some point a black swan event leading to higher inflation with no leg room for more borrowing like 2008. Bond markets will dictate fiscal tightening and politicians will likely take control of monetary and fiscal policy ending capitalistic bedrocks for them. This will feed into the Endless high return on capital cycle. Government will bow out of every service to service the debt through taxes.
- People not seeing any upward progress in their economic status or careers: Large populations find high upfront cost/headwind to enter into new economies. Failure to adapt, political choices become extreme.
- Deflationary effects due to progress of china, korea, japan etc due to cost of innovation crashing: At some point large economies become advanced enough that cost of highly specialized goods exported by private companies in highly indebted countries will fall causing non dollar currencies to experience deflation and undermine reserve currencies.
The only countries with leverage left would be the ones the ones with technology that is highly integrated into the society at a level that its people can rapidly change behaviors and adapt without losing wealth/landing on the street. After all you can convince a person he wasn't cheated by God/Demagogue, but you cannot convince them that they are not hungry.
Some of this is already happening in fits-and-jerks motion relative to pace of progress since industrialization. Add things like climate change to the mix and you might not be able to ask "how fast?".
So the gist is to make Intel the Huawei but for US&A
The problem with that is that Huawei makes world leading products in a lot of categories and Intel's remaining dominance is slipping. I don't see how this stake impacts any of that
My understanding is the piece argued state support as investor and customer might turn intel around.
Huawei started with much worse product and foundation than intel, but the state sponsorship kept it going, plus they have ultra hard working people and occasionally some shameless thieves, which made them where they are.
It would have been more effective to pay Micron to build up the capabilities to be a general-purpose fab to compete with TSMC.
I didn’t realize steelmanning requires strawmanning the opposing view.
A 10% stake does what? Nothing. The U.S. doesn’t even get decision making capabilities.
OTOH, the CHIPS Act created an incredible amount of semiconductor manufacturing capacity from a wide variety of manufacturers including both TSMC and Intel.
So the real question is what does getting a 10% stake do, that the CHIPS act which Trump is trying to retroactively destroy, isn’t doing much better?
Is this the beginning of the US sovereign fund?
US own the dollar why they need a sovereign fund? sovereign fund is profitable when you invest in a foreign currency.
That's what is being said. The Intel stake is a first step to a US sovereign fund that will include ownership stakes in many corporations.
is merging interests of the state and corporations marks a return to good ole fascism ?
or is it just an alternative way of taxing capital? instead of taxing wealth and capital, just take an equity stake in it ?
"Fascism should more properly be called Corporatism because it is the merger of state and corporate power.” — Benito Mussolini
"Corporate" in that quote refers to groups consisting of something like entire industries, including employees and employers, like a guild. It doesn't refer to a business legally recognized by the state as the word is commonly used today.
But when you link evidence that hitler had secret meetings with capitalist business leaders to bankroll him, the entire mefo bill nonsense, etc to the "were nazis socialist?" argument you get downvoted.
> "were nazis socialist?" argument you get downvoted
Well it's complicated... Is China socialist? What about state capitalism in general?
More an alternative way of controlling capital.
If you wanted to tax capital via equity stakes, you'd simply have demanded a much larger stake.
What we're doing is starting down the road of "capitalism with Chinese characteristics". It's a tacit admission that the Chinese model can be effective at achieving a nation's strategic economic goals. (More effective than the model we previously championed.)
The real flip side in all of this is that everyone else sees what we're doing for what it is, and they also implement capitalism with Chinese characteristics. Which in and of itself wouldn't be bad. But what if nations like India or Indonesia turn out to be just flat out better than us at it?
Or, God forbid, the nightmare scenario, which would be nations like Brazil being better than us at it?
10% is not a controlling stake, and US already controls Intel via regulation.
Most importantly, Intel's market cap is minuscule $100 bln, it doesnt allow control over meaningful amount of capital
Socialism with Chinese characteristics - it reduces private wealth and curbs control of oligarchs like Jack Ma. I feel like US is the opposite, where oligarchs directly control the government already
Sorry, I believe I've been misapprehended.
I didn't mean the intent is to control Intel's capital.
I meant controlling capital flows. In this particular case, controlling the flow of capital in a strategic sector out to TSMC et al. The idea is that regulation, state backed companies, etc etc all concert to oblige the market to keep those capital flows inside of your jurisdiction.
China does the same. It's extraordinarily difficult to exfiltrate capital from China. One of the only ways to do it is to turn the capital into products and exfiltrate those products out of China in place of the capital.
I think, long term, the US wants the same sort of environment over here.
Nationalized companies don't necessarily mean socialism or fascism but fascists did like giving the state fairly tight ownership and control of companies. It depends on how they handle that - if you see Trump loyalists embedded in lots of boards or top down instructions given to industry that might be a sign.
Or is it more socialism, the public taking ownership in the fruits of labor?
Honestly this is pure horseshoe theory where Bernie Sanders and Trump hold the same views.
Don't most sovereign wealth funds invest mainly (or entirely like in Norway's case) into foreign assets.
Holding significant stakes in domestic companies just seems like light state capitalism.
I'd suspect Trump would model his on Saudi Arabia's PIF rather than Norway's fund. The PIF invests in companies worldwide, including Uber and Blackstone, as well as providing capital for mega-projects like NEOM.
https://en.wikipedia.org/wiki/Public_Investment_Fund#List_of...
Honestly the fact that we don’t have a sovereign wealth fund invested in US equities is just silly. I get that you don’t want too much central interference in the economy but it feels like leaving money on the table
It's pretty funny to talk about central interference when the federal government already has a monopoly on monetary policy.
Its silly I don't have a multi billion dollar trust fund. Unfortunately you need wealth to have a wealth fund.
> President Donald Trump’s announcement on Friday that the U.S. government will take a 10 percent stake in long-struggling Intel marks a dangerous turn in American industrial policy. Decades of market-oriented principles have been abandoned in favor of unprecedented government ownership of private enterprise.
Really? A decade and a half ago the US government owned a 60.8% of GM and none less than Barack Obama was directing management changes.
The US has a long and well established history of being a mixed-market economy to varying degrees.
> Really? A decade and a half ago the US government owned a 60.8% of GM and none less than Barack Obama was directing management changes.
Did US govt. actually had an ownership stake in GM? Please provide some links to this effect.
Yes, along with a number of other US companies. This was done to stabilize the economy in the wake of the 2008 economic crisis. It was a very hot political topic at the time.
https://www.politico.com/story/2009/05/obama-reluctant-share...
https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
They also owned AIG insurance. Probably some other companies as well.
I don't understand how they can say Democrats are Communists while they do this. It's going to be interesting hearing everyone who spent decades spilling volumes about the evils of communism and the failure of the USSR quickly pivot to being champions of state capitalism.
I think you are putting too much faith in the belief that people actually understand or care about what is behind some of these labels. They are ultimately just a way to create an "us" vs "them" dichotomy.
You're mixing up communism and nationalization[1]. I suppose those are related concepts, but since communism ostensibly serves the working class, I'd expect to see nationalization under communism/socialism to start with things like health-care, civilian infrastructure, and agriculture, whereas under fascism (which famously also nationalizes), I'd expect the industries which help the state expand (military and military infrastructure) or control its own population (surveillance, telecom, police) to be prioritized in nationalization efforts.
[1]: https://en.wikipedia.org/wiki/Nationalization
I don't think the person you replied to is mixing them up, but instead, criticizing others who use "communism" as a blanket term for most any government involvement in the market.
I actually think the model here isn't communism, it's fascism/corporatism. They aren't nationalizing directly, they're intimidating private enterprises into compliance and cooperation.
I think that's an incorrect framing. A more proper framing is that some industries are key to ensuring a nation is not dependent on another for key products that ensure a dominant (not supplicant like say Ukraine) position with regard to defence and therefore independence.
This is recognized by the current administration but is also a continuation of the previous administration's pivot toward undergirding and supporting key industries. I hope it's also recognized by any subsequent administration.
I think even neocons now recognize the "new world order" is not sustainable if some players don't play by the rules that they all agreed on.
No country with an ability to avoid it wants to be subject to being held by the neck.
this sounds like the situation with the Krupp Corporation
> A more proper framing is that some industries are key to ensuring a nation is not dependent on another for key products that ensure a dominant (not supplicant like say Ukraine) position with regard to defence and therefore independence.
That was why they passed the chips act to direct this money to Intel. It has nothing to do with Trump forcing them to dilute shareholder value in order to get money that they had already been allotted by congress.
One of the key features of fascism is keeping up the illusion of private property and other individual rights. When such abrogation of rights ultimately results in disasters, our intellectuals will lay the blame at the foot of capitalism without having ever really understood what it was and why the current administration is not pro-capitalist and neither is the GOP.
I mean both sides are guilty. ‘08 saw us bail out banks and now the likes of Fannie Mae and Freddie Mac are GSE’s.
The difference with Intel vs the banks, is Intel has assets that take decade plus to procure (foundries), and not something easily replaceable.
I think the US messed up big time in terms of national defense by not having some Gov program that does semiconductor manufacturing owned 100% from the start by the DoD. Now we need to do some grey area purchase of a failing company.
> I mean both sides are guilty. ‘08 saw us bail out banks and now the likes of Fannie Mae and Freddie Mac are GSE’s.
George W Bush (also a Republican) was POTUS in 2008 and it was his administration that oversaw the bank bailouts (the program continued under the Obama administration but was designed and implemented by the Bush admin) and the nationalization of Fannie and Freddie.
Whereas with banks, their failure would've thrown the global economy into a deep depression?
> now the likes of Fannie Mae and Freddie Mac are GSE’s.
Uh.. they've been GSEs since their founding. (12 U.S. Code § 1717)
"Yeah but in 2008 the government bought shares in th.." Doesn't matter. Still GSEs before that. "But they were privatiz.." Doesn't matter. Still GSEs after that.
Every time someone says "both sides are the same" a billionaire flooding media with 'both sides' messaging in order to distract from what is going on's taint twitches.
Which party was in power when 2008 happened?
> I don't understand how they can say Democrats are Communists while they do this.
The republican game is to call democrats <insert_any_label_here> and then do the same thing they allege democrats do.
> Government involvement in private business almost always ends badly.
I don't say this to argue with the author or try to refute anything they are saying, but this bit toward the end is a very interesting position that I think displays the level of anti-regulation, anti-taxation, anti-government propaganda we are bombarded with by corporations.
People just kind of assume that the government can't function or work with private enterprise in any way when it does that all the time.
China is the elephant in the room of a counterexample. Who built the largest high speed rail network in the world and who owns them? Or how about the US military industrial complex? Or how about SpaceX? What about the time when the US government ordered factories to build Jeeps in WW2?
I don't really agree with...well...anything that the current administration is doing, but owning part of Intel isn't really horrendous. The horrendous part is that it came out of nowhere with apparently no congressional appropriation of funds/approval of such an endeavor.
If the US did go all the way with 100% ownership, would that even be a bad thing? American companies would have access to cutting edge chips which would presumably be able to be sold near cost at least on the domestic vs export market. No where on earth would be able to offer as competitive a margin. Innovation in so many categories would be spurred and would happen stateside.
> Intel fell behind TSMC, who was powered by massive orders from Apple in particular
> the China concerns are real, Intel Foundry needs a guarantee of existence to even court customers, and there really is no coming back from an exit. There won’t be a startup to fill Intel’s place. The U.S. will be completely dependent on foreign companies for the most important products on earth, and while everything may seem fine for the next five, ten, or even fifteen years, the seeds of that failure will eventually sprout, just like those 2007 seeds sprouted for Intel over the last couple of years. The only difference is that the repercussions of this failure will be catastrophic not for the U.S.’s leading semiconductor company, but for the U.S. itself.
You know, we can just provide critical industries with direct assistance in the form of subsidies. There’s no need for the US government to take an equity stake.
Nationalizing companies - and that is essentially what we’re starting with Intel - worked out horribly for the Brits last century.
"We should do something to preserve leading-edge chip manufacturing in the US. This is Something, therefore we should do it."
Intel is dead to me for capitulating to narcissistic, authoritarian, inhuman, apathetical Donald Trump.
There is no one in the Trump administrator that has the balls to tell Donald Trump he is and idiot and doesn't know what he is talking about. Intel will bend over backwards and fail because of this mentality. Donald Trump knows better than all the engineers at Intel according to his followers. Just like when stated he knows more about dish washers than anyone else in the world.
Intel will need to hide the actual course their are taking to actual product a viable solution. This scenario seems to mirror the development of the MP43/MP44. Government was against it because the administration was too dumb to understand it. Government will also like short versus long term gains because the short gains allow for quick propaganda usage.
Another reason not to buy Intel chips
The short version is: this can work but it won't.
Let me just say, for those of us who remember the 1990s and 2000s, Intel's drop off has been something nobody would've predicted. It's hard to overstate just how dominant they were (other than the fairly brief but significant Athlon64 era). And even when they were behind on consumer CPUs, which they were until the Core Duo/Centrino platform (which was really the Pentium 3) saved them from the Pentium 4 disaster, their fab ability was second to none.
So what happened? Capitalism happened. More specifically, financialization happened. Everything US companies does comes down to simply cutting costs and increasing profits for short-term financial performance. There is (now) absolutely no long term thinking. CEOs get parachuted in and stay just long enough to collect a huge golden parachute before the merry-go-round continues. And who are approving these massive CEO pay packets? Other CEOs who sit on the board.
We've seen this exact same thing happen with Boeing. The only things holding Boeing together are the inertia from earlier successes, the 737 type rating monopoly for budget airlines and defense contracting. Just look at the Starliner project to see Boeing actually try to build anything.
An example of this financialization is the likes of Dell, Gateway, IBM, HP, Compaq, etc all started to cut costs by offshoring parts of their operations to Taiwan. At first it was just assembly and then it was certain parts (eg motherboards) and at some point they had completely funded the Taiwan PC industry and created Asus, Acer, MSI, etc. US computer manufacturers completely paid for the Taiwan PC industry by short-term profit seeking.
There are multiple ways to describe China's economy but the most accurate and relevant for this topic is that it's a command economy and the coming years will show just how much more devastatingly effective this will be. Really the only thing stopping Chinese companies from destroying Western competitors is trade barriers (eg BYD).
So I think the US government should take equity interests in companies they bail out rather than just giving them gifts or even loans. The government should (IMHO) also take equity stakes in any extraction companies (eg oil and gas). China shows this can work.
So why won't it work here? Because the administration is both corrupt and incompetent. Everything done by the administration is to line the pockets of politicians and the wealthy on a very short-term basis. You see it in Congressional stock trades (eg buying up Intel ahead of the announcement).
As for the author, I suspect he represents the American corporate view that any kind of government intervention (beyond bail outs) cannot work because they don't want that long term. It would reduce profits and/or make a few people slightly less wealthy. They spend a lot of money on propaganda to convince ordinary people that corporatism is good and collectivisim of any kind is bad, that governments aren't capable of anything, etc.
All Western companies and billionaires want is public-private partnerships because they're a massive wealth transfer from the government to the wealthy. They don't want the government taking away profits from private hands.
Counterexample: AMD almost died and see where they're now.
Intel needs a major shakeup, it has been brewing for a long time, but coffers were too full. Cushion is gone now, urgency is now understood by everyone; now it takes a visionary and some successful execution, for once.
If you say corruption is the difference, maybe - but I wouldn't be so pessimistic... yet.
Oh my.
Please no one take this the wrong way, but I hope AMD is not the model of "success" we're going for here.
Can you elaborate?
This is a bit of a long piece but if you're interested in this subject I think it's a good read
https://docseuss.medium.com/the-biggest-threat-facing-your-t...
Good Article thanks for sharing
"Doc Burford contends that the true danger facing teams today isn’t competition, disruption, or lack of capital—it’s leadership devoid of expertise, decision-making dominated by superficial metrics, and a culture that values appearances more than actual value creation. Sustainable success comes from building things people want, not engineering facades to appease investors or the market. Relying solely on executive titles or data without understanding the craft or customer rapidly leads to collapse."
Have to agree and think this encapsulates alot of what we have been living through in the US over last few decades.
I'm surprised I haven't seen this before. Thanks for mentioning it. It is long and I did skim some sections but I read large chunks. I'd actually be curious to know the author's politics because that is a deeply anti-capitalist essay (which I agree with, for the record).
The Bungie grenade example was funny because I've seen this exact same ignorant data fuckery. Blizzard does this with World of Warcraft now because they're tuning talents that classes have based on how much they're used, which ignores how often people just copy builds and how some abilities are just inherently fun (as the grenades apparently were). The net result is they just keep nerfing anything people like.
When he was talking about Valve and Steam and EA and sports exclusivity, he may as well have just said "enclosures" (in the capitalist) sense because that's exactly what he means.
Every modern corporation is just looking for a formula that they can repeat ad nauseum. He talks about this with media properties and the Marvel and Star Wars slop (my word, not his) that we get as a result. This is fundamentally incompatible with creative projects, be it movies or games.
One of the most destructive ideas to come out of the 20th century is this idea that a good business leader can manage anything. So we get a lot of "leaders" who end up running things they know nothing about and in large companies, "leaders" get shuffled around every 6-12 months on purpose, to avoid them ever failing because they're never anywhere long enough to see the consequences of their actions.
You see that with the VP shuffle at any large tech company.
I also appreciate that he was anti-NFTs as I was for the exact same reasons: it doesn't actually solve any problems or give consumers anything they actually want.
Yeah, one of the paradoxes I found was on the one hand talking about being responsible for projects making large sums of money, but, well...it doesn't seem like he's seen much of it.
But indeed I feel like at some level there's been a pendulum swing from, let's say "stories" to "data" - indeed he touches on sabermetrics/McNamara. I like how he torches this: data is important but it's not enough (the map is not the territory) -- I started wondering about this a lot for example with Windows. "Oh, we removed this feature because telemetry showed it wasn't used." Well, why? Because it wasn't useful? Because it wasn't discoverable? Because it wasn't intuitive?
And that assumes the numbers are even any good: I remember from one of Sinofsky's Windows engineering blog posts, in which he talked about some feature and the percent of sessions in which it was used. And I thought, well, hold up. I hibernate and rarely restart, whereas many less sophisticated users shut down their computer entirely. So does that mean they effectively are counting those non-power users a lot more than me because they have more sessions?
And then there are other second order effects. If you lose your power users, do they then stop recommending your product, and what then? I see your net promoter score and raise you Goodhart's law (once a measure becomes a target it ceases to become a useful measure)
> There are multiple ways to describe China's economy but the most accurate and relevant for this topic is that it's a command economy
That brings up an interesting point. It seems to be a conventional wisdom that centrally planned economies don't work (and did not work in cases where they were tried) as well as Western-style capitalism because of the communication and command bottlenecks.
But what if those bottlenecks have been greatly increased in the information age of Internet, other global communication networks, and data collection? The western-capitalist system has the problem of getting stuck in local minima, being driven as a network of actors. What if the downsides of that are finally greater than the performance hit due to central planning bottlenecks?
There are two problems with a command economy.
First, as you say, because of communication bottlenecks. 300 small bakeries (number made up) keep a better eye on how much bread is needed in Manhattan than a technocrat in DC, or even Albany. As you say, we now have the communication technology to overcome that.
But second, there is the command problem. You may be able to get the data there, but who's going to make the decisions? They were made by 300 (or however many) bakery owners; now they're going to be made by one or a few people. They may have the data, but do they know what to do with it? Do they know enough about bakeries and bread? Do they have the mental capacity to replace 300 people?
This gets worse as you get bigger scale. What if you're not just trying to do the bakeries of Manhattan? What if you're trying to do all the food supply in Manhattan? All of retail in Manhattan? All of retail in the whole country?
The other problem with a commander is that they can decide that they want something, whether or not the data supports it. And their subordinates may decide that they'll get better promotions (or at least keep their jobs) if they 1) do what the commander says and 2) tell the commander what he wants to hear.
Better ability to communicate the data does not fix the second problem at all.
You don't really micromanage things, just like managers in a company shouldn't micromanage things. You don't make decisions on how much bread should be made by each of the 300 bakeries; you decide that making bread itself is important so you give subsidies. You decide that making bread locally is important so subsidies are only available to locally made and not imported bread. You decide that whole wheat bread is more important than white bread so you give subsidies only to whole wheat bread.
That's one possible outcome, yes. If the commander is smart/realist enough, you might even get it.
What is "conventional wisdom"? It's propaganda, basically.
You might be tempted to think of academics as if they're operating independently, almost as if they're in an Ivory Tower where they bless us with missives occasionally as they make deep, apolitical discoveries. But that's just not the case.
There is an entire ecosystem of think tanks and funding to push the neoliberalism agenda. This is entirely self-interested. And it's not necessarily that funding is buying particular opinions. It's that anyone who contradicts this narrative simply gets self-selected out of the academic grants pipeline.
I stend to refer to this as the Tyranny of Austrian Economists [1].
There is an entire industry built to convince people that capitalism is good and collectivism of any kind is bad. It also misattributes the wealth of the developed world to capitalism when it's really about exploitation (eg slavery), colonialism and imperialism.
It's really no different to all the industry funded tobacco research that "proved" how safe smoking was.
Africa isn't poor. The people might generally be poor but Africa is not. It's simply been looted by the West. You don't commit resources to an imperial project that is poor.
If command economies are so unsuccessful why do they need to be isolated and starved (eg Cuba)? Won't they just fail on their own? The whole point is to punish any contradiction to capitalist dogma and to engineer their failure to prove that point.
[1]: https://en.wikipedia.org/wiki/Neoliberalism#Austrian_School
Who was isolating and starving Yugoslavia? They did a pretty good job of failing on their own.
> So I think the US government should take equity interests in companies they bail out rather than just giving them gifts or even loans.
The US government never gave bailout and gifts to Intel. The original agreement was profit-sharing with Intel through the CHIPS act is standard with any business wanting the funds. All Trump did specifically for Intel was alter the deal to be an equity stake instead, which will still only be beneficial is Intel is profitable.
Your entire comment is faulting on this premise. Please stop spreading this lie.
This is a bailout to Intel. It's essentially the US government pfoviding guarantees to Intel and its customers. How would you describe that as anything but a bailout?
But really I was talking generally, such as the bank bailouts in 2008. When a bank normally fails the FDIC comes in and takes control of it including ownership. The shareholders are SOL. In my mind, this is exactly what should've happened to all the banks that were essentially insolvent.
As another example, the US government bailed out LTCM in the 1990s when there was a willing buyer (Warren Buffett).
Bailouts are different from the CHIPS act you’ll just have to accept that those other bailout agreements didn’t have a profit-sharing clause attached.
Emotionally you call it a bailout but it is not and by trying to enforce that fact you are ignoring the truth and pressing a lie.
Plain and simple the CHIPS Act is not a bailout. [0]
[0] “Biden to require chips companies winning subsidies to share excess profits” >> https://www.reuters.com/technology/us-require-companies-winn...
> Recipients who receive more than $150 million in direct funding "will be required to share with the U.S. government a portion of any cash flows or returns that exceed the applicant’s projections by an agreed-upon threshold," the department said.
> Companies winning funding are also prohibited from using chips funds for dividends or stock buybacks, and must provide details of any plans to buy back their own shares over five years. The department will consider an "applicant’s commitments to refrain from stock buybacks."
Do you think nitpicks like this are effective arguments? It's a bailout: they received privileged access to financing others didn't get
> So what happened? Capitalism happened. More specifically, financialization happened. Everything US companies does comes down to simply cutting costs and increasing profits for short-term financial performance. There is (now) absolutely no long term thinking.
Blaming real-world problems on nominalized abstractions is quite unhelpful, especially when those abstractions are all-encompassing ones like "capitalism" or "financialization" which mostly represent patterns of behavior that have always been present.
Identifying specific shifts in incentives or intentions that resulted in different motivations or intentions becoming dominant is difficult, but there's really little point in engaging these conversations without at least making an attempt to do so.
> As for the author, I suspect he represents the American corporate view that any kind of government intervention (beyond bail outs) cannot work because they don't want that long term. It would reduce profits and/or make a few people slightly less wealthy. They spend a lot of money on propaganda to convince ordinary people that corporatism is good and collectivisim of any kind is bad, that governments aren't capable of anything, etc.
"Corporatism" is collectivism, and much of the critique of these kinds of interventions stems from the correct recognition that political incentives (a) are deeply entwined with commercial ones, not a counterbalance to them, and (b) often have even worse failure modalities than prevailing economic incentives.
How is this ‘equity stake’ different than nationalization? (The thing that soviet socialism did to russian property and business a hundred years ago). After all the government prints the money. So instead of just taking control of a company the govt prints the money to buy it. Isnt it the same thing?
And where is the example of a successful govt run business?
Why dont we encourage businesses here w free trade zones?
All of these questions seem more like claims. And I largely agree in spirit. Im not a fan of the government buying stock with the money that would have been given as grants. However,
>How is this ‘equity stake’ different than nationalization?
Ownership scope and control. A nationalized company is owned and run by the government. This equity stake is the US buying stock in Intel instead of issuing the money as grants. I would agree this creates conflicts of interests for both parties. And that it shouldnt happen. But this is wildly different than nationalization.
It is a minority stake so they won't "control" Intel in the way we typically associate with "nationalized" businesses.
> And where is the example of a successful govt run business?
This is a bit of a loaded political question until you first define "success" and "business". Most of the reasons you'd even want a company to be run by the government in a mixed-market economy are precisely because you want it to be run differently than a private company.
10% is nowhere near a controlling stake, let alone "nationalization".
And where is the example of a successful govt run business?
USPS, TVA, Paris Metro...
I know many are irrationally scared of the S and C words, but this ain't it.
The USPS is a really good example. Most of its modern problems are exclusively the result of politicians sabotaging it - given the constraints it operates under it's wildly successful. Even some foreigners I know have a positive view of the USPS because of their interactions with it (shipping goods to the US).
It offers good service to everyone in the US - even people living in the middle of nowhere - with fairly good delivery speeds and strong reliability. I can't remember the last time I had a package or mailpiece get lost, and I think I've had a package get damaged exactly once in my entire life.
> And where is the example of a successful govt run business?
If you look at the list of largest companies by revenue [1], 4 of the top 6 are state-owned. (I'm not saying I support this move by Trump - and natural resources are probably different than technology, etc.. But just to answer the question).
[1] https://en.wikipedia.org/wiki/List_of_largest_companies_by_r...
I wouldn't read too much into it. I think this is just the Trump administration buying the dip. they're gonna invest heavily into Intel to reduce TSMCs political leverage, the stock will go up 1000%, and Trumps friends & co. (& everyone who 'got the signal') get rich off it, US semiconductor industry is revived (maybe?), and everybody(?) wins.
This isn't unprecedented - I think Trump really set the tone with TRUMPcoin saga, which was very wild-west. a lot of people lost money, and others got awfully wealthy in a flash. but ultimately, it was legal: both winning, and losing.
Then you had Trump dipping the S&P and telling everyone "nows a great time to buy!", which IMO was even more diabolical than the trumpcoin stuff.
I think the signal is clear: the concept of "securities fraud" has become the financial equivalent of arranged marriage & dowries, and in its place we welcome the "free & open market", double edged and all.
hold it carefully or you'll cut yourself!
like it or not it seems to be working. the wealth disparity between the US and everyone else is growing (to the US favour). I think if the US starts arguing 'youre either with us or against us', most people today will go full FOMO into the US - even the most ardent patriots will quietly shift all their assets into the US side.
now we hear that Trump will allow 600k Chinese students to study in the US - has there ever been a greater inditement against the CCP? What does it say about the "Chinese Century", when their brightest minds are clamouring to get into Stanford or MIT?
Pax Americana for yet another century, I'm all in.
>ntel making decisions for political rather than commercial considerations
> Intel’s board prioritizing government interests over their fiduciary duties
How about Disney, Mozilla and every major corporation? You must hire right people (including this lame CEO and board), or no loans and contract for you!!!
US government pushed really really hard their agenda onto ALL industries without any lube for past 40 years!
If US gov actually directly express what they want, and just buy 10% of strategic company on open market, it is super refreshing!!
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Eschew flamebait. Avoid generic tangents. Omit internet tropes.
Please don't use Hacker News for political or ideological battle. It tramples curiosity.
https://news.ycombinator.com/newsguidelines.html
To have a conversation about the US government buying a stake in Intel, and the threats of China in that space, requires one to have a conversation about both politics and ideology. It’s disingenuous to claim anything else. And to point out the irony of the passing fad on straws but deep love of fast fashion highlights the hypocrisy of US society in general and why we are incapable of having nice things or getting anything meaningful done at a scale of other countries such as China, Taiwan or even South Korea. And love or hate DEI you also can’t say companies like Target jump on and off that band wagon at shareholder will, when they aren’t ever jumping on the “we should invest in R&D and the next generation” because why would they, we haven’t asked them to so why would any other company Intel included.
The purpose of HN is to discuss things in the spirit of intellectual curiosity. To respond to an article about chip manufacturing with such a generic ideological flamebait line as "You can’t build a foundry on DEI, but you can feel good about yourself as you virtue signal about straws as you buy fast fashion" is the opposite of intellectual curious discussion. If the topics of DEI, straws and fast fashion are mentioned in the article or are relevant to the content of the article, sure, write them into the comment in a way that is relevant to the content of the article. The way you've invoked these themes, without any clear relevance to the article's content, is just what we're trying to avoid on HN. This is not new or difficult; the guidelines have been in place for many years and make it clear what we're trying for here.
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Please don't reply to a bad comment with another bad comment. You can just flag comments like this and move on.