[arder]

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

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

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

[hedgehog]

The problem with keeping the foundry business is they're probably never going to get back to competitive at leading edge and that dooms end products that rely on having the best process to be competitive. In times past Intel dominated the market by volume and that scale gave them the ability to pour a lot into process development. Today they are a small and shrinking part of the overall chip business so the scale advantage goes to TSMC etc. They may technically be able to spend themselves back to performance parity with TSMC but that will hurt their margins. Can't turn back the clock. There's still plenty of use for having mature older processes around for the majority of chips which are not high end compute but then again likely not at their historical margins unless captive customers like military can prop that up.

[ryukoposting]

> The problem with keeping the foundry business is they're probably never going to get back to competitive at leading edge and that dooms end products that rely on having the best process to be competitive.

FWIW I feel like I remember hearing similar remarks about AMD when they spun off GloFo. It's easy to assume that whoever is currently in front, will stay in front. On a 1-5 year time scale, it's a safe bet to be sure. Yet, Intel's own loss of process leadership tells us that things can change in the long run.

I posed this question in a top-level comment, but I'll throw it out here too: world governments are more interested than ever in making sure their fabs are on the leading edge. Could this serve to create more parity than we've seen historically?

[hedgehog]

I suspect AMD's assessment at the time was similar so they offloaded fab and hopped on the TSMC bandwagon. It's worked out well for them. Interestingly Global Foundries decided not to keep chasing leading edge and instead invest deeply in nominal 12nm. They describe it as a "mature platform" that is "reliable and trusted for automotive, consumer, industrial and aerospace & defense applications".

As for whether this dynamic helps level the playing field between governments, I don't see how it would. Ever more expensive fabs make it harder rather than easier to stay competitive.

The aviation world has some historical parallels. China has been working to catch up on jet engines for at least 40 years and they're still not quite there yet. Not for lack of effort, engineering talent, theoretical understanding, etc, certain kinds of industrial capability are just hard and slow to build. A much smaller country would have no hope. My guess is chip production ends up being similar.

[Uvix]

> I posed this question in a top-level comment, but I'll throw it out here too: world governments are more interested than ever in making sure their fabs are on the leading edge. Could this serve to create more parity than we've seen historically?

Not while ASML is a bottleneck.

[sidewndr46]

"spend themselves back to performance parity" they basically already tried that with 10nm. They failed.

[hedgehog]

The 10nm debacle was something to behold but they're still at it and shipping some products on Intel 4 now. I think the question is "at what cost?"

[qwytw]

> The reason they lost the mobile market is to a large extent because their chip design was bad.

Or more directly because they scraped XScale since they didn't want to compete with other ARM designers. Wouldn't this be the opposite of what "a manufacturing company that happens to design CPUs to drive demand." would do?

[christkv]

Intels foundries might be considered strategic assets for the US government. Spinning them out works potentially create a longterm risk for the country.

[sidewndr46]

It isn't that their chip design is bad, it's that the profit margins weren't what they wanted. So they passed on the whole market. Theoretically this means they can direct those resources at other more profitable business ventures. As we've seen this is obviously false.