Intel's NAND flash was overshadowed by their Optane (not included in the sale) and lagging behind Hynix and Samsung, so I guess this isn't such a bad move. The cynical take is that the CFO running Intel is attempting a bunch of standard corporate restructuring strategies to delay the effects of their slowing technical innovation. It is definitely concerning from a US technical superiority standpoint to consider that this same CFO may soon try to sell off some of their more competitive fabs.
>Intel's NAND flash was overshadowed by their Optane
It is important to note Optane is manufactured in partnership with Micron. The partnership is that Intel still owns part of the IP, but actual manufacturing with guarantee capacity is still done by Micron. And judging from previous Micron Investor notes, Intel hasn't been keeping up with their Optane Sales and buying agreement. So that means Intel will no longer be doing any NAND / Optane manufacturing by themselves.
Few other point worth noting,
Intel has one of the best Enterprise / DC SSD range on the market. And they are extremely popular in wholesales channel as well as with System vendors. Intel has been using these SSD as weapons / incentives by giving away SSD with enough Xeon CPU volume. One of the few reasons why AMD EPYC hasn't been gaining much ground at all in Enterprise segment.
The NAND Plant is in China. Wroth pointing out in the current geopolitical climate.
NAND is a commodity market. It doesn't swing up and down like DRAM in the old days mostly due to less players in the market and HyperScaler's volume creating enough buffer. But generally speaking Intel doesn't like commodity business. May be not commodity market per se, but Intel doesn't like margin fluctuation.
Overall I think it is a good move. Most of the time I am very cynical of CFO running companies. But I give Bob Swan some credit because so far things seems to be moving in the right direction. While the pace might not be fast enough. ( Mostly due to inertia ) But at least it is better than BK's era.
There is a lot of flash makers, way, way more than DRAM makers. And there is tons of flash going to things other than PCs, unlike DRAM. Regular DDR DRAM only goes to high-end desktop PCs, and servers, with few laptops. Everything else has switched to the LP-DDR line even if there is no explicit need for energy saving (LPDDR4 may actually cost you less than regular DDR4 these days, especially given the extra for DIMM/SO-DIMM, through hole sockets, assembly cost, and wasted PCB space).
Intel was not the first to NAND flash, but they pretty much started the SSD revolution with the first truly revolutionary SSD. I still remember Anand's review of the first X-25M (only 100GB) [0], immediately becoming the standard-bearer for the SSD revolution.
I remember mid 1990's announcements from Intel's research partnership group that non-volatile flash ram drives were about to roll out to the consumer market.
By late 1990s the press releases dropped off and the idea of consumers running solid state drives went pOoF! for another decade.
Intel's been focusing their flash development and production specifically for their enterprise SSDs. While you can find Intel flash in some third-party drives, it's not particularly common. And even when Intel and Micron were still partnered for NAND, it was Micron that wanted to make smaller-capacity dies for use in things like smartphones and memory cards. Intel's been all about big dies for big drives. This is really evident if you look at their market share in terms of SSD units shipped and in terms of SSD bytes shipped. Intel's average drive capacity in Q2 was almost three times that of Hynix.
The real shitshow starts when the CFO becomes the CEO (as is usually the case), so Intel is pretty much dead as is US tech innovation on this scale (until VCs do what China does and start pouring money into hard stuff, not just fluffy software).
The challenge even when "VCs do what China does and start pouring money into hard stuff, not just fluffy software" is that like Feynman's There's Plenty of Room at the Bottom observation, there is plenty of innovation room in the intricacies of "low-end", "low-margin" manufacturing. Divorcing that operational, get-your-hands-dirty aspect from your business closes off insights that arise from the ongoing software-eats-the-world wave still building up steam around the world.
The more you cram together the people networks, culture, knowledge, tooling and practices of how to create all this stuff into a single ecosystem, the more they start making Burke-like Connections. Thinking you can Jira-innovate your way to dominance on an ever-narrowing technology stack is architecture astronaut'ing on a strategic corporate scale.
If Amazon had outsourced their IT operations to an IBM, would their internal culture still have de novo evolved the nascent devops principles back then into AWS?
It isn't what Intel gives up now by selling this business that will hurt their innovation. It is the options that suddenly get a lot more expensive to investigate in the future for future innovation. Technology innovation is evolution: extremely messy, more dead ends than successful adaptations, enormously energy-intensive from lots of majority-repetition, and highly organic. You can certainly optimize around the edges to make it slightly less jagged-edge, but innovation sparks at the tiny interstices, usually not at the top.
It's amazing that pretty much every economist, journalist, business school professor and overpaid McKinsey consultant miss this critical point about how innovation works.
Indeed. And it is even more amazing that "staunch free market advocates" among this leadership cadre mostly do not see the parallels between evolution and capitalism. And they blithely praise the innovative superiority of capitalism in one meeting, then create elaborate narratives how selling off "non-core" capabilities shrinking their innovation Petri dish agar surface area increases innovation in the next meeting.
Somehow the innovation spurred by capitalism from the freewheeling, chaotic free market is suddenly amenable when it crosses the corporate threshold to sprints, top-down grand corporate architectural visions, and five-year plans. I wish as much as anyone innovation wasn't such a massively, messily, wasteful, organic process. But after decades of experience bashing my head against the wall with everyone else trying the top-down, bottle-it-up-and-sell-it hopeium, I've been pleasantly surprised with "letting go" and letting the "floor" mix it up, take input from it, feed back into it, and create a constantly-boiling stew of ideas. The finance management part in me has to be locked away in the padded cell here and there for their own good, but they and I can't argue with the results.
Yep. China figured out that they can just pay the hand to shoot the foot. The hand commissions some academic opinions on the virtues of foot-shooting so that in the unlikely case someone tries to hold it accountable it can claim it didn't know that foot-shooting was bad.
There is a big difference. The US was led astray due to its economic ideology. There was a concerted effort to move industry to other countries, so that salaries in the US would be depressed for lower income classes and the owners of industry could realize larger profits for a generation. Now the country is finally realizing that this is a losing proposition, while China saw the opportunity and based its economy on industrialization and scientific research.
Yes, that's what happened. Yes, the US was incredibly stupid and had a big hand (the biggest) in its own downfall. No, that doesn't mean China's hands are clean in the matter. Ultimately, politics are amoral and it doesn't matter, but to the extent that we're interested in making purely academic moral distinctions there's no need to whitewash China's actions. They did us dirty, and if we have the option to do them dirty back, we should take it without the slightest sliver of shame or guilt. Politics is amoral.
In any case, we absolutely should not let our natural inclinations towards an underdog story cloud our judgement. China isn't an underdog anymore.
Let's make things clear: China didn't invade the US. China didn't steal natural resources from the US. China didn't make Americans slaves. China didn't promise something they couldn't deliver. They just played the capitalist game with the US and became rich. Why should I harbor bad intentions against them?
Let's make things clear: you shouldn't. You should aspire to amorality, just as they have done. It's not about revenge, it's about winning, and doing what it takes to win.
Half of the people in America look at foreign policy through the lens of naive capitalism and the other half look at foreign policy through the lens of naive morality. Both are incredibly foolish, as China has taught us.
To be clear, the current administration has matched rhetoric about "winning" with some very stupid moves. I'm not a fan of stupid moves, but I see people object to both smart and stupid moves on the basis that they aren't good, or right, or fair -- and I object to that. Politics is amoral.
I have just not learned anything from this. The way China got there was working hard and developing its industrial and scientific capacity. I don't think at this point the US has even a military upper hand over China. If there is a hot war, China will be able to produce weapons quicker than the US can assemble a coalition against China, and at the same time China will stop supplying every vital export to the USA. The only way out for the US is to do what it used to do in the past, which is to develop its industrial and scientific capacity. There is no way to solve this problem through war.
It’s natural for large tech companies to enter the harvesting business when they can’t innovate anymore. Look at IBM. They just can’t innovate, so they do all kinds of financial engineering on the back of a robust customer audit program.
Eventually that money gets recycled into funding earlier stage companies. (If a company buys back stock, the old investors have to put the money somewhere)
Its not that large companies can't innovate (re: IBM) its that they can't cannibalize their high margin businesses on risky strategies until its too late.
This happens over and over, intel wasn't willing to bet on low margin phone SoC's at the expensive of their laptop/server business. Now those low margin SoC providers are selling a billion chips a quarter and financing a manufacturing behemoth that intel can't keep up with. Same thing with IBM, porting zos/ztpf/aix/i5/etc to x86 and making servers wasn't something they could justify, so they spun the business off to lenovo which grew it 5x, and now IBM is stuck with hardware they can't get enough volume on in a shrinking (but high margin!) business.
If they were selling POWER10 blue pi's for $50 they might have a chance in the edge space or IoT, but that might cannibalize the business elsewhere.
Indeed. But they shot themselves in the foot when they replaced their experienced, expensive staff with low-wage Indian workers (not to pick specifically on Indians... there are certainly Pakistanis and other Asian cultures represented in that cohort).
Ironically enough I feel like IBM is actually an example of a giant company that, against all odds, is somehow still innovating, at least with its POWER CPUs. They're doing really interesting and open-ended things like CAPI and the upcoming Open Memory Interface.
Apple does research, design and software but all the manufacturing and assembly is done in China by Chinese companies. Mostly Samsung and Foxconn. Nvidia is the same but the chips are fabbed by TSMC (Taiwan Semiconductor).
Foxconn is taiwanese, Samsung south korean. Some Nvidia chips are also made by Samsung.
Apart from these inaccuracies however I'd mostly agree that us-american manufacturing is not in a great position, to put it mildly. That's not neccessarily where the real value lies, however: That's usually exactly in the designs, where the USA are strong.
The US has an arguably overbuilt military supply chain. But in practice modern military hardware is both expensive and slow. The destructive capacity of modern great powers effectively limits the timeline of any large war to either hours(nuclear bombardment) or weeks ( precision bombing of all military and industrial targets )
The real loss is that industrial enterprises employ a lot of people who are exposed to hard problems. I'm skeptical that the current set of "design"/"marketing" only hardware businesses will last much longer than the international trade pacts that support US patent law.
This. The US's biggest future threat isn't having its military production choked off in a conflict. It's having its military complex become irrelevant as the world moves towards a model where money and consumer technology become the main avenues for influence and control, and where the moment the US tries to flex its military muscle it gets put on a decades-long blacklist by members of the global economy for starting a mess.
> The destructive capacity of modern great powers effectively limits the timeline of any large war to either hours(nuclear bombardment) or weeks ( precision bombing of all military and industrial targets )
The 100-year history of strategic bombing theory has consistently held that once you start strategic bombing, the enemy's will or ability to fight will collapse very quickly. The actual application of strategic bombing has consistently failed to live up to those expectations, with the atomic bombings of Japan being the only example people give of countries capitulating due to strategic bombing, and even then it's still debatable what factors induced it to surrender.
It should also be pointed out that people saying great power wars will be swift and decisive is usually followed by a great power war that is exactly the opposite of swift and decisive.
Why you all worried about war, who'd start it? The US?
Right now we're just talking about economies and being able to have a well off society where people don't struggle to make ends meet. And from that point of view, the future of the US as it continues to lose competitive advantage to other countries doesn't look as good as it used too.
Are we saying the US plan in case this trend reaches extreme levels is to start a war?
America is the world power least worried about physical geography and locations if and when the shooting starts. 2 oceans as moats, plenty of oil and natural resources on its home turf, and all potential flashpoints on the other side of the world. I'm sure America would love to give WW2 another run, especially considering how last time it shook them out of the great depression and devastated everyone else's industrial base.
> America is the world power least worried about physical geography and locations if and when the shooting starts. 2 oceans as moats, plenty of oil and natural resources on its home turf, and all potential flashpoints on the other side of the world.
Can you grow semiconductors on corn plants? Big moats don't help with embargoes, and if your economy is based on international trade (like the globalization crowd has championed), an embargo would be crippling.
Around WWII, they used to call America the "workshop of the world," but China has that title now.
Also, you seem to be forgetting that long range, intercontinental missiles and bombers exist now, when they didn't during WWII.
Leading node semiconductors come from Taiwan and South Korea. In the event of WWIII nobody is going to be getting those until the fighting stops. Of the accessible fabs the US has better domestic silicon manufacturing capacity than China. Also China's economy is just as reliant on importing cheap raw materials as the US is on importing cheap manufactured goods.
Hypothetical non-nuclear WWIII is terrible for everybody but the US, with the ability to control oceans that aren't within a few thousand miles of the Chinese mainland, is probably in a better position than China is to recover economically.
Americans in 1941 were much different than they are now. My sense is that Americans then were more practical, more humble (while still being feisty), and they had a better handle on physical and social reality. We could do so much so quickly then. But now, during late-stage capitalism, information systems dominate physical systems, and that's a great way to lose a war. When everyone wants their cut, wants their say, is willing to fight dirty, with tooth and nail in the legal system to get their way, it slows everything down to a crawl, and makes everything more expensive. Want to preview Americans in wartime? Look at any and every city infrastructure project currently deadlocked and billions over-budget. That's us. And while our broken justice system grinds through the paperwork, the courthouse gets bombed by the barbarians who were never slowed down by paperwork.
This is less an argument against civilization, and more like a wake-up call: America has multiple interlocked badly broken systems that all need massive reform. Forget about justice, I think its necessary for our civilization to survive. It is urgent that we reform our judicial system (where any involvement IS the punishment), our medical system (where getting sick is a prelude to bankrupcy), our social safety net (where getting fired without a personal support net means homelessness), consumer rights (where deregulation and arbitration clauses leave individual consumers to fight alone against huge well-funded interests), the tax system (which is too large and complex for anyone to use properly), and education (where students must take enormous debt to get educated, and so much of that debt funds administrative overhead). Personally, I don't even think these things should be about your location on a politcal scale - right or left, these are table stakes for a 21st century democracy. The lack of on-shore manufacturing, particularly for big infrastructure projects, e.g. things like roads, the electrical grid, tall buildings, and factories, is merely a symptom, I think, of all the rest. Yeah, the consumer market is strong, but for the everyday Joe, it is painful to deal with all these broken systems on a day-to-day basis.
> where getting fired without a personal support net means homelessness
I think you're spot on, but I want to point out the above situation was created by design. IIRC, part of the creation of a modern market system was the demolition of traditional social safety nets, so peasants were put in the situation where the alternative to selling their labor in the market was starvation. Early market advocates understood this clearly, and praised the motivating power of an empty stomach.
Apparently when war starts iPhones will be more important than oil, steel, jets, and ships. Or does China build those for the US military as well?
Also, ICBMs fly both ways. But while nobody decides to press the "End Game" button, the US with its self sufficient continent can weather more punches than any other country in any conceivable conventional war scenario.
>Apparently when war starts iPhones will be more important than oil, steel, jets, and ships
You are focusing too much on the war aspect instead of what happens at home.
What happens to companies like Apple and nVidia when for whatever reason they can no longer manufacture in China. Apple luckily has a rainy day fund to fund itself until heat death of the universe, but other companies may not be so lucky.
I’m sure it would take decades at this point to develop the talent, infrastructure and scale in manufacturing that China currently has
We all saw the manufacturing chaos that ensued when shipping of components and products from overseas was drastically curtailed at the start of the COVID-19 epidemic. While military suppliers are supposedly required to secure their supply chains against such disruptions, it would be surprising if they hadn't screwed big parts of it up after being so long in peacetime.
> Apparently when war starts iPhones will be more important than oil, steel, jets, and ships. Or does China build those for the US military as well?
Sure, the US military has maintained low-volume domestic manufacturing capability in those areas to meet peacetime military demand.
However, you mentioned WWII. Did the US fight that with just its preexisting military-allocated production capacity? It did not. You had jukebox companies drafted into making rifles and car companies into building tanks and airplanes. Electronics are key to most modern military equipment, and guess who has the spare manufacturing capacity in that area now?
> Also, ICBMs fly both ways. But while nobody decides to press the "End Game" button, the US with its self sufficient continent can weather more punches than any other country in any conceivable conventional war scenario.
Attacks with long-range conventional missiles are also a distinct possibility.
You also used that word "self-sufficient" again. The issue here is contemporary Western politico-economic dogma has abandoned the idea of self-sufficiency in favor of interdependence and free trade. China, has not done that, and appears to have deliberate industrial policy with the goal of modernized self-sufficiency. IIRC, its main imports are raw materials, which it may still be able to obtain through trade (e.g. Russian oil and gas) or military capture in a hot war.
China is neither food nor energy secure and Russia cannot provide sufficient quantities of either. PLARF would be focused on not continental US, but US forward positions which would allow for US assets to easily strike Mainland China. Fact is that the US could starve out China from a distance if needed.
Furthermore for all the Chinese efforts for self sufficiency, it lacks that in high tech manufacturing.
The US actually depends on trade much less than most nations. Any economic embargo would be bad, but in general much worse for almost any other nation.
Also, surprisingly, more people in the US work in manufacturing today than in 1939. And obviously the $ value of that manufacturing is much higher due to increased productivity.
USA's manufacturing statistics is weird. There are a lot of "manufacturing" companies with billions in revenue without a single factory in USA.
First, it is funny accounting, second, it is LOWER productivity of most companies, not higher, which is counter-weighted in statistics by few supergiant companies like Boeing, third, it is slow shift to lower value goods, and processes in smaller companies, and sky higher ones in big ones.
Oceans are nice, for sure. But if you're reliant on China and others for all of your manufactured goods including semi-conductors, you're in for a world of pain, oceans or not.
Likewise, oil and gas aren't all that helpful if you can't get them out of the ground because your equipment is broken and all the replacement parts are made in China.
I say this as a patriotic American. Comparisons to WWII are fairly off-base because in the 1930's and 40's we were much less reliant on foreign countries for manufactured goods.
You have it backwards, China is deathly dependent on semi-conductor imports. And what replacement parts are you imagining of? Be specific. Because the US has plenty of manufacturing capability for just about anything that comes to mind for Oil and Gas.
Cyber warfare is probably a more likely and a bigger threat than missiles. Attacking core infrastructure (like power grids, for example) connected to a network would bring things to a crawl or to a stop.
While I'm sure there are plenty of people who see it this way, it's not 1939 anymore. If it came to war, there would be a plethora of ways China could devastate the US's infrastructure and terrorize its civilian population.
Very few iPhone components are actually manufactured in China even now, it's just where all the parts are assembled, but the value contribution of assembly is only a few dollars per device[0]. Back in the day as much as about 40% of the components by value were manufactured in the USA, including the early Samsung CPUs made in a fab in Texas, and Gorilla Glass made by Corning in New York state. That was actually the case at the height of the furore about iPhones being made in China around 2010-2012, although few commentators bothered finding that out.
Nowadays the countries of origin are more diverse, and the proportion made in the USA has fallen. The biggest single change though was moving from US made Samsung CPUs to TSMC chips from Taiwan.
I believe some of the more sophisticated assembly and QA test equipment is US made, or at least used to be but can't find a reference for that online.
China accounts for only about 5% of global semi sales, according to SIAC's 2019 annual report. The US still dominates in logic and analog sub-product categories by a wide margin.
> Back in the day as much as about 40%...
40% sounds too high -- I think 18% at max is more realistic. Apple's A chip cost was estimated between $12-$20 or about 7%-8% of total BOM. Aside from Apple's A chips fabbed by Samsung and baseband/RF/sensors by Qualcomm/Skyworks, I can't think of any other significant US components in Apple's mobile product. The most valuable components in the iPhones in those days were DRAM/NAND flash storage (about 30% of BOM) and displays and they came from either Japan or South Korea. Micron wasn't an significant supplier until Apple's relationship with Samsung soured.
Sure, who can forget Tim Apple's rare CBS interview where he proudly declared the engines of their portable devices were made in the US, after which Apple promptly outsourced it to TSMC in Taiwan. I suspect that that was a calculated move to make the final defense of their outsourcing practices before moving that out of the US as well.
Parent is being flippant here, but there's some truth to this. If we get into a Cold War with China (or, worse, a shooting war), China may attempt to forcibly re-unify Taiwan, and they have a pretty good chance of succeeding.
Very true. However there's only a very slim chance that they'd get TSMC out of that. Taiwan has made it pretty clear that they'd rather destroy TSMC than let it fall into PRC hands. Since they don't have nukes, holding a large portion of the global semiconductor supply change hostage is a very large part of the power they wield geopolitically.
ironically, Taiwan falling to the PRC probably makes the US the inheritor of at least down to TSMC's 5nm node. That DoD backed foundry in Arizona then being orphaned would probably mean it either spins off as a US company or goes on the market in some backroom deal.
And Trumpf reliant on Chinese laser tubes, and Zeiss is reliant on Chinese contractors for a part of lens work they sell. And if somebody think the former is easy to replace, go and search for even a single 10kw tube sold without months long lead times.
Virtually all economic talking points you see in the news and columns are based on data that simplifies the issue to the point where it's misleading. You need to evaluate international trade using value added to get a proper picture (TiVA = Trade in Value Added)
Chinese tech exports have been typically low value added assembly jobs. They import components from Taiwan, South Korea, Japan, EU and the US and assemble them together at the PCB level and up. Few years ago, only 4$ per iPhone was left in China when you subtracted the value of imported parts from the exported value.
Chinese are climbing the value chain and sanctions force them to climb them faster.
Tesla has sold fewer than a million cars since 2012. That’s a rounding error, and unless they scale up, they will remain a rounding error. Of course that has nothing to do with their overvalued market cap.
This is a fantasy. Tesla sells cars, not chips. A chip manufacturing company can sell 1M chips this year and 100M two years from now. A car company cannot even go from 1M to 2M without a lot of effort. It is not a business that can scale easily, especially not at the price point at which Tesla is operating.
A more proper comparison might be revenue instead of units sold. Otherwise I could compare Intel's 8051 sales figures which dwarf AMD's gpu sales figures.
> "Tesla has sold fewer than a million cars since 2012."
At the end of 2019, Tesla's cumulative global sales were 891,000 units. They are targeting 500,000 for 2020 alone, so will be well over a million by now.
Tesla are very much in the process of scaling up, with massive factories under construction in Germany and Texas, and major expansion underway at the Shanghai factory. These factories will each be able to produce more than 500,000 vehicles per year.
Difference between the 777 and 787 programs : for 787 management was in a tower in Chicago not looking over the factory floor.
Obviously the distributed manufacturing introduced with the 777 meant it became possible to argue that the ideal management perch is virtual. But this was a profound separation from tradition and I sold my shares on learning of the new HQ.
The problem is that real engineering often absorbs "the fluffy stuff" in hardware. Server composition with independent subsystems accessible over the network is such a compression of OS services in controllers. This is when the value added IP gets recaptured, particularly in standards dependant technology which enables you to play snakes and ladders across the ecosystem board.
Why is the IP element to close only in 2025? Without looking, I suspect that Intel has booked some very high goodwill and other intangible values on the NAND IP that realistically are wishful thinking about that fluffy stuff.
Boeing HQ was across the street from Boeing Field while the 777 was engineered and built in Everett. There’s a huge engineering building in Everett that was nicknamed the “Taj Mullaley”, after Alan Mullaley, who ran the 777 project (and later Ford Motor Company).
The bailout can and should be after they declare Chapter 11 bankruptcy. Save the factories and the jobs, but there is no need to bail out the shareholders or bondholders.
Why? Chapter 11 doesn't mean they stop making or selling planes. The biggest problem would be uncertainty, and that can be dealt with by announcing the intention of bailout immediately after the chapter 11 announcement.
For example GM went through chapter 11 in 2009. This helped their sales rather than hurt it.
Neither should Chapter 7 mean discontinuity for operations.
Pre-packing can be as easily applied to Ch. 7 as 12, if the insolvency court agrees.
But there's no management continuity or parachute in Chapter 7.
I nearly added union agreementd to the sacrifices of Ch. 7, but I'm really not sure if you can be so cavalier with well written agreements like union concessions made in order to enable management to work thru difficulties. At least instinctively I believe that creates a equitable interest.
Which makes me wonder if working out the union position in Chapter 7 wouldn't put the necessary fire under complacent managers.
Mike Milken's first junk bond pitch was a case study of the corruption at Lockheed in the 70s, and how much he made buying their "fallen angel" debt, secure on his knowledge of congressional forgiveness.
The enabler of present day Boeing is the market has long since made implicit guarantees part of their overt modeling and client analysis.
The sickly results include a management insulated from even catastrophic mistakes.
> Fluffy software drives demand for fancy hardware.
Fluffy hardware drives demand for fancy semiconductors. Intel valuation wouldn’t be where it is without... eh, what?
And this is where the skeleton in the closet is. For a major silicon vendor, it becomes more, and more scary to not simply get on the wrong side with chip manufacturer, but even just missing on the next best deal possible.
Companies that actually make all those chips don't matter as much when you are a 3rd-4th-5th tier company in your niche, and they don't care much about you. But the moment you become a bigger fish, your stakes become much, much higher. If a popular part (like a cellphone SOC) vendor gets a 10% worse fab deal than its competitor, that part vendor is likely on the way out.
In fact, it's a long going "conspiracy theory" in the industry that chip makers keep playing their biggest clients against each other to prevent any of them getting too much negotiating power.
Unpopular opinion: Intel may be slowly dying, but this is fine and eventually happens to all ageing corporations. Looking at the technical quality of their non-x86 products, most of it was not great, so it is not surprising to see the rot spread.
> Looking at the technical quality of their non-x86 products, most of it was not great, so it is not surprising to see the rot spread.
What's a damn shame is Intel's StrongARM / XScale division in the early-to-mid-2000s. Methinks the world would be very different today if they continued investment in that sector - and we'd have more than just Qualcomm and Apple to contend with.
Yes that was spectacularly dumb, considering how Intel grew big themselves: out-competing the high-end, big-bucks server and workstation vendors with low-end, mass-market CPUs that eventually, through economies of scale, made them obsolete. Yet Intel thought "eh this cheap, mass-market CPU that every household has dozens of will lead nowhere, lets sell it lol". they probably deluded themselves that they could do it in x86.
An interesting case of alternative history would be:
What if Jobs asked the CEO to make the processors, and the CEO went to the employees to get feedback on the idea. My guess is that the engineers would be like ‘yeah let’s do this, we will learn so much!’ and the marketing/business folk would be like ‘is this a $100M opportunity? nope, don’t engage’
Imagine if questions like these were brought to the whole worker base? There is so much knowledge and intelligence at the leaves of the organization that doesn't make it up the chain.
The amount of fiddling and coddling that is done to "protect" the director and GM level folks is incredible. With each level respinning the facts to match a pre-approved mileiu.
> The amount of fiddling and coddling that is done to "protect" the director and GM level folks is incredible. With each level respinning the facts to match a pre-approved mileiu.
Given that the practical survival of technology megacorps depends heavily on internal competition and making unpopular internal moves, I'm surprised that megacorps today still don't foster internal competition and encouraging the propagation of negative opinions as much as they should.
As an example of an org that does it _right_ (even if I have absolutely no idea _how_ they do it), look at Apple: when the iPhone was ready for release they made the gut-wrenching decision to axe the superbly profitable and hugely popular iPod product line. It's hard to imagine another company doing something as drastic at that, especially when the bright future of the iPhone wasn't really established until after the defeat of Blackberry and Windows Phone by 2013.
> Intel may be slowly dying, but this is fine and eventually happens to all ageing corporations.
The sad bit is, it will lead to consolidation at the hand of few players which would be worse for customers. Intel used to have good products in flash space.
I think eventually China will catch up and give 'em hell. They have to have a national processor that is competitive with the west out of strategic considerations. After what happened to Huawei they will double their effort.
I'm not sure I agree it was lagging behind. They were definitely not first to market with 3D-NAND but my gut feeling is that was because of the engineering focus on Optane. AFAIK they and Kioxia (toshba) were leading the charge on PLC memory.
All of that is ignoring the fact that there is absolutely a benefit for Intel to have vertical integration in this area. They make countless products that rely on flash storage - from NICs to switches. The second they have to rely on an outside party they have to pay markup for that company's margin and they're at that company's mercy from an R&D perspective.
This whole thing feels penny wise, pound foolish to me.
Indeed. I was briefly foxed as well, given Andy Grove talks about Intel bailing on the memory business back in the 80s right at the start of High Output Management.
Does Intel only sold the NAND manufacturing parts to SK Hynix or it also includes the SSD controllers IP? Because most of Intel SSD performance came from the controller not the NAND flash themselves, in fact Intel usually lag behind in NAND flash manufacturing.
It will probably include the controller IP. However, none of Intel's IP will be transferred until 2025. That should give them time to disentangle any of the IP that's shared between the NAND SSD controllers and the Optane SSD controllers, and give Hynix time to decide whether it's worth continuing development of both their existing enterprise SSD controllers and Intel's designs.
A tinge of sadness. I remember reading reviews of the X-25 like a decade ago and being so excited (it was this anandtech review https://www.anandtech.com/show/2614). To me it was the dawn of the "common SSD". Just now I've looked at a bunch of timelines of SSD history, and I suspect the X-25 was similar to many other people. There was certainly a lot of SSD activity prior to the X-25 being released, but it seemed like the only customer facing brand that had an offering before it was OCZ (you can see it in the review comparisons... you can also marvel at the old 10k RPM HDDs... how's that for a nostalgia trip).
Intel pretty much stopped being relevant to the consumer SSD market as soon as the SSD market as a whole broadened enough to support the development of client/consumer-specific SSD controllers. Once Intel could no longer compete by stripping a few features out of an enterprise SSD design, their consumer SSD products had no real advantage over other brands. (Minor exception: Intel's consumer QLC NVMe drives have consistently had very good retail prices.)
If you mean the 660p/665p, I think even those SSDs are not worth it. The Kingston A2000 uses the same SM2263 controller, is about the same price, but uses TLC NAND instead of QLC.
Oh totally. By the time I actually had my own money to buy an SSD (so like 2013 or so), Intel was completely out of the running (I went for a Crucial). As you said, I remember looking at some reviews last year and being surprised that Intel was in the running at all in any category.
Intel pretty much didn't design it. It wasn't worthwhile for them to invest in making a consumer-oriented NVMe SSD controller of their own. Instead, they used the first NVMe SSD controller from Silicon Motion, whose SATA SSD controllers Intel had been using for a while. That SM2260 NVMe controller was cheap but bad, because it was made on a 40nm process (compared to 28nm or smaller for most NVMe controllers) and it was Silicon Motion's very first NVMe controller so they had lots of bugs.
Note: once upon a time, Intel's fab strategy involved new fabs making CPU's (x86) for a couple years, then being repurposed for memory. This meant that their memory fabs were practically free (i.e. they were building them for CPU business anyway), which helped them compete on price in memory.
I'm sure they still find some use for their no-longer-brand-new fabs, but this kind of examination of each business line in isolation doesn't take into account synergies like that. I can easily imagine Intel doing one "makes good business sense" decision after another, until they are no longer able to manufacture competitively at all.
Oh, wait, maybe that already happened a couple years ago...
Everyone seems critical of this sale as some sort of imploding canary for their impending financial doom but if they don't see a lucrative or competitive future for this business than I don't think divesting from it is a bad idea, using the proceeds for buy backs effectively makes their business smaller whilst retaining the same inherent value. It goes against Wall St's grow-at-all-costs philosophy, but personally I think sitting on a war chest waiting for the next big opportunity is better than pouring investments in a low margin business playing catchup from 5th place.
Personally I believe Intel needs some big wins as they're basically getting their lunch eaten from all sides. Fortunately they're still highly profitable which affords them a lot of opportunity for investments, if they can't do that their future may be dependent on others successes of their intelcapital.com arm, which worked well for Yahoo! who at the end, most of their value came from their Alibaba investment.
I guess it harkens back to their first few years, when they decided to sell off their DRAM business? Although, not so clear now whether it means they're on another course to greatness...
Yes, I was thinking of the same precedent. IBM got out of memory at about the same time, I believe, and for the same reason: Too low margins to make continuing to fight against the tough competition worthwhile.
>Although, not so clear now whether it means they're on another course to greatness...
This is the $64,000 question. Intel got out of the memory business when it was clear by 1985 that CPUs were its future. I didn't write x86 because Intel itself wasn't convinced of this; see iAPX 432, i860, Itanium, and StrongARM/Xscale. All failed to give Intel the backup/alternative to x86 that it has repeatedly sought.
It is not an exaggeration to say that Intel has failed, or at least failed to distinguish itself, in every single market it has entered since IBM chose the 8088 forty years ago. Besides the above alternative instructional sets/architectures and flash memory, antivirus (still perhaps the most mystifying move in Intel history), servers/motherboards, and GPUs come to mind. The most successful non-x86 business for Intel is ... Ethernet cards? Meanwhile, it's embarrassed itself with discrete GPUs at least three separate times. A few years ago buying Nvidia would have been a savvy move; now it can no longer do so, and it's not impossible to imagine Nvidia buying Intel in the future.
Even within the one market Intel does dominate, what saved the company 15 years ago amidst Itanic and Pentium 4 was 1) AMD Thunderbird being just as inefficient as Pentium 4 and, more importantly, 2) an Intel Israel skunk works project to improve on the Pentium 3. There is no such out-of-the-blue miracle this time.
But why buy Intel when Samsung has a device in every class (even enterprise) that's just as fast or faster, and cheaper as well? This is the fifth-best SSD manufacturer selling out to the third-best SSD manufacturer. No matter how much you put into marketing, it's a worse product being sold to technical purchasers.
Because basically every enterprise storage provider on the planet has contracts that require a minimum of dual-sourcing. Beyond that I'm not sure where you've seen Samsung be cheaper - they're more expensive across the board. Obviously storage vendors aren't paying retail:
Indeed it is, but flash is a commodity, and if somebody IS still buying Intel NAND if the price is ok for them, and Intel will still have somewhat good money from that, then why not?
Intel can even stop investing further into flash R&D, and it will be years, and years before they will be outpriced, even with discount for their lower performance.
The "intel view" of this announcement can be found on their newsroom [1], its justification for this sale is basically this PR spin its CEO:
"For Intel, this transaction will allow us to further prioritize our investments in differentiated technology where we can play a bigger role in the success of our customers and deliver attractive returns to our stockholders."
Hmmh, I thought Andy Grove's strategic genius was to get Intel out of memory entirely and double down on processors. At least this is one of the reasons the popular business press celebrates him. Didn't know they were still in this business.
What reputation does Hynix have for server SSDs? Everything I read about Intel SSDs were that they were rock solid in term of reliability, but mostly resiliency to crash/power loss.
Intel's divesting their NAND memory business, they haven't had a DRAM business in a very long time, and they have not yet started up their own production of 3D XPoint memory, or even announced concrete plans to do so. The title is accurate even though it does not include all the relevant context.
iPhone was also barely making a dent in Nokia and Blackerry's margins in the first couple of years. The difference is the update cycles are longer in this business but intel could be the next Nokia in 10-20 years.
And right there you just pinpointed the reason why so few companies truly innovate anymore. There's no benefit to innovation if the only thing you're ever evaluated on is how profitable you were in the prior three months.
Worse, if you're a 60yr old board member, you're not going to approve of a project that wont get returns to you quickly. How can any company make a 10 year investment when none of the board cares longer term than their retirement in a couple years
How is the hyper-competitive, low-margin, commodity NAND business core to what Intel does or aspires to do?
(Intel is of course not doing their best at their core, but this does not seem to be an instance of it IMO. This is more analogous to exiting the DRAM business early in their existence)
> How is the hyper-competitive, low-margin, commodity NAND business core to what Intel does or aspires to do?
Because that "commodity" gives a company a steady revenue stream. The less diversification a business has, the more vulnerable it is in case of issues (e.g. the fiasco that is the new fab process sizes), market demand shifts or other external events (wars, tariff / trade wars, pandemics, economic crises).
Intel is now trading that revenue stream for a one time cash injection, probably to get back on their feet regarding the mentioned new fab processes - but if that bet fails, they're out of all the money they spent AND don't have that revenue stream anymore.
In my opinion this is a dangerous short-sighted move driven by bean counters with next-quarterly-only incentives...
Going all in on your core business is risky, but I wouldn't call it short sighted. It seems more like being committed to you technical decisions, and deciding "If we can't make it here, whats the sense in even staying around".
Poking around it looks like Intel announced a plan for $10 billon worth of stock buybacks recently. If that's true this isn't "going all in on your core business" and instead more like going all in on your share price.
"For Intel, this transaction allow us to further prioritize our investments in differentiated technology ... and deliver attractive returns to our stockholders."
It's also about financial engineering, financial engineers proselytise people into believing the idea that all business of a company need to be in a single profitability band, or the financial magical doom will come.
