[HN Gopher] Political Chips
       ___________________________________________________________________
        
       Political Chips
        
       Author : simonpure
       Score  : 130 points
       Date   : 2022-08-03 14:40 UTC (8 hours ago)
        
 (HTM) web link (stratechery.com)
 (TXT) w3m dump (stratechery.com)
        
       | zbird wrote:
       | > This is why Intel's shift to being not simply an integrated
       | device manufacturer but also a foundry is important: yes, it's
       | the right thing to do for Intel's business, but it's also good
       | for the West if Intel can pull it off.
       | 
       | It's good for the US, not "the West".
        
         | MauranKilom wrote:
         | Intel is also building a new fab in Germany. So no, it's not
         | just the US.
        
       | throwaway4good wrote:
       | Intel is in big trouble and the only card they have left is the
       | nationalism card. And that card is for losers.
       | 
       | We are about to enter a silicon slump with low demand and
       | oversupply; for Intel things will get worse.
       | 
       | What will happen when it is clear to everyone including
       | politicians that all that subsidy money is going into a black
       | hole? And people finally figure out that a rocket that blows up
       | stuff doesn't need a 2nm chip?
       | 
       | They are going to lose interest and those subsidies that is
       | Intel's last hope will end.
        
         | hotpotamus wrote:
         | I've read that the problems with chips for cars are actually
         | old processes (greater than 100nm) that are commodity and so no
         | one really cares to make them and the equipment has one foot in
         | the grave and such, so I don't think anyone cares too much
         | about putting chips into rockets since that stuff was figured
         | out awhile ago.
         | 
         | My perception of national defense types is somewhat influenced
         | by reading their press stuff and somewhat influenced by General
         | Buck Turgidson from Dr Strangelove. He would say, "We must not
         | have a $weapon gap!" (missiles, mineshafts, whatever he
         | perceived to be in the national interest at the moment). And
         | today, what occupies the minds of these types is AI which means
         | latest gen chips and problems with pesky nerds and their
         | ethical considerations. They greatly fear that China has
         | surpassed the US in AI and has us outgunned. To be fair to
         | them, AI could certainly be a potent weapon, but I have no idea
         | how their perceptions of China reflect reality.
        
         | groby_b wrote:
         | "We are about to enter a silicon slump with low demand and
         | oversupply"
         | 
         | What causes you to assume that?
         | 
         | "What will happen [if...] people finally figure out that a
         | rocket that blows up stuff doesn't need a 2nm chip?"
         | 
         | One, they'll learn that we're not doing too hot on custom chip
         | fabs in general? They'll also, if they're really that dense,
         | learn that we need chips for a few more things than to make
         | things go boom. (FWIW, they're not that dense.)
         | 
         | "They are going to lose interest and those subsidies that is
         | Intel's last hope will end."
         | 
         | Even if the rest of your statements were correct (and I don't
         | think they are), that is absolutely not how subsidies work.
         | Local subsidies translate to local jobs translate to votes.
         | Keeping them running is rather important to politicians. So,
         | no, "lose interest" is not exactly the most likely failure mode
         | here.
        
           | JonChesterfield wrote:
           | This one seems to have translated into dividends while intel
           | posts substantial losses.
        
       | mark_l_watson wrote:
       | I am a Libertarian so this may seem like an odd comment: I
       | support some government intervention to design and manufacture of
       | at least low tech chips (adequate for laptops, tractors,
       | industrial uses in general).
       | 
       | I am not a hardware expert, but given that the Open RISC projects
       | seem very worthy of support, both in design efforts and multiple
       | inside the US fab facilities.
       | 
       | TSMC's new 5nm factory just opened 60 miles south of where I live
       | in Arizona is also the kind of progress I want to see. I am a fan
       | of globalization but we need to balance that with good "Plan B's"
       | for building what we really need inside the US.
        
         | sanxiyn wrote:
         | US is not lacking in CPU design. I agree OpenRISC (and RISC-V)
         | is worthy of support, but they benefit China more than US, and
         | it would be poor use of US tax money to benefit China more than
         | US.
        
         | lotsofpulp wrote:
         | It is not odd to be Libertarian and support government
         | intervention that benefits one's self. Hypocritical, maybe, but
         | a common sentiment.
        
           | mark_l_watson wrote:
           | That is how I see it. I often drift into hypocrisy: I am 100%
           | anti-war except if my country was directly attacked, but in
           | the financial interests of me and my family, I do own
           | "defense" stocks.
           | 
           | Also in my own self interest: I am for our government
           | massively supporting poor kids with meals at schools, special
           | tutoring, etc. in order for us to have a larger and better
           | educated work force in the future.
           | 
           | Anyway sorry for the rant.
        
             | NikolaNovak wrote:
             | fwiw it didn't come through as a rant. Most of us if we are
             | honest with ourselves have internal contradictions. It's
             | important to be aware.
             | 
             | My wife is fundamentally a socialist (we are in Canada so
             | it's not a misunderstood bad scary word :-). But she is
             | also a home depot manager, where she is the voice of
             | capitalist market forces. What she wishes the system should
             | be, and the system she is daily a part of, are frequently
             | at odds.
             | 
             | I personally find extremes of any given philosophy to be
             | impractical and untenable. I respect more people who, like
             | it appears yourself, say "this is my general leaning,and
             | these are my pragmatical exceptions".
        
               | spaetzleesser wrote:
               | In today's world you can't really follow any ideology in
               | a clean way. If you want to live you have to make
               | compromises somewhere and basically be a hypocrite. I
               | only have a problem with people that don't admit that (of
               | which there are many and they are very loud).
        
         | KaoruAoiShiho wrote:
         | Hate to say it but just sounds like you're a regular ass person
         | and not a libertarian. You're against government intervention
         | except in cases where it benefits you, and in those cases
         | you're for it. That's like, most people. Except presumably
         | you're privileged economically, probably socially, and so the
         | number of things that you need is low and the amount of
         | opportunities afforded by your social status is high. If you
         | were lower on the totem pole you might find it more important
         | for governments to also do things like protect or expand access
         | to education or have environmental regulations if you're not
         | economically capable of just moving to a wealthy place.
        
           | lotsofpulp wrote:
           | This is the what I meant with my post.
        
             | KaoruAoiShiho wrote:
             | Yeah my take is not that he's hypocritical but that like
             | most people he's not an actual libertarian. To be
             | libertarian is to know there are things that government
             | intervention can do that will benefit you but still know to
             | forgo those things because their costs are higher to
             | society as a whole. What he is is just a republican.
        
               | Apocryphon wrote:
               | Libertarianism, like any other political ideology, can
               | contain moderate stances.
        
         | edmcnulty101 wrote:
         | I'm a 'government using funding to improve the world' vs 'govt
         | using funding to control people' libertarian.
         | 
         | Scientific r and d falls strongly into the former category.
         | 
         | DEA, FBI, NSA, CIA, TSA, ATF, DoD, state police, county police,
         | municipal police, neighborhood police, and other organizations
         | used to control people. Plus the literally uncountable number
         | of criminal and regulatory laws on the books that keep growing
         | exponentially without congress taking time to go back and
         | review old laws...
        
       | pphysch wrote:
       | I wonder to what extent Washington's fuss over Taiwan is simply
       | TSMC lobbying at work. They're an important company that is gonna
       | get their lunch eaten by the mainland. But what can Washington
       | even do about it?
       | 
       | Beyond the "unsinkable aircraft carrier" angle, that is.
        
         | trynumber9 wrote:
         | The US has been sending carrier groups to support Taiwan long
         | before they were a leading edge semiconductor manufacturer. So
         | it's geopolitics as normal.
         | 
         | As for getting crushed by SMIC, this is only with possible
         | massive government investment from the PRC. Now you see many
         | other governments reacting with subsidies in kind. It will be a
         | totally distorted market in 10 years time.
        
           | pphysch wrote:
           | Hence "to what extent". TFA implies that TSMC leaders were
           | VIPs at the Pelosi meeting. What does this have to do with
           | Washington's long-standing policy of militarizing Taiwan?
        
         | Throwawayaerlei wrote:
         | "[TSMC is] an important company that is gonna get their lunch
         | eaten by the mainland."
         | 
         | How so? Not for the foreseeable future in bleeding and leading
         | edge nodes, where the PRC is some unknown but very long
         | distance away from making their own EUV machines.
         | 
         | An invasion of Taiwan just means an end to TSMC production
         | there, a point its chairman Mark Liu made a few days ago in a
         | CNN interview. That would have _really_ bad effects on the PRC
         | 's narrow economy with its export focus.
        
           | pphysch wrote:
           | > PRC's narrow economy
           | 
           | Come on. There is not a less "narrow" major economy on the
           | planet than China's. This is just silly.
           | 
           | USA would collapse in weeks if China blocked all exports.
           | China would run out of dollars, which coincidentally would
           | become worthless at the same time.
        
           | tshadley wrote:
           | Very good points. Here's the link.
           | 
           | https://transcripts.cnn.com/show/fzgps/date/2022-07-31/segme.
           | ..
           | 
           | LIU: Nobody can control TSMC by force. If you take a military
           | force or invasion you will render TSMC's factory non-operable
           | because this is such a sophisticated manufacturing facility.
           | It depends on the real time [correlation] with the outside
           | world, with Europe, with Japan, with the U.S., from materials
           | to chemicals to spare parts to engineering software
           | diagnosis. And it's everybody's effort to maybe this factory
           | operable. So if you take it over by force you can no longer
           | make it operable.
        
       | keepquestioning wrote:
       | How would one profit off the next few years of political
       | chipmaking?
        
         | throwaway4good wrote:
         | Pork futures.
        
         | throwaway4good wrote:
         | Chinese semiconductor companies. If this insanity continues
         | (nationalism and sanctions), the massive Chinese market will
         | end up being serviced only by Chinese chip companies. Some of
         | these are investable via the Chinese or Hong Kong stock
         | markets.
        
       | mikewarot wrote:
       | Chips are great, but you need discrete components, circuit
       | boards, and other support, and the manufacturing infrastructure
       | for all of that. Do we really have all of that in sufficient
       | quantity domestically any more?
        
       | kipchak wrote:
       | >"the goal should be to counteract the fundamental forces pushing
       | manufacturing to geopolitically risky regions, and Intel is the
       | only real conduit available to do that."
       | 
       | I wonder if it's fair to assume based on this the US gov will
       | prop up intel as a foundry for as long as necessary, to secure
       | it's own supply and reduce reliance on Taiwan/TSMC.
        
       | klelatti wrote:
       | Great piece but it seems that Ben doesn't quite finish joining
       | the dots.
       | 
       | If Intel is to have a successful foundry business at the cutting
       | edge then its customers will be those firms that are designing
       | cutting edge CPUs, SoCs and GPUs.
       | 
       | That means Apple & Qualcomm (possibly OK) but also Nvidia, AMD
       | and other Arm based competitors with Intel's CPUs and GPUs.
       | 
       | Can't see how this will work with Intel in its current form.
        
         | hyperation wrote:
         | Perhaps a duopoly in domestic chip fabrication, with both Intel
         | and TSMC operating fabs in the continental U.S.
        
           | sanxiyn wrote:
           | I think klelatti is doubting whether AMD could trust Intel to
           | pursue AMD's best interest.
        
             | klelatti wrote:
             | Absolutely! Handing over your detailed product
             | specifications and product plans to a direct competitor is
             | inconceivable.
             | 
             | I'm 100% convinced now that an Intel split into foundry and
             | CPU vendor is inevitable.
             | 
             | It's a political if not a commercial necessity if Intel is
             | to provide a viable alternative to TSMC.
        
               | sanxiyn wrote:
               | Samsung manufactured for Apple for a long time. I don't
               | think it's inconceivable.
        
               | klelatti wrote:
               | That's a fair challenge. I think it's a little different
               | though - the SoC was one component of the iPhone - so
               | full details of the competing product weren't being
               | shared.
               | 
               | Plus when the relationship started volumes were small for
               | both iPhone and Samsung phones. As we know Apple ended
               | the relationship eventually.
               | 
               | I struggle to see Lisa Su handing this info to Intel even
               | with some strong safeguards.
        
       | robocat wrote:
       | AMDs spin-off of Global Foundries only gets mentioned once as an
       | aside, yet surely there are multiple important reasons why that
       | story is relevant to Intel.
        
       | photochemsyn wrote:
       | > "The most important decision was shifting to extreme
       | ultraviolet lithography at a time when Intel thought it was much
       | too expensive and difficult to implement; TSMC, backed by Apple's
       | commitment to buy the best chips it could make, committed to EUV
       | in 2014, and delivered the first EUV-derived chips in 2019 for
       | the iPhone. Those EUV machines are made by one company -- ASML.
       | They're worth more than Intel too (and Intel is a customer)."
       | 
       | CNBC toured ASML clean rooms in a very interesting video. IIRC,
       | the only thing keeping ASML from exporting these machines to
       | China is some EU/USA export control rule:
       | 
       | https://www.youtube.com/watch?v=iSVHp6CAyQ8
        
       | rossdavidh wrote:
       | Full disclosure: I worked for AMD for about a decade.
       | 
       | I agree with the bottom line here (we should spend gov't $$ to
       | make sure significant amounts of chip manufacturing still get
       | made in the US, and Intel has to be a big part of that). However,
       | it misses the real reason for Intel's decline.
       | 
       | For most of it's existence, if Intel had missed a manufacturing
       | node in Moore's Law, it would have been rightly recognized as an
       | existential threat, and it would have become the #1 focus of the
       | CEO and the rest of the company. Intel fell behind Moore's Law
       | for years in its manufacturing, and it never caused them to
       | appropriately panic until that hit the bottom line. This is a
       | problem of an executive suite too focused on this quarter's
       | results, and not focused enough on the engineering that drives
       | those results. Previous generations of Intel executives
       | understood that. It is likely that the current CEO, brought in
       | once the board saw problems in their stock price, realizes it. If
       | they had been run by executives who cared more about the
       | underlying engineering, they would have had a 5-year head start
       | in fixing the situation.
        
         | throwaway4good wrote:
         | For an example of a broken company:
         | 
         | https://twitter.com/dylan522p/status/1554889887630761985
         | 
         | Intel with a bunch of Optane related presentations at
         | #FlashMemorySummit
         | 
         | Some the Intel folks I spoke to about this (not pictured) had
         | no clue it was going to be cancelled until they read it on an
         | article from Toms Hardware.
        
         | georgeecollins wrote:
         | I think this is a result of the problem of financializaton. I
         | don't think that an engineer has to run a company like Intel,
         | Boeing or Apple. But if the growth of steady profits becomes a
         | higher priority than what you actually produce, you are likely
         | to milk the business at the expense of its long term prospects.
        
           | sanxiyn wrote:
           | I mostly disagree with this line of reasoning. Yes,
           | financialization is bad, but Intel would have been fine if
           | its process went fine.
           | 
           | We probably will never know what exactly went wrong, but I
           | think the current best guess is this: Intel set minimum metal
           | pitch target for its 10 nm process at 36 nm, while TSMC set
           | minimum metal pitch target for its 7 nm process (equivalent
           | to Intel 10 nm process) at 40 nm. These processes were the
           | last before EUV, pushing DUV to its limit. It turned out that
           | you can do 40 nm but not 36 nm. That's it.
           | 
           | It was an extremely technical issue, with justifications on
           | both sides, and Intel's decision wasn't obviously mistaken,
           | even in retrospect. 36 nm was usual scaling to Moore's law.
           | It was 40 nm that was unusual, TSMC underscaled metal
           | relative to fin and gate. Why 40 nm? Because it was the limit
           | of DUV double patterning. But Intel also knew that! That's
           | why Intel went with quadruple patterning. It was a
           | conservative choice to underscale metal to the limit of
           | double patterning, but quadruple patterning wasn't crazy
           | either. Everyone was using quadruple patterning for fin at
           | this point, so it wasn't thought that risky.
           | 
           | Should Intel have reconsidered this once they encountered
           | yield issues? Yes, but that's hindsight. All processes
           | experience yield issues. Intel probably thought they can be
           | solved, faster than going back to drawing board and doing
           | everything again. Unfortunately they couldn't.
           | 
           | (Above analysis was informed by lots of reading on this topic
           | I did over the years, but https://semiwiki.com/semiconductor-
           | manufacturers/intel/7433-... in particular.)
        
             | icelancer wrote:
             | Yeah I generally agree with this take. Of course on HN and
             | other technical sites the opinion "lol engineers should run
             | companies" gets a lot of play, but plenty of engineers tank
             | companies and don't get posted here with the alternative
             | viewpoint.
             | 
             | Intel made a calculated bet, lost, and furthermore made a
             | handful of other bad business decisions. We focus a lot on
             | the latter part when in reality it's unlikely the
             | "business" decisions were the primary reasons for
             | failure... it very well may have been technical problems
             | led by engineers in the first place.
             | 
             | I don't think Intel acted irrationally.
             | 
             | Last, this is the journey of almost all industries. The
             | titans become too complacent, set for disruption by other
             | smaller companies / outsiders. This is just the natural
             | course of business due to inertia. Intel is hardly alone
             | here.
             | 
             | EDIT: All that being said, the right man for the job is in
             | the CEO chair. I personally believe he always should've had
             | the role. We'll see how Gelsinger turns it around. I am
             | optimistic.
        
           | lazulicurio wrote:
           | A big part of this is investors demanding financializaton.
           | Unless you're in a sector that investors have decided is a
           | "growth" sector, it's all about capital efficiency and
           | headcount and how much "fat" you can trim. See, for example,
           | the recent gas price situation. Companies are far more
           | worried about becoming overcapitalized than they are worried
           | about losing out on some sales volume.
        
         | mandevil wrote:
         | In general I don't believe that being an engineer is necessary
         | to run a technology business (some of my best leaders were
         | not), but I have come around to believing that Intel and Boeing
         | are exceptions: the nature of their business requires new
         | massive bets- not quite 'bet the company' but definitely 'bet
         | the next 10 years of company performance' every so often (new
         | fabs and new planes), and that one decision really needs to be
         | made by an experienced engineer, due to the nature of the
         | underlying evaluation. If not, then people who think they can
         | bafflegab mother nature the same way they can auditors will
         | make the decisions.
        
           | mandevil wrote:
           | Just wanted to clarify that singling out Boeing and Intel
           | specifically was not my intention: I really meant commercial
           | aircraft and semiconductors industries as a whole, using
           | those two companies as a syndoche, because of the massive
           | investment and large time delays between the commitment of
           | money and the result in the market. Those two in particular
           | seem to require regular, hugely expensive (10+ billion
           | dollar) efforts of 5-10 years in duration to keep up the pace
           | of technical development, so picking the wrong horse is
           | catastrophic for a long while.
           | 
           | (Obviously the A380 never killed anyone like the 737Max did,
           | but it definitely was a massive, 25 billion dollar sinkhole
           | for the company- some estimates are that Airbus never even
           | turned a profit on the flyaway cost of the airplane,
           | excluding development costs! If Boeing hadn't simultaneously
           | had the 737Max actual disaster, it would have been much worse
           | for Airbus. Intel has seen TSMC power ahead, which has made
           | their problems more obvious.)
        
           | neuronexmachina wrote:
           | An interesting example is Dennis Muilenberg, who was Boeing
           | CEO from 2015-2019, during the 737 Max debacle:
           | https://en.wikipedia.org/wiki/Dennis_Muilenburg
           | 
           | He started at Boeing in 1985 as an engineering intern, earned
           | a masters in Aeronautics, and worked his way through
           | management and engineering positions until he became CEO. I
           | have no idea how much of the 737 Max issues could be placed
           | on him directly, but he was CEO during its launch and the
           | crashes.
        
             | nickff wrote:
             | Dennis Muilenberg also featured in the NOVA documentary
             | "War of the X-Planes", around the middle of his career,
             | where he appeared to be a risk-taking, forward-thinking
             | engineering manager. Of note, I believe that a significant
             | portion of his career was spent on the 'defense' side of
             | Boeing, which some have blamed for the company's problems.
             | 
             | I personally place more blame on Muilenberg's predecessor,
             | James McNerney, a former Proctor & Gamble, and 3M
             | executive.
        
             | mandevil wrote:
             | The key 737 Max decisions were made circa 2011-2013, while
             | James McNerney was the CEO (2005-2015). That was when the
             | design objective of no simulator training required was set
             | for the plane (and Boeing released marketing information
             | promising that) while also promising to do it with engines
             | that were too big for the wings. That decision was what led
             | to everything else, and was loudly announced and marketed
             | while Muilenburg was over on the Integrated Defense side of
             | the company.
             | 
             | James McNerney was a Harvard MBA who spent time at McKinsey
             | before going to the Jack Welch clown show at GE, where he
             | ran the aircraft engine business for a long time. When he
             | lost out to Immelt to be CEO there, he went to 3M for a few
             | years then bounced to Boeing.
             | 
             | Now, Muilenburg has to bear the mistakes he made: pushing
             | an unsafe plane through certification, not listening to the
             | right people, not investigating the Lion Air crash
             | sufficiently, etc. But the evidence I think strongly shows
             | that someone who was not an engineer was making the final
             | decisions on the "bet the company for the next 10 years"
             | choice to go forward with the 737Max rather than a clean-
             | sheet design, back in 2011.
        
               | Spooky23 wrote:
               | It's funny. I worked in a geography with a lot of GE
               | alums. The ICs were really good for the most part, hard
               | workers, smart but reserved.
               | 
               | The managers and executives turned consultants went out
               | of their way to tell you about how they met Jack Welch or
               | got screamed at by Jack Welch, etc. It was weird, and
               | moreover, they almost without exception idiots.
        
               | swyx wrote:
               | just looked McNerney up.
               | https://en.wikipedia.org/wiki/James_McNerney
               | 
               | for his contributions to society, he made between
               | 12-29m/year every year for the 10 years he was CEO.
               | 
               | ugh
        
           | spaetzleesser wrote:
           | I think it boils down to the messaging that comes from top.
           | Do they mainly talk about creating the best products or do
           | they talk about shareholder value?
        
         | formerkrogemp wrote:
         | You could apply this with slightly different specifics to many
         | US national and multinational corporations.
         | 
         | The efficient market rewards inefficient stock buybacks, record
         | debt fueled dividends, years of underinvestment, low wages, and
         | most of all no strings attached bailouts. They may be a loser,
         | but we'll pay for their loss. Socialize the losses/costs and
         | privatize the gains.
        
           | lotsofpulp wrote:
           | Based on the performance of publicly listed companies in the
           | last 15 years, the stock market has rewarded companies with
           | great cash flow, high profits, and relatively rosy outlooks.
           | 
           | Of course there is an underlying assumption the government
           | will bail out simultaneous/systemic big failures, but it does
           | not seem accurate to assume any random business will be
           | bailed out.
           | 
           | Edit : fixed typo
        
             | PaulDavisThe1st wrote:
             | > but it does it [sic] seem accurate to assume any random
             | business will be bailed out.
             | 
             | Precisely the issue. It's not "any random business". It's
             | any business with the appropriate properties and
             | connections. If it was truly just random business, perhaps
             | the bail outs would not create such a level of moral
             | hazard. But it's not, and businesses know that.
        
               | megaman821 wrote:
               | I don't like the bailout but I understand they were
               | necessary. I just wish they came with harsher deterrents.
               | Like if the shareholders vote to take a bailout, the
               | Board, C-Suite, and VP's all get let go and any financial
               | packages can be litigated in special bailout courts.
        
         | amelius wrote:
         | Sounds similar to Boeing. You begin to wonder when these kind
         | of lessons start entering management textbooks.
        
           | throwaway4good wrote:
           | The accountants took over the company, and the good engineers
           | left.
           | 
           | I have witnessed this with other companies; and I am sorry
           | they are never going to return to what they once were.
           | 
           | It is kind of obvious when you chat with all the sad
           | employees: Why didn't you leave? And then you realise that
           | the ones, who are left, are the ones who couldn't get a job
           | elsewhere.
        
             | formerkrogemp wrote:
             | > The accountants took over the company, and the good
             | engineers left.
             | 
             | As an accountant, I would quibble with this aspersion and
             | lay the blame with management and other, broader issues.
             | 
             | > It is kind of obvious when you chat with all the sad
             | employees: Why didn't you leave? And then you realise that
             | the ones, who are left, are the ones who couldn't get a job
             | elsewhere.
             | 
             | This seems true of many companies. Many of us are just
             | playing musical chairs with our careers and jobs trying to
             | find that job that doesn't suck.
        
               | throwaway4good wrote:
               | I am sorry for insulting accountants and I realise what
               | wrote is too harsh (but hey this is the internet so ...).
               | 
               | And you cannot have engineers running everything because
               | then you will have a half-built Concorde and a bankrupt
               | company.
               | 
               | But there is a balance. And if that balance tips for too
               | long, you end up with the whole organisation content with
               | just doing maintenance. And when that happens there is
               | just no going back.
        
               | adamc wrote:
               | You are describing a sort of cultural inflection point.
               | It would be interesting to read more about that.
        
               | ArnoVW wrote:
               | In the aviation industry, Lockheed Martin famously
               | avoided 'resting on its laurels' by having a separate
               | 'skunkworks' part (who made the U-2, SR-71 and
               | practically invented 'stealth' i.e. F-117, F-22, etc)
               | 
               | It was originally created by Kelly but he managed to
               | transmit the spirit to a successor, who wrote an
               | interesting book about his time (80's and 90's) called
               | 'stealth'. If you look on Google you can find the PDF.
               | 
               | Another book about organisations having to deal with
               | ossification is 'the soul of a new machine'. It's written
               | by a journalist that was embedded in a R&D department of
               | a computer manufacturer in the 70's and 80's. The place
               | is run by someone a lot like Kelly Johnson, and the
               | author managed very well to get into his mind. Again, I
               | believe you can find a PDF on Google.
        
               | Throwawayaerlei wrote:
               | "It was originally created by Kelly but he managed to
               | transmit the spirit to a successor, who wrote an
               | interesting book about his time (80's and 90's) called
               | 'stealth'."
               | 
               | The time period doesn't quite match up, but I found
               | _Skunk Works: A Personal Memoir of My Years at Lockheed_
               | by Ben R. Rich
               | https://www.amazon.com/gp/product/0316743003/ to be quite
               | interested if not quite as interesting as I'd hoped when
               | I bought it.
        
           | jimkleiber wrote:
           | I was just gonna say that the Intel case may fit well in this
           | book called Obliquity[0], which ironically discusses Boeing.
           | 
           | I believe it said that Boeing was less profitable when it
           | focused on increasing profits and more profitable when it
           | focused on improving engineering.
           | 
           | [0]: https://www.johnkay.com/product/obliquity/
        
             | spamizbad wrote:
             | I've noticed a pattern of how executives approach this:
             | 
             | 1) When looking for more profits/revenue at a technology
             | company, they'll often either try to push an R&D "big bet"
             | to market half-baked, in hopes of it pulling in new revenue
             | OR put the screws to product and engineering to churn out
             | some "quick wins" to give them some momentum.
             | 
             | 2) When focusing more on engineering, it's often because
             | they're either distracted by other challenges faced by the
             | organization outside of engineering OR they are up against
             | an existential threat that mandates engineering investment
             | and letting them steer the strategy somewhat.
        
           | georgeecollins wrote:
           | I went to business school. The management textbooks used to
           | tell you that steady profits were the most important thing.
           | When I think about the things I was taught, particularly this
           | incredible reverence for GE, I laugh.
        
             | Throwawayaerlei wrote:
             | "The management textbooks [at my business school] used to
             | tell you that steady profits were the most important
             | thing."
             | 
             | That's stark raving mad. It is for example one of the
             | clearest signs someone is running a Ponzi scheme. Which
             | would seem to transfer over to this not quite as dishonest
             | domain.
             | 
             | Reverence for GE, a company doing technical things that
             | started stack ranking and firing their employees.... Plus
             | eventually got first their fingers and then last time I
             | checked their whole body burned by going into financial
             | businesses, very much not a core competence.
        
               | michaelt wrote:
               | _> That 's stark raving mad. It is for example one of the
               | clearest signs someone is running a Ponzi scheme._
               | 
               | Not really - I mean, if I run Toyota should I not be
               | producing cars I can sell at a profit? And if my sales
               | are falling, isn't that a bad thing?
               | 
               | Rising sales are good, of course - but not oscillating
               | sales. If the rise is going to be followed by a sales
               | slump in a few months time, do I want to take on extra
               | staff who I'll then have to lay off, causing them untold
               | strife and inconvenience? Do I want to build a new
               | factory full of expensive machines, then have them stand
               | idle while costing me interest and rent?
               | 
               | Industries like Software and IP licensing are, of course,
               | often a different matter!
        
           | cjbgkagh wrote:
           | I read a lot of creative accounting case studies and am
           | repeatedly surprised when others fall for the same simple
           | tricks over and over again. At some point I have to assume
           | willful ignorance.
           | 
           | I'm sure there are plenty of case studies in text books that
           | management could read. Either they don't read them or they
           | take away the wrong message. Don't forget the execs at these
           | companies probably cashed in some big bonuses.
        
           | alexashka wrote:
           | They can't. It'd undermine the very existence of the ruling
           | elite class that doesn't know how to do anything, besides
           | 'managing' by following a magic formula taught at Harvard,
           | Stanford, etc.
           | 
           | The problem is the _existence_ of a business management layer
           | as an idea - it 's an attempt to get back to the good old
           | days of feudalism, whose chief characteristics are nepotism,
           | stagnation, corruption and nihilism, now that we've gotten
           | rid of the mental pacifier of 'heaven' for the oppressed and
           | hell for the ruling elites (religion).
        
             | jjtheblunt wrote:
             | this is the most resonant comment I've seen in months, as
             | it entirely fits my experiences in engineering inside
             | Apple, and later Amazon and Facebook.
             | 
             | the inner sanctum of very flat Apple was as far from
             | feudalism as could be, for my several years, and it
             | functioned like a very performant ecosystem of engineering.
             | This diametrically contrasts precisely with Amazon
             | engineering, where I saw all the horrors of feudalism and
             | generalized nepotism (racism for example, sexism promoting
             | incapable people to fit quotas, and flagrant corruption).
             | Facebook was somewhere more like Apple but not in its
             | DNA...just in the imitation is flattery sense.
        
               | recyclelater wrote:
               | Yes but I would argue Amazon has better software than
               | apple by a long shot. Ignoring how you felt as a worker
               | out what you read Amazon employees feel like, Amazon has
               | better results.
        
               | adamc wrote:
               | Why do you think that is?
        
               | recyclelater wrote:
               | As in can I justify my claim, or what are the reasons
               | that Amazon produces better software? I would say the
               | former is a qualitative statement and I am going to have
               | a hard time backing it up with facts, and the latter I
               | have no idea.
               | 
               | I run into non stop issues when interacting with apple
               | software as an app producer, from Xcode to iOS to App
               | Store to App Store connect. Their apis are pretty
               | horrible, both the reliability and the design.
               | 
               | As an end user of apple products, I regularly run into
               | odd software problems with my MacBook and iPhone. Every
               | CarPlay experience I have had is buggy, both from the
               | actual CarPlay connectivity as well as apples own CarPlay
               | enabled apps.
               | 
               | Apple Watch is a horrible nightmare to make anything more
               | complicated than a simple remote display.
               | 
               | I could go on and on. However on the Amazon side of
               | things I have never experienced a significant bug, aside
               | from the audible app freezing on occasion when
               | interacting with CarPlay. I blame apple though based off
               | how their own apps work. I say this as an extensive
               | consumer of Amazon products both as a business owner,
               | developer, and SRE, as well as an extensive user of
               | Amazon consumer products.
               | 
               | All this being said I don't like amazon as a business, I
               | can find flaws in their decisions, but they are business
               | decision flaws not just straight buggy products.
        
               | lupire wrote:
        
               | ahartmetz wrote:
               | It may be that Apple does more of the "inspiration" part
               | of the work and Amazon does more of the "transpiration"
               | part. There is software that is great on the outside but
               | crap on the inside and vice versa. The last 80% of
               | quality (after the first 80%) come from testing,
               | discipline and other such such unsexy things.
        
       | adamsvystun wrote:
       | > The most important decision was shifting to extreme ultraviolet
       | lithography at a time when Intel thought it was much too
       | expensive and difficult to implement; TSMC, backed by Apple's
       | commitment to buy the best chips it could make, committed to EUV
       | in 2014, and delivered the first EUV-derived chips in 2019 for
       | the iPhone.
       | 
       | Can somebody here correct me if I am wrong, but my impression was
       | that Intel did commit early to EUV, with initial plans to start
       | high volume manufacturing in line with other fabs (initial
       | schedule was to introduce EUV in 2017 [1], it just got postponed
       | many times), but they just failed in their execution.
       | 
       | [1] https://wccftech.com/idf13-intel-ship-10nm-chips-2015-7nm-
       | ch...
        
         | Throwawayaerlei wrote:
         | I think your citation is 9 years old. What I've always heard is
         | what they called 10 nm was non-EUV. You are correct that what
         | they called 7 nm was going to use EUV, pretty much had to, but
         | 10 nm catastrophically failed and the company responded very
         | poorly to that.
         | 
         | Not _that_ long ago I remember reading, forget at what
         | confidence level, that their old 7 mn was believed to have the
         | potential to leapfrog their 10 nm and save the company, but
         | others said they had some problematic things in common (not
         | counting the very poorly run company!) that made that unlikely.
         | In any event what was 7 nm did not ride to the company 's
         | rescue.
        
           | adrian_b wrote:
           | Their 7 nm process has been renamed now as "Intel 4" and
           | there is a presentation of it at Anandtech, which looks more
           | credible than the fake presentations of the 10 nm process of
           | some years ago.
           | 
           | The first product using this process, Meteor Lake, is
           | expected 1 year from now.
        
             | Throwawayaerlei wrote:
             | Meteor Lake/Intel 4 would then be six years late if the
             | wccftech.com article's commentary on the two nodes was
             | correct. Good to hear about the presentation material,
             | thanks!
        
       | [deleted]
        
       | throwaway4good wrote:
       | Intel tried very hard to get Apple as a customer for the iPhone.
       | They knew very well of mr. Christensen but they simply could not
       | deliver hinting that Intel's problems are not that of strategy
       | but at a lower more fundamental level of competence and ability
       | to organise.
       | 
       | (The stuff about RISC/CISC is a red herring - it basically
       | doesn't matter on a modern cpu.)
       | 
       | Here is an article about Intel and Christensen with clip of him
       | from 2012 (or earlier) where he mentions his work with Intel.
       | 
       | https://www.edgementoring.org/leadership-blog/clayten-christ...
       | 
       | Christensen Taught Intel CEO How To Think And Why It's Important
        
         | aidenn0 wrote:
         | I think Intel "tried very hard" from the point of view of a
         | small company, but the fraction of Intel's resources put behind
         | it was minuscule and felt very perfunctory.
         | 
         | Right or wrong, they had zero interest in betting the future of
         | the company on low-power chips for mobile, or any other market.
         | 
         | [edit]
         | 
         | I just read the wikipedia summary of the prescription for
         | incumbents in _The Innovator 's Dillema_ and the one thing
         | Intel was missing was:
         | 
         | > They allow the disruption organization to utilize all of the
         | company's resources when needed but are careful to make sure
         | the processes and values were not those of the company.
         | 
         | To a certain extent, it feels like buying a cloud offering from
         | AWS vs. Google. Google might have a lot of resources dedicated
         | in absolute terms to the cloud offering, but it feels like an
         | afterthought that might go away at any moment. The AWS offering
         | feels like a real product that Amazon plans on making money
         | from.
         | 
         | In both the cases of Intel and Google, I can't say which is
         | true, but customers can only make their plans based on
         | appearances, not reality.
        
           | throwaway4good wrote:
           | The textbook solution is for the incumbent to spin off
           | companies to deal with the disruptor. And one of the textbook
           | examples is Intel.
        
       | alain94040 wrote:
       | I'm usually a big fan of stratechery, but for once I disagree
       | with the explanation of Intel's decline.
       | 
       | I think it's much simpler: being number one in fab technology is
       | mostly driven by volume: whoever has the most volume wins. During
       | the PC era, Intel had the most volume, so they also had the best
       | fabs. It's a winner-take-all, self-reinforcing ecosystem.
       | 
       | But in the last 10 years, mobile has had the highest volume.
       | That's what allows TSMC to have the best fabs, and Intel is
       | struggling. That's all there is to it. Nothing to do with
       | services or software.
        
         | babypuncher wrote:
         | Which is probably why Pat Gelsinger wants to turn Intel into a
         | fab for hire just like TSMC and Samsung.
        
         | klelatti wrote:
         | The CISC vs RISC point Ben makes is key here. Intel could have
         | been a big player in mobile: it put too much focus on x86
         | though when it could have been making (its own or others) Arm
         | based SoCs.
         | 
         | Edit: not that Arm is necessarily RISC - but it certainly takes
         | an approach that is different to x86 and better suited to
         | mobile.
        
           | reindeerer wrote:
           | I've lost count how many misguided bids of taking x86 to low-
           | power they made. Also the apparent unshakeable confidence
           | that ARM will never become viable on server and desktop.
        
             | klelatti wrote:
             | In this context the Gelsinger video clip in the article is
             | fascinating. Sometimes companies fixate on one element of
             | their strategy that has worked in the past.
             | 
             | It seems that Intel had 'always make x86 / backwards
             | compatible' as their fixation.
        
           | jjtheblunt wrote:
           | Intel was making its own ARM chips called Xscale 20 years
           | ago, no?
        
             | klelatti wrote:
             | Indeed and XScale was successor to StrongARM which I think
             | was highest performing Arm design for a while.
             | 
             | Sold to Marvell in 2006 right before the iPhone appeared.
             | 
             | Intel then spent billions trying to make x86 commercially
             | viable on mobile.
        
         | aidenn0 wrote:
         | That is one of several reasons proposed in TFA; in particular
         | TFA mentions TSMC's earlier investment in EUV being due to the
         | guaranteed volume of smartphone chips.
        
           | sanxiyn wrote:
           | I very much doubt this. When EUV decision was made Intel was
           | at the top of the world and had more volume than TSMC. As I
           | understand Intel's reluctance was mostly about doubt whether
           | ASML could deliver, and while ASML delivered I must say, even
           | in retrospect, Intel's doubt was justified.
        
           | Throwawayaerlei wrote:
           | Did not read TFA and if it doesn't focus a lot on the 10
           | nm/Intel 7 botch it's not fine, but I've read TSMC's very
           | roughly equivalent 7 nm node was also non-EUV but less
           | aggressive than Intel's. And it succeeded unlike Intel, which
           | then made it natural to start introducing _in production_ EUV
           | in their 7+ node. Here I suspect gaining real experience in
           | chips delivered to customers trumps whatever volume you 'll
           | end up doing.
        
         | adrian_b wrote:
         | This would the correct explanation if Intel would have made no
         | mistakes.
         | 
         | However, it is beyond reasonable doubt that Intel has made some
         | extremely ugly management mistakes during their failed attempts
         | to transition from 14 nm to 10 nm, which have absolutely
         | nothing to do with the competition from TSMC or others.
         | 
         | Maybe Intel would have lost their technological advance
         | regardless how the company had been managed, due to the
         | difference in volume between smartphone chips and PC chips, but
         | now we cannot know which has mattered more, the internal
         | mismanagement or the change of the semiconductor device market
         | favoring their competition.
         | 
         | I wonder if it will ever become public knowledge which were
         | exactly the technology problems of Intel and who are those
         | guilty for the decline at the company, because the failures
         | could not have had any real technical causes but only bad
         | management causes.
         | 
         | During their worst years Intel has been capable even of
         | presenting to the public fake technical presentations about the
         | alleged great characteristics of their future 10 nm CMOS
         | process, which is something that I would never have expected
         | from a company like Intel. The marketing messages from any
         | company are expected to be full of lies, but the technical
         | presentations are expected to match reality.
         | 
         | During many years, unlike TSMC, Intel has behaved as if it were
         | completely unable to predict the precise characteristics of the
         | CMOS process that they will able to manufacture in the
         | following year.
         | 
         | How could this happen is very hard to understand, as the
         | manufacturing processes and the future devices made with them
         | can be simulated long in advance of their implementation, and
         | the models can be tuned continuously while the processes
         | evolve, by fabricating and measuring various test structures.
         | Unlike for Intel, for TSMC the performance predictions for
         | future processes have always been reasonably accurate.
        
           | klelatti wrote:
           | There was the infamous demo when they 'forgot' to mention a
           | CPU was overclocked. Bit of a red flag for the culture that
           | permits that.
           | 
           | https://www.tomshardware.com/news/intel-28-core-
           | cpu-5ghz,372...
        
           | sanxiyn wrote:
           | > I wonder if it will ever become public knowledge which were
           | exactly the technology problems of Intel and who are those
           | guilty for the decline at the company, because the failures
           | could not have had any real technical causes but only bad
           | management causes.
           | 
           | Why do you think this? It was a yield issue, and the best
           | guess is it was caused by multi patterning. (Intel themselves
           | said so.)
           | 
           | I found an analysis from SemiWiki titled "Intel 10nm Yield
           | Issues" pretty convincing. See
           | https://semiwiki.com/semiconductor-
           | manufacturers/intel/7433-...
        
             | adrian_b wrote:
             | It was not only a yield problem.
             | 
             | The yields are indeed hard to predict, so if that would
             | have been the only problem, then there would not have been
             | so much reasons to blame the Intel management.
             | 
             | As I have already mentioned, Intel has behaved as if being
             | completely unable of predicting the electrical
             | characteristics of the devices made with their future 10-nm
             | processes.
             | 
             | The first generation of 10-nm products was Cannon Lake,
             | launched in 2018. I have actually bought out of curiosity
             | the Intel NUC with Cannon Lake U, together with an Intel
             | NUC with Coffee Lake U, a 14-nm CPU launched simultaneously
             | with Cannon Lake U.
             | 
             | The 10-nm CPU had pathetic performances in comparison with
             | the 14-nm CPU, i.e. much lower clock frequency at identical
             | power consumption or much higher power consumption at
             | identical performance.
             | 
             | This too low performance should have been determined very
             | early during the design of Cannon Lake and the project
             | should have been canceled even before reaching the tape-out
             | phase.
             | 
             | Even the 2nd variant of the 10-nm process, used for Ice
             | Lake in 2019 was inferior to the by then 5-year old 14-nm
             | process. This should also have been known enough in advance
             | to cancel Ice Lake before tape-out.
             | 
             | Converting any Intel factory to mass production of 10-nm
             | wafers should have never begun before having a working
             | 10-nm process able to make electrically-better transistors
             | than in the old 14-nm process.
             | 
             | Intel has begun the mass-production of chips using the
             | 14-nm process in 2014. By then they must have already
             | started the design of the 10-nm process, but only in 2020
             | they have succeeded to make better 10-nm transistors than
             | their 14-nm transistors (while still having a lower maximum
             | clock frequency) and only in 2021 they have succeeded to
             | exceed the old transistors in all parameters.
             | 
             | It is impossible to understand why have they wasted huge
             | amounts of money for failed projects like Cannon Lake and
             | Ice Lake and for factories using uncompetitive process
             | variants, instead of concentrating all their resources to
             | their top priority of finding a way to manufacture 10-nm
             | transistors that are better than their existing 14-nm
             | transistors, which is normally a precondition for starting
             | any design process of a CPU using a new process and for
             | building a new factory.
             | 
             | It all looks like if most people working at Intel would not
             | have been aware that they actually do not have any working
             | 10 nm manufacturing process, and they were continuing all
             | their usual activities, like designing CPUs, but with fake
             | transistor models, or building new factories, while there
             | was some gang who knew that the 10-nm process does not
             | exist outside fake presentations, but they hoped that there
             | will be some miracle and the 10-nm process will just work
             | when the time comes to use it.
        
               | Throwawayaerlei wrote:
               | Intel has a decades long history of very poor top level
               | engineering management. They got petrified about the
               | issue of how much DRAM they'd be able to put in a system
               | in the 1990 (remember Rambus RDRAM?), and among the
               | consequences was a 1 million part recall of motherboards
               | shipped to Dell just before they were going to be shipped
               | to customers, plus another related one I can't remember
               | the details of yet.
               | 
               | This speaks to the sorts of dysfunction you're speaking
               | of; certainly _someone_ at Intel realized these parts
               | weren 't going to work in the real world.
        
       | kache_ wrote:
        
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