Thread regarding Intel Corp. layoffs

Seems there is a reasonable risk that one or more of the AI hyperscalers will cut back on their capex plans, and that will cause a major semi retest. Intel goes along for that ride.

This is a similar situation as to what happened at the end of the Dot Com bo-m, where the semis and other infrastructure providers were driven to excess output by dot-com customers who ultimately did not have fast enough customer adoption to fund the buildout.

AI is real and it is happening this year, but companies can only adopt it at a certain pace, or risk going bankrupt by the disruption caused by moving too fast.

The last time this happened was with companies moving too fast with SAP and other enterprise systems. Some of those companies either went bankrupt or got so far behind the competition that they were impaired for years. Yet failure to move to SAP would have caused structural cost and lost sales.

If too much AI capacity is built, then that will cause huge losses for the hyperscalers, due to how rapidly the systems depreciate. As of now the true rate of demand growth is all speculation, but it is clear enough that as companies work out how implement then they are either going to do that or risk being put out of business by their competition.

It also seems clear that the Agentic AI companies will produce products which eliminate the need for a lot of existing companies to exist.

So no matter how this works out, it is the single most deflationary tech revolution in history, and millions of workers will have to find new careers.

Then there is the humanoid robotics...

This may well prove to be the single most mispriced stock market to have ever existed.

@2gt There is a growing consensus that bond yields rising, crazy precious metals rally and other flights to traditionally 'stable' assets are signs that the market is trying to get out of the way.

Some are still expecting a vertical rally to precede what could prove to be a major bear market. This is in anticipation that GOP will lose Congress in the midterms, then Dems spend the next two years impeaching the President for..existing.

So yeah, this could get ugly.

@27e I agree. Looks like Intel will strategically announce their first big foundry customer, attempting to stem the downside caused by the overall market (and semiconductors in particular) doing a major swan dive between now and Spring.

Been greatly reducing all holdings and not in Intel or any other semiconductor at the moment.

AI semis are real enough, but current expectations assume uninterrupted growth. That is usually when something else happens, which is ok, but not at these valuations.

Being overvalued is not the cause of a bear market, but it does make the market very fragile. I also see how the market is trying to exit large cap tech, in favor of 'value' stocks, which are only slightly less overvalued. This is usually the precursor to the market going to cash, once they realize that is the best asset for the moment.

Not the end of the world, unless one is leveraged in the wrong direction.

@d5 Read the latest on IBM mainframe business. It grew 61% over the past year.

Mainframes are still widely used and IBM has kept updating them. They support AI inference and are highly regarded by companies which need to have computing on premises, and not in the cloud.

For example, 87% of credit card transactions are on IBM Mainframes.

They could continue to see huge growth, possibly beyond the traditional customer base, as companies want to host AI solutions on-premises, for security reasons.

IBM is also a major AI consulting firm.

@nf Seems like a matter of time before some meaningful Foundry contracts happen, maybe even on 18A-P.

But..the market seems likely the source of possibly extreme downside for INTC. See if the Metals crash broadens out to Energy, then to the broader market.

The Metals crash was the largest one day move since Volcher was at the Fed, and that is probably not a coincidence. His nomination may be the opening salvo for getting the deficit under control, as he may stop Quantitative Easing which has been in place since the 2008 GFC.

The Hard Left is already stating they are against Warsh at the Fed, as it would end their graft-enabling money train.

The end of QE could lead to a lot of market excess being unwound, with AI and the megacap tech companies at the top of the pyramid.

At the very least, the market seems ready to do one of those typical 20% to 30% down phases, which often happens in mid-cycle election years.

This is no time to be super-bullish, as good as things seem to be going for Intel.

This is time to prepare for the next round of layoffs, as LBT and the Board move to their next phase of transformation. My guess is 60k is the next headcount target, with 40k as the final step, obviously contingent on the companies needs.

@pv My experience as an IC was horrible under Pat. I'm glad all of his lieutenants are being removed because they fed him bs and he was too d-mb or in denial to see how things actually were for the real employees doing work. F his lil closeted munchkin a s s.

Imagine firing Jensen just before the AI bubble took off! It took almost eight years after the first AI chip was delivered by NVDIA for the market demand to materialize ! The board did the same to Pat! He sacrificed his fat pay package to save the company investing heavily in R&D and fixing the foundry and products! Then LBT comes and steals the thunder!

@ne I agree, let Gen Z own the coming financial catastrophe.

Not saying that is fair, but then life isn't fair.

Besides, a good, solid global depression will give them some much needed character development.

Just don't vote for anyone named Adolph, ok?

@nf I'm definitely sticking around now to see where this goes

@kd Imagine being so bad at your job that you need 80 hrs deleted from your life just to get it done. Have you tried thinking harder and working smarter? Instead of being a cuck for your boss as he has his way with your life hahaha

I had to read the headline twice, to see if the $150B DOD contract was a typo or something.

It'll be over time but gosh, that is a lot of money.

You wagies will need to work a bit more OT, so get to it.

@hv Look at JPY now.

It may be a situation where the bond market is merely pressuring the government to relent with such extreme monetary policy, but if it goes beyond that then see where that leads.

I got many pounds of PMs, but that won't make up for the loss of everything else, so by no means am I hoping for real price discovery here and now.

Unfortunately, we don't get to choose the timing of such things.

Can't we just kick the can a bit further down the road? Let the Millennials and Gen Z deal with it.

#cringe

@n2 Pat was our savior!

@mm Letting work get in the way of family is tragic but also honestly pathetic. Work should be a means to an end - make enough money to support your life. Now he has no life. I hope he learns from this and doesn't make the same mistake again.

@mm 70-80 hours under Pat for multiple quarters made turnover over 50%. This was during the paycut too. Not that it was better before. Intel is such a cheap company and now they might be hosed. Who knows? Try hiring enough people to get the work done and maybe all your employees wont leave for other companies.

@kf I do 50 regularly before. After cuts, I find I'm now doing 65 hours a week for a few months now. With the work in the office and then doing meetings afterward from home, it really su-ks.

It really su-ked for this other guy on my team, as it caused his family to fall apart. His wife took the kids and is now seeking a divorce. His whole life has been Intel and he works at least 70 hours a week. Email him on a weekend and you'll get a response in an hour. He's working even more now to hide from the fact that his family has fallen apart.

I dont think 60, 70, or 80 is reasonable except for maybe a week or two of crunch time every few months. I also have no sympathy for teams that show up 40-45 hrs and do 20 hrs of work that is half messed up so another team that is next on the ladder gets stuck with extra work bc that seems to be the Intel way

@kc If you haven't seen 80hrs then I need to ask if you are delegating out PPTs?

@OP The LBT shlt pile hasn't hit the fan yet. Just wait until the handouts run dry. GPTW will include regular layoffs and 80 hour work weeks. By then, LBT and his friends would of cashed in their stocks and moved onto something else.

@j8 It is possible that we are already in what is sometimes referred to as a 'crackup bo-m', which is the period of time where people have come to recognize that the government is running the economy hot (purposefully causing inflation), in order to prevent the economy collapsing into a depression.

For a period of time, that results in a race to shed cash, particularly in favor of physical assets, but also stocks, cars, houses, and anything else which can hold up to inflation.

Eventually that effort runs out of cash to spend, and even debt to leverage, then the wheels come off the bus.

This is a real thing, proven over and over again in countries that attempted to fix a debt problem with more debt. Whether it fully describes what is happening now is less certain. I certainly hope not.

In the German post WW1 hyperinflation, people who ran to hard assets often ended up selling them at a steep loss when they needed cash to pay for things like food. The only 'winners' were those who owned businesses that produced good which people could not do without. But then some of those 'winners' got 'shot'.

@hv well past time for everyone to understand what happens in a sovereign debt crises.

Worst case is where there is a bank holiday and most or all savings, retirement funds and so forth are either seized or revalued in a new currency, at a fraction of the old value.

More common is a period of high to hyper inflation, which has the same effect on most asset holdings. But note that debt is not repriced, and that is how many in these extreme situations end up losing their primary asset, which is their house.

The people at the top of the economic pyramid are able to take from everyone else, because they have (physical) assets which produce income.

At this point it doesn't matter where in the G7 the panic starts, because the issues exist in all countries. The US might even see an initial flight to the dollar, which would retest precious metals sharply, before it too joins the party.

Nothing is inevitable but the current sovereign debt growth rate trend is not sustainable either.

As with all insurance, it is better to have it before you need it.

Japan, I'm looking at you.

Right back at ya, U.S..

Seems to me that there is a non-zero risk that LBT continues to do all the right things, but that is overwhelmed by an economic collapse caused by sovereign debt (Japan, I'm looking at you).

Doesn't matter where it starts, because all countries have tried to paper over the insolvent situation caused by the 2008 GFC, and we appear to be reaching some inflection point from all those efforts to inflate away unpayable debt.

See what is happening with rates in Japan and then look at precious metals. Then try to ignore all the nonsensical efforts to explain away why PMs continue to rally. They will eventually retest, yet the message is not going to go away.

Intel could easily find demand cratering as part of a deep global recession or even a depression, and be forced to downsize people and facilities another 50%, leaving the company with half the fabs and about 35k headcount. And that is just as an attempt to remain a going concern.

No fault of LBT but that is a situation he is well suited to manage. The dude knows how to do the right thing.

Software comes and goes.
Hardware stays around until it fails.
Many countries around the globe still running legacy PC ware. Many folks have unpluged off the grid due to data content overload.

@OP this has been the last 5 or 10 years. LBT has only been here for a year homie

Isn't this a description of texas instruments?

@d5 You may not like IBM, but they have continued to exist and have found new markets and technologies to exploit.

But they have not found anything like what they had as the dominant mainframe provider. One could argue that they had to shed all of the pre-existing business structures in order to even survive, because all the people and organization they had were incapable of finding the next shiny object.

That is certainly the case with Intel, where there are countless examples of how those who rose through the ranks in the 1990s and went on to become managers, then fought as hard as possible to enact any of the change needed for the company to produce product relevant to emerging technologies, such as phones, gpu and ai, but there are many more examples.

For example, it probably is not a coincidence that IFS is performing better at the same time that Anne and other entrenched V.P.s were pushed out.

This may well prove to be the extent of what LBT is able to do, and that he is not the guy to find the next huge market, but failing to purge virtually ensures that the company will continue to fail to get anything meaningful done.

LBT has stated that he is willing to stick around for a decade, and clearly he sees this as his legacy, but most CEOs last about 5 years regardless of performance. The day will come when downsizing and efficiency gains have been had, and by then there will be some push to get a product engineer as CEO.

@cw IBM just su-ks. They have been coasting on their former reputation for far too long

@cs Intel has been called IBM 2.0 and that seems like a good comparison.

IBM still makes mainframes, but it doesn't amount to much.

The issue as I understand it, is that producing complex hardware systems requires a large amount of equally-complex systems. A software company can much more easily reorganize to move to new markets or technologies, but for chip design or manufacturing, that is almost an existential crises.

LBT is attempting to make the existing business more efficient, in an effort to make it profitable enough to fund the next node and processor design. The capital cycle broke down with 10nm (some say the use of cobalt was really the issue, not EUV), and it got to the point where it wasn't clear the company could raise enough debt to fund 14A.

This is a case where the future relies on the company getting smaller, and it may not be done with that effort either. IFS still has tens of thousands of people working on older nodes, none of which will ever see external customer demand. IFS will have to be broken up in order for it to ever be an IPO, with the older fabs sold off or held till they run out of roadmap.

So merely reconciling IFS will take total headcount to the 40k to 50k range.

Once LBT has scaled the company assets to what can be profitable, then (as happened with iBM) see if that smaller organization can find the next big growth market. Hint: it will not be in PCs.

@bv People need to get over it and realize that tech companies have an arc, and few of them are able to recapture that arc once the initial success plays out.

This is particularly true for hardware, as software companies can sometimes shift focus and find a new niche.

Best case is that LBT makes Intel a profitable foundry and chip designer, but unless each of those businesses can find a way to outcompete then they will always be struggling to compete.

Attempts to keep the old Intel alive were just wasting time, as the focus on PCs and Servers to the exclusion of everything else stopped being a winning strategy the day after smart phones happened.

Christensen wrote several books about this, a long time ago.

@bw are you even working at Intel? The last semi-major change in the roadmap was done under MJ almost a year ago.
Lipton is doing nothing but hiring his friends and acquiring his own startups.

Total BS. Before LBT we did not have a decent roadmap or products in the pipeline.
Now we are starting to have these.

Intel will never die. It will always exist in some form or another ( like AOL, yahoo and MySpace). But it will be radically different from our heydays in the 90s. Currently, Intel is no longer prestigious to work for and is battling with GF for the bottom feeder spot of the semiconductor industry

I expect worse.

I mean, what are the odds everything and everyhere would collapse all at once? I’m not betting against the house this time.

its funded by the government
that's not sustainable