Thread regarding Intel Corp. layoffs

@jy+1 I suspect that the strategy to break up the company came from Bob Swan, who looked at the situation and (probably correctly) determined that extraction of remaining value was the best strategy.

This fits in with the shift from getting Top 10 school RCGs to offshoring and whatever cost savings the company was trying to achieve with DEI (because that is what DEI is, cost savings). Notice how all this ramped up under BS.

I saw IDM 2.0 as an effort to make the fabs and products relevant enough to extract the most value in an eventual spin off or sale, and now with a VC CEO, just see if the culmination of this 10 year effort comes to fruition. You won't have to wait for long, as he will only be around for a few years in any case.

If along the way the company somehow picks up enough external customers to make IFS viable then it probably gets spun off..sooner, because the company needs it to be cash flow positive in order to get a reasonable value in the spin off.

Likewise if Products can still do something with x86 to take back market share from AMD, then that maybe delays the eventual sale but does not stop it.

If the Board had any intention of the Intel brand persisting then they would start up an ARM division, or at least one based on RISC-V.

Instead we (so far) see AI products with x86 cores, which will never be viable products.

First you try and stop the hemorrhaging...

... going after AI with x86... bah hah ha ha ha ha. You mean Larabee 2.0?

only now it is 15 years later and many competitors are already on second and third generation...

basically, the only play here is to trim the company to bare bones and then generate some positive cash flows and maybe sell it off as an IP company.

forget about leading edge manufacturing.... you see Intel missed the EUV boat and trying to 'catch up' would required 10s of billions Intel doesn't have. This is why Intel has thrown in the towel and is using TSMC 2nm.

Unfortunately, Pat was probably the last shot the company had a any kind of return to glory path. He asked for five years of runway and got 3. Even five wouldn't have been enough. He underestimated how much investment would be required, not to mention completely changing Intel's bloated, stagnant and toxic culture.

People who look at the Board and think they are clueless and have no strategy might consider that there is a strategy and they are executing it right now by bringing on a venture capitalist as CEO.

I'd agree that the Board has done miserably if the strategy was to create a world class product and foundry organization. In fact, it is not clear to me how they could do worse at that strategy than they have done so far.

But if the strategy was to milk x86 for whatever profits remain as the installed base is replaced by ARM, then the grade is still not awesome, but better.

If that strategy includes the gradual breakup of the company, then what is actually happening makes a lot more sense. Not sure the Board is executing that very well either, but at least what they have been doing makes more sense in that context.

Consider all the meetings they have had with potential suitors, which seems to have raised a key sticking point of valuation. So they bring in LBT, who has a long & successful track record of managing companies to extract the maximum value when taken public.

Reducing the product portfolio to the most profitable products could be seen as something to do whether breaking up the company or not, but see how they handle the product groups to be divested. Do they first try to maximize profitability and thus valuation?

Same goes for the fabs. If LBT and the Board start selling the non-EUV fabs in an effort to get IFS to profitability then do they start that process with headcount reductions and other efforts to increase valuation?

The company is never, ever going to publicly state what strategies they are pursuing, and often there are multiple strategic options being considered, so the effort can morph over time even if the same basic strategy is still in play.

Just watch the actions and see if they really are about trying to revive Intel, or merely to reduce cost (often at the expense of longer term growth).

@an+1 I am not in the know on Intel AI architecture, but had read that it was based on x86, like we tried to do with phones.

Intel works with ARM on foundry but products still is where the revenue and profits are made and I had not heard that the company was working with ARM on any product.

If foundry were spun off right now, it would immediately face insolvency.

He very clearly is going after AI.
Foundry is also post-x86 for non Intel/AMD customers.

Try to keep up.

The value/profit migrates to be all in the solution, not the enabling hardware. Nvidia will experience this too if AI solutions can deliver on all the hype. The hardware fades into the background just like electricity- ubiquitous, reliable, cheap. X86 is in well on the way to a point where no one cares about the hardware. Sorry andy.

We’re going to “Delight our customers”.
That’s not a plan, that’s a pipe dream.
Where’s the details. What product? What customers? More archaic X86 junk? Continue kissing Microsoft’s a-s as they themselves go down the drain?
It’s not just me folks, the market watchers are asking the same questions and not getting any answers.

@a4 Technology disruption is speeding up. IBM faced decades of declining revenues with mainframes. x86 started being disrupted in just the past few years and (I think) will mostly be replaced by 2030.

Similar thing happening with RISC-V, which could supplant ARM in a decade. The fabless business model is able to move faster, as they are not tied to any particular technology node. Think about how 10nm held back product groups including Altera.

I've not read that much about the Chinese architecture but it seems to be homegrown (or simply taken from ARM).

They just eliminated semi related tariffs, without saying much about it, and in any case Intel has product from TSMC, Ireland and Israel so tariffs are not really going to be that much of an issue. Even the forthcoming US tariffs can be managed with some roadmap adjustments.

Nice IBM analogy to contextualize how long the death and any possible rebirth could take, OP. They were displaced more quickly than Intel will be, so maybe Intel’s pivot is executed faster if there is FCF, but nonetheless…

…with China’s emergence as an AI heavyweight and burgeoning chip manufacturing ecosystem, isn’t it inevitable that Risk-V becomes the standard x86 used to be? Tariffs may well serve to only push the rest of the world harder in that direction.

The current strategy seems to be to keep scaling the company down to match the declining revenue streams, then eventually break up the company and get what remaining value is still possible.

For the fabs the company has already passed the point of no return, where they no longer make enough money on the latest node, to fund the next node. Thus the push to become a foundry.

If the foundry effort takes more than a few years to ramp up then that will slow development of newer nodes and IFS becomes another lagging node foundry.

While they can still extract the most value from the various business assets, they should sell off as much from both the product and fab side, then work to rebuild from that smaller base. A lot of the rumors over the past 6 months looked like that was what the board was working on, but LBT seems uninterested in that and isn't even going to spin off Intel Capital.

It's like he wants to go Full Pat, but more efficiently.

@a1+1 It is a 40+ year old architecture.

ARM is no spring chicken either, nearing 25 years old at this point.

AMD is affected by this as well. All they have done is take share from Intel. They are also losing to ARM.

There are vast hordes of ARM-based semiconductor companies aiming for all markets previously owned by x86.

This is the normal and natural progression of chip architecture, and computing in general.

Plenty of articles out there addressing this existential crises that Intel faces.

What's wrong with x86? AMD is making tons of money from it.