So, Intel has been having trouble getting their cutting-edge (very small geometry) manufacturing to work. Automotive chips, however, I believe typically do not require the very newest, smallest geometry manufacturing (although they have other peculiarities and demanding requirements).
I was, many years ago, employed as a manufacturing engineer in semiconductor fabs that, once no longer cutting edge enough to do the latest CPU's or memory chips, would transition to doing higher-voltage stuff. It's a reasonable thing to do. It does not necessarily speak well of Intel's current situation, though, with respect to CPU and memory chips, that they consider this a good move. But, given their current situation, it probably is making the best of a bad situation.
Intel is playing a PR angle to win hearts and minds for the homegrown semiconductor push. Even if an automotive IC move to get Congress and the public to appreciate Intel incurs a short term loss, it may be economical in the long term because there's about to be a lot of government money available to the sector.
Also, if they want to get busy with foundry, this is the way to do it. It's not like they're doing HPC processors with all the trailing node fabs.
I know an engineering researcher who uses a shaft position sensor chip that is also widely employed in EVs. They have been out of stock for months. That little chip could have major implications for many industries and communities.
A little of both, I think. They do have lots of fab capacity for older process nodes which are ideal of embedded applications. And they do want to boost their PR image, plus they aren't wrong: the industry is kinda effed right now with TWO fires in Japan (most recently Renesas). It's a golden alignment for Intel, and Gelsinger miiiiight be shrewd enough to score a home run. But Intel stock? Eeehhhh.... not a long term hold, they ain't got a play book after this.
3. Intel does exactly what Gelsinger outlined in his recent presentation (did you even watch it?). They fix their process tech (by moving from Immersion to EUV) and catch up with TSMC, they move to a similar "system-on-a-package" design as AMD and catch up on design, they build their new fabs in Arizona and use those to compete against TSMC in the custom fab business.
I see #1 happening, but I'm not sure how #2 would play out. Hundreds of billions of dollars spent on fabs, with close to 80% of their employees working in fabs 24/7. That would crater several towns in the US (Chandler, Santa Clara, Portland come time mind), and just be throwing away money. One hell of a capital loss! I think there are too many people high up at intel getting stinky rich to throw the company under the buss like that. But then again it might happen, you're not the first to suggest it.
Santa Clara will be just fine without Intel, guaranteed. Regarding #2: that would be the beginning of the end for Intel. Gelsinger is reminding me of bringing in Mayer to fix Yahoo. Intel is done on design. AMD, Nvidia, and Apple are all smoking them and the gap is only widening now. Intel would need a miracle to turn around their terrible inertia. Investing into being the US fab play, their only expertise, advantage, and existing massive facilities, seems like the only reasonable path forward.
What Intel is managing to pull off using outdated manufacturing tech is pretty impressive. The low-end and mid-end parts are excellent and well priced. They do not have a problem in the design department. They are behind on manufacturing and they missed the boat on chiplets, but this is not fatal - yet. Also consider that Intel manufacturing capacity is enourmous, and given the current IC shortage, they can probably sell anything to OEMs. If AMD could source more wafers, the situation might be different, but they can't.
No, Intel's cores are still core-for-core beating AMDs as far as I'm aware, likewise for the new server ARM chips (Apple is not hugely relevant, their market share is price capped). That's design.
The actual chips are slower because they don't have nearly as many cores, so for workloads that can be highly parallelized they're behind. But that's process.
Intel won't do option #2 as a full-on strategy, for the reasons you mentioned and because it ruins their unique value proposition for government subsidy.
But they do need a little bit of option #2, if only for market share defense against competitors. TSMC obviously prioritizes long-term partnership, but in today's demand environment, every wafer that Intel buys is a wafer that AMD (or Nvidia) cannot.
Also: if China marches into Taiwan, TSMC is off the map and the world is fuckered. AliBaba has PinTouge fabs which are ramping like mad. Which means China could shut down TSMC and come out on top.
I think the allies would be immobilized with fear? The same way Russia annexed Crimea and nothing happened except stern finger wagging from allies. Little Donnie Dipshit tried to push China around and they laughed in his face. I'm pretty sure that emboldened them.
And then we'll get a decade-long global chip shortage, instead of a year-long one.
It's a perfect example of cutting one's nose to spite one's face. Also, Taiwan will end up a large, long-term loser of that, as well.
China's ambitions on Taiwan have nearly zero to do with TSMC's presence there. (And everything to do with the past 80 years of history - more specifically, its desire to 'conclude' the civil war. If Taiwan's didn't have a chip industry, the PRC would still have the same goals.)
Intel is more of a Beaverton thing than Portland directly, not saying it wouldn’t have an impact but a lot of the semiconductor and hardware stuff isn’t in Portland proper but to the south or east towns.
Relying on government contracts doesn't sound like the behaviour of a growth company. Government processor technical requirements aren't likely to align with commercial requirements. And low risk government cheques tend to push out any higher risk commercial innovation.
This is kind of ironic, because the only reason the semiconductor industry exists as it does today is because massive amounts of defense contracts in the early days of semiconductor manufacturing. The US's massive defense spending sometimes functions in a more productive way than one would guess.
I'd be hard pressed to come with an argument that there's any other reason that today's software world is in the SF Bay Area. Government contracts attracted initial silicon startups, noncompetes ensured entrepreneurship, VC developed around the talent, eventually software became bigger than the hardware as the hardware was commoditized. Amazon and Microsoft were successful in the Seattle area, but otherwise the concentration of talent in the SF Bay is hard to beat
> I know an engineering researcher who uses a shaft position sensor chip that is also widely employed in EVs. They have been out of stock for months. That little chip could have major implications for many industries and communities.
> "For want of a nail..."
I remember reading an article about how production of Apple Macintosh desktop computers in Texas stopped for the want of a specific kind of screw. If I remember correctly, in China they would have been able to resume work within hours in the worst case.
I have no industry knowledge so no idea of this is true though.
The story says they were delivering partial shipments of the tens-of-thousands of screws in their personal vehicles. And also, that they couldn't make as many screws as Apple wanted.
Tim Cook's Apple is a logistics powerhouse. Surely they have full control over their entire supply chain. Every detail planned long ahead of time.
Which screw part was it? Quick scan of all the popular reports doesn't identify the specific screw.
Why not change the design to use a more readily available screw?
Why not make a one time order of a box of screws from China?
Apple regularly provides the capital so their suppliers can ramp up. How much would have cost for that tiny Austin screwer suppler to double production? Probably less than the loose change found in Cook's office couch.
In conclusion, I don't buy this excuse. I dimly recall another report about the struggles the Austin plant had producing the Mac Pros. Bad fit and finish. Long turn arounds because there's no surrounding ecosystem of skills, suppliers, deep experience. Etc. Nothing that Apple couldn't have fixed; they just didn't want to.
> The story says they were delivering partial shipments of the tens-of-thousands of screws in their personal vehicles.
Sounds about right. When my brother was green in his automotive supply logistics career, there were a couple of times he got thrown on an airplane with a carry-on of parts...
Former automotive R&D guy here. It was quite some time ago but my colleagues in the chip department (we were all new grads at the time) were telling me that they were designing chips with triple redundancy. "Hood Space" is a fierce competition among vendors to get into car models 5 years in the future, but miniaturization needs are nowhere near that of the consumer electronic space (this was shocking to me, having been raised in SV in a family working in the PC industry!)
Fast forward some years later and I was working at a motion sensor company for consumer electronics. Our node sizes were like 40-50nm and many generations behind cutting edge ICs. Lower margins but meaningful volume. Our fab was naturally, you guessed it, TSMC.
Intel made military versions of their semiconductors for three decades (inclluding the 386). Rad hardening anyone? (In fact, alpha strikes are part of their low-voltage memory QR statistics). Military is far more robust than automotive. There is probably still enough tribal knowledge there to call back on. Maybe. They might have all retired or died.
Automotive is actually quite reliable and military spec parts are often automotive rated parts that have additional testing and/or slightly different packaging.
The military has been using automotive grade parts to reduce costs where possible.
My 1989 Honda has an Intel chip that powers the ECU. They have been in millions of cars, so I would say they probably have some knowledge buried somewhere in the company.
That wasn't really my point. The point was that they probably do understand the conditions under which automotive and other more rugged applications work.
The suppliers didn't mothball the facilities (which are not at all antiquated, and are massively in use for other things), they just sold that capacity to less capricious customers.
That’s one thing I noticed in aerospace. The executives would far sooner run out of parts and have very expensive delays in order to hit turnover targets than to have a 2 month buffer to handle demand surges or scheduling variability. Then they’d leave for similar roles at bigger companies.
That's a plague amongst modern management and corporate operations, you return amazing numbers by cutting all your inventory and production slack and it works fantastically, until a slight hiccup occurs and it fucks your production for years to come. But that is the next guy's problem, not yours.
Efficiency and Robustness are very often a tradeoff, the more efficient you are, the more prone your entire operation is to minor disruptions.
Something akin to overfitting in machine learning.
Also something to consider is what happens when the entire economy is forced in that direction, where you either cut everything to the bone for the sake of efficiency, or go out of business due to competition.
Coming from a Supply Chain function in aerospace, I have to agree and disagree. 2 months of stock are somewhere around a turn rate from 4-6. A region some aerospace companies can only dream of.
The problems are, that they stock to much of some parts and not enough from others. That problems gets worse when programs reach end of life, obsolescence is a severe problem then.
Most of the demand fluctuations in aerospace, less so for spares, is home made. Delivery lead times and production lead times are so long, that done right, fluctuations are mainly a problem for long lead time items. And that is manageable.
I meant 2 months more as a floor across a majority of items(and it’s been a long time since then so there’s a certain amount of rounding). Production wanted to eliminate shortages whereas executives and accountants wanted to optimize turn rates while claiming to care about shortages.
Overall, each of the projects had around 2000 unique parts (at least for what this particular plant was making). Occasionally, newer contracts would get a much higher prioritization and could grab parts (and employees) from older projects. Another scenario that would lead to extra demand was having test failures on a project that was nearing design freeze.
I ended up changing industries to financial services, but will always have a deep respect and appreciation for what went into those projects.
The funny thing is, that aiming for inventory levels, or certain levels across the board, can increase the likelihood of shortages. Higher stock means larger production lots and longer lead times. If for some reason your planned production / procurement doesn't match demand, almost a certainty with large production runs, one part cart run out of stock. And the large production runs make replenishment of this part difficult.
It was a very fun game that required knowing the capacity of each supplier and their suppliers as well. The sales orders had to get matched up with airplanes and sometimes the planes would have shortages that would then instantly changes years' worth of scheduling.
Overall I felt like there were a number of good strategies but that sometimes the strategizing interfered with the execution. Peoples tenure and the projects they went through often influenced their notion of ideal. By the time I started getting comfortable understanding these things, it was time to get a new job.
> The problems are, that they stock to much of some parts and not enough from others.
Is there a reason for that? I would imagine they'd have actuarials telling them exactly how much of each thing they need to produce a thing, as well as failure rates.
Inventory management is hard, and one of the main tasks of Supply Chain Management. In the end, I have yet to see a formula, algorithm or model that calculates stock levels that isn't over shooting at a factor of 2, either way.
In the end, it is the tram and person responsible for inventory planning and placing production / purchase orders that set, directly and indirectly, inventory levels. In some cases 2 months maybe just right. In other cases it maybe 1 month to much, in again other cases not close to enough. And that can change over time.
As a rule of thumb, you don't want inventory. It makes an operation inflexible and fat. You need it so. Figuring that out is the task planners and supply chain managers. Some orgs are better at that then others.
> The executives would far sooner run out of parts and have very expensive delays in order to hit turnover targets than to have a 2 month buffer to handle demand surges or scheduling variability.
That sounds like a contractor milking a cost-plus contract.
Can you explain? This was a cost center for a large conglomerate with a number of multi-year contracts but I haven’t heard of cost-plus contracts only cost-plus pricing.
This isn't surprising; a lot of nifty features got axed after 350nm, like having two full-fledged polysilicon layers (a few subsequent processes technically have two poly layers but one of them is totally crippled and can only be used for flash cells).
It should also be mentioned that worldwide suppliers 1 and 3 had a big loss from power outages in Texas in February, and then supplier 2 had a fab burn down. But, if they hadn't canceled all their orders, it wouldn't be as bad a situation as it is.
They "need" chips made on a 28 year old process? I'd really want a source for this. Even if it were true, there are still fabs that can make .35um process chips.
A source that modern cars can't be built without .35um chips. I didn't say those old fabs aren't still pumpingout chips, in fact I pointed out THEY ARE still pumping out chips, despite the parent saying they had all been shuttered. I doubt that modern cars can't be built without old process chips, but would like a source rather than simply saying parent is wrong.
I don't think its so much that the cars must be built with old chips, its that the designs are built, software written, tested, and safety certified around the specific chips they have.
Whos to say the full process to swap out a handful of chips within the car and getting any required tests and certifications done wouldn't take as long or longer than waiting for the next production run of the spec'd chips?
Automotive ECUs solve the humidity problem by putting the boards in a pot of epoxy (talk about overkill!), and as for reliability, all my ancient computers still work just fine, the only things that ever die seems to be the capacitors or leaky CMOS batteries, i'd be happy to buy a car with an intel xeon (ECC PLEASE!) as the ECU.
It goes consumer grade, automotive, military, and then you have levels above that meant for things like space and down-hole oil drilling. Automotive is certainly a step up above consumer grade but it's not like Intel is throwing an i7 into a car. They are going to just offer fab capacity to anyone that can build on the various technologies that can be built at Intel's fabs.
This is not really true. Firstly, the volume for automotive is much higher. 2nd the cost structure is entirely different and a business set up for high cost low volume military parts may not be competitive in automotive with low cost.
The problem we have ("we" meaning the US and Europe) is that we have allowed a massive portion of the semiconductor mechanism to leave our shores. In a world where electronics are found in just about everything, this is a pretty bad situation to be in.
We are in the process of developing a commercial product that will require manufacturing at a rate of 10K to 20K units per month. When we started this work, semiconductor availability wasn't a significant concern. At the start of this year we started to receive quotes with lead times in the order of 52 weeks. Yes, a whole year. Some of the chips we designed into this product became unobtainium.
Well. Not quite. We discovered the supply is plentiful in China. And, of course, pricing is insane. A device that was $0.70 is now over three dollars in China. And, again, of course, the only way you can buy it is if you have your boards manufactured by the supplier. In our case this would mean a contract for 10K to 20K units per month having to leave the prospects of US-based manufacturing --which is already a difficult proposition under normal circumstances.
Never mind roads and bridges. We don't need to touch any of that. We need to dump that money into rebuilding industries and reducing their costs of operation to the bone.
Let me put it this way. Everyone can understand that something like a basic Arduino is a very simple product. In electronics terms, on par with making cloth masks. Well, if you had to manufacture a simple Arduino in the US or Europe today, it would be impossible. Much as is the case for masks, the raw components needed to make such a product are not made in the US and Europe. You might be able to have the raw PCB's made. I would not be surprised if the raw materials for that process were not made in the US and Europe as well (I didn't look into it, so I can't make that assertion). Even if you could make one, the end-user cost would likely be over a hundred dollars per unit (if the components were made in the US and Europe).
That's were we are today. And this isn't going to get any better by fixing roads and bridges.
We need to focus on what is truly important. We needed to do this ten or twenty years ago.
This effort by Intel might not be all it is reported to be. I just hope it is an indication that we are starting to understand what we are standing on...and it isn't solid ground.
>Well, if you had to manufacture a simple Arduino in the US or Europe today, it would be impossible.
I think you have no idea what you're talking about. In Europe at least, there are plenty of fabs that make microcontrollers like the Arduino. And the original Arduino boards (w)are made in Italy which last I checked is still in Europe.
>Much as is the case for masks, the raw components needed to make such a product are not made in the US and Europe.
In Europe we have also plenty of factories making FFP2 masks (my favorite ones I can buy in Austria ATM come from a brand made in the Czech Republic).
I am using an Arduino as a simple example. Anyone can look-up the components used to make one, go through the exercise of sourcing them and gain an understanding of supply chain realities in this way.
Generally speaking, products with greater complexity illustrate this problem far better. The problem is it would be impossible for the a reader on HN to dig into this reality due to not having access to the bill of materials, etc.
I have never said I am pushing for a 100% localized supply chain. That would be preposterous. Silly. However, the reality we navigate today isn't good at all. Last year showed the world what can happen.
China is nearly at a 100% single-source position. This varies from industry to industry. And, of course, they are not saying "we have enough, let's stop here", they are laser-focused on bringing in as much business as possible and will absorb as much of the supply chain as possible.
What they have done is admirable and nothing less than remarkable. I don't fault or hate them for it. They work hard and deliver results. They deserve to be where they are.
I think you need to read what I wrote more carefully. I try to be precise with my language.
Simple exercise: The bill of materials for Arduino boards is publicly available. Pick a board. Now go source every single component on that board.
Create two spreadsheets. The first would have you source what you can from China. The second would source from any EU country and the US if you'd like and exclude any Chinese made component from the list.
My prediction: You can make 100% of an Arduino in China using Chinese components. You cannot make an Arduino in Europe or the US without Chinese components.
Let's add another layer to this.
Let's say you create a third spreadsheet where you source as many components (and services) as possible from the US and Europe and whatever you can't you get from China.
Now calculate the cost for each case: China only. US/EU only. US/EU + necessary Chinese components and services.
Prediction: The US/EU cost --if it is even possible to do it-- will easily double or triple the cost of that product. The US/EU + China cost won't be competitive at all because the vast majority of the items will have to come from China and you will incur additional costs for producing in the US/EU rather than just facing reality and having the product made entirely in China.
Please note that I am using an Arduino as a super-simple example for the sake of an illustration. It would be wrong to engage in dissecting this simple illustration tool in an attempt to invalidate my claim. This claim comes from decades in manufacturing, where I have faced this question of where I can buy components, assemblies and services. Twenty or thirty years ago sourcing from the US or Europe wasn't horribly difficult. Today, it is frustrating to see just how difficult this is. The problem is real.
Nobody is suggesting 100% repatriation of the supply chain. That is impossible. There is a number between 0% and 100% that would do both the US and Europe much good. I don't know what that number is.
Once you start looking at more "real world" products, the picture gets dark very quickly. Last year we designed a robotic system. Virtually every component that went into making this robot came from China. I think I can say that the aluminum, sheet metal and bearings did not. While I did not conduct a component-by-component survey, I think I can easily say that 95% of the electronic components, connectors, wires, cameras, displays, sensors, pneumatic valves, motors and even the wheels came from China. In other words, if you had to make this robot without China all you'd end-up with is an empty metal shell. That should make everyone take pause.
I should add that the CNC machined parts in this robot were US-made because we happen to have our own CNC shop. If we did not, frankly, I probably would have sent them to China for fabrication. The math is simple, if I have parts made outside our shop, the cost, when compared to China, is between 2x and 5x (if not more). It also takes weeks to get parts...unless you pay an insane amount for them. I can get beautifully finished CNC parts from china in three days or so. This means that, in the time and for the cost of making these parts outside our shop I can run two to five design iterations by using CNC parts made in China.
This is just one layer of this reality. There are many more.
Yes we need parts from China, but those parts are cheaper than what we could possibly manufacture ourselves. We don't have to do the dirty work ourselves. We have Chinese henchmen for that.
The answer isn't getting rid of China, the answer is to create a competitor so that China cannot screw you over. Instead of letting China become a middle man for goods produced in Africa just go to Africa directly.
The obvious problem with your suggestion is that the Fed has driven interest rates to an all time low in response to low inflation. The corporate savings rate has risen at the expense of the household savings rate (from 2000 to 2019). Cities give businesses massive tax credits which are free money for large corporations.
There is not much you can do to help private corporations at this point, you've already given them all the support they could possibly get. If nobody bites, that's on them.
Meanwhile low skill workers barely get any support. An infrastructure bill gives them work and keeps the towns and cities from falling apart.
> It does not necessarily speak well of Intel's current situation, though, with respect to CPU and memory chips, that they consider this a good move.
They also announced [1] that they were building two new fabs in Arizona a couple weeks ago. There may just be growing demand for shortened supply chain in the semiconductor space (recent trade/tariff wars, chip shortages from offshore fabs, various national security implications)
May be it is from Pat Gelsinger, so I am uncharacteristically optimistic about it.
1. Intel needs to clear Fab Capacity if they were to move to higher node. This is always a problem in the Fab industry. Normally Intel just scale whatever product line up they have that fits.
2. Car will be the next SemiConductor Battle Ground. It will just be a large computer, lots of sensors with battery moving around. Intel already has MobileEye, they might as well partner with these largest Car manufacture on Chip design for future growth. This is the same play with 5G although Intel seriously messed it up.
3. It also make political wins and help with their change in direction of Custom Foundry or now called Intel Foundry Services.
For me this is a brilliant move. Assuming they execute it perfectly. Some short term pain and lots of long term gain. Which is what I like. A vision and strategy how they are going to win. Something that was lacking with the previous Intel.
2nd hand cars have become 20% more expensive here in Germany this year (anecdotal based on just buying a used car). This is a good move because Intel are being agile and focused on solving a real problem. This speaks well for how they will respond more generally. They know it isn't below them.
Used cars are expensive in the US right now too. We had a car that wasn't being used very often so my wife suggested we look into selling it. Went to the website of one of those places that gives you an offer online and the offer seemed to good to be true. Took it in to them and walked out with a check for the full amount.
I should have mentioned that I haven't worked in the semiconductor industry for over a decade, so perhaps something has changed with regard to automotive chips, but that was my understanding at the time I left.
Does this mean they are going to onshore their fabrication plants based on your experience? It seems like CEOs promise that but still go ahead with building plants in countries with cheap labor
Dollar for dollar, fab is not as labor intensive as many other forms of manufacturing. Even if it were, the occasional loss of product due to infrastructure problems in underdeveloped areas would offset labor cost. It makes sense to locate in one area where you can count on reliable infrastructure and negotiate good rates due to your massive scale.
Fabs use a lot of water and electricity. Samsung announced that it was considering a new investment in Austin, then the Texas storms hit. A few days later, Samsung announced that it was considering a new investment in Austin or somewhere else.
Intel already operates several fabs in the US and other first world countries so I don't know what onshore would mean in this context, but Gelsinger has made it pretty clear that he believes our best bet is to make chips at American fabs run by American companies. So I guess that is a yes.
My understanding is that fab equipments are so expensive that cheap labor doesn't matter. Note that most of Samsung's fab capacity is in South Korea and it has no plan whatsoever to offshore that. Ditto for TSMC.
The auto industry is also moving towards smaller geometry parts. Not least of all is the sensors, self-driving, telematics, radios and such. There are issues in terms of environmental conditions, aging and such, but it is happening.
Conversely, a lot of the trouble with 10nm and smaller manufacturing is that they shrank the transistors but didn't shrink the dies -- or rather, the ones that did succeed didn't "make a giant 5nm CPU" but they decided to make chiplets instead.
If you really could make the monolithic 5nm part it would crush the chiplets in terms of economics since advanced packaging is more like circuit board assembly than lithography. Maybe they can do it now with new pellicles, but today small geometry parts go good with small dies.
So they are going to become a contract manufacturer of +300 nm chips that are sold a few dollars a piece? How is that going be a good business for them?
Actually, modern vehicle manufacturing is mostly bottle-necked on software and much of the added value comes via software powered by hardware accelerated machine learning. So performance matters, a lot.
Legacy car manufacturers are basically playing catch up with the likes of Tesla (doing their own chips) or Waymo (nvidia, I believe) to fix their supply chain to not have dozens of poorly integrated black boxes so they can actually update them in a sane way. E.g. VW has been struggling in the last year to get that working with the ID3. They are working with Infineon on chips for this apparently. Other manufacturers are facing similar challenges and are getting there with various levels of success. E.g. if you want to update your Kia EV, you need to go to the dealer.
So, the market opportunity for Intel is making performant SOC aimed at these manufacturers that can keep up with the market leaders and can be used while they figure out to get from level 2/3 autonomy to level 5.
There probably is a market for dumb EVs as well without much intelligence but that also implies low margins. Anything ICE is basically what it is at this point. R&D is basically limited to milking those legacy product lines until they are eventually shut down. So that's not a good market for Intel either.
There are plenty of low margin/low performance manufacturers where Intel stands no chance of ramping up to volumes of sales that would compensate for the low margins. So, high end EV manufacturers with some ambitions on the autonomous driving front is the market for this. Anything else does not make sense for Intel.
The only question is if they keep on insisting on x86. IMHO if they do, they are going to fail, again. Like they failed in the mobile market. The right moment to start targeting this market was 10 to 5 years ago. They are already late.
> Actually, modern vehicle manufacturing is mostly bottle-necked on software and much of the added value comes via software powered by hardware accelerated machine learning.
Really? My major concern with any car I have used ever has never been software.
Why this obsession with dropping x86? Do we have any evidence that arm offers better performance & thermals at the same processing node? Only one arm chip today really competes with x86 and it is in 5nm node whereas amd is at 7 and intel at 10
If the reporting I've read is accurrate, the x86 ISA is a limitation on decoder width. Intel and AMD's attempts to go above 4 parallel decoders have failed. Apple is shipping 8 way today.
I'm excited by the possibility of Intel's recovery from it's long, slow, near death experience.
That being said this is a classic "grab headlines while one may, for by the time the deadline rolls around everyone will have forgotten and the goalposts will have moved"
Intel hasn't seriously been in the low margin embedded chip business in decades (margin starts terrible and goes down from there as product matures and you have to guarantee supply for a long time).
> I'm excited by the possibility of Intel's recovery from it's long, slow, near death experience.
Intel made 24 billion dollars last year on 78 billion dollars of revenue. It's not exactly near death. 1996 Apple was near death. Intel is having a mid-life crisis at best.
Intel is circling the drain; their revenue masks a deep illness, like a healthy looking person who drops dead of a heart attack at a party. I do think there's a chance Gelsinger can convince the company to turn around. They do have a lot to work with, despite having squandered many many opportunities.
Why do I say sickness?
- Most of their revenue comes from a single product line; every BU reported a revenue decline last year except mobileeye (small) and CCG.
- Their parts are not broadly competitive on performance/W nor raw performance except in diminishing subsectors.
- They have no presence in the largest growing sector: mobile.
- Oh, that "eye-popping" $20B investment in fab over the next three years? TSMC plans to invest $100B in the same period!
Now the Intel of old could probably have pulled out of these problems, but let's look how they got here:
- They have historically been a fab powerhouse, with process years ahead of the competition. But they have repeatedly missed their own milestones for smaller node size and are now (relatively behind or even far behind). They've had to throw in the towel repeatedly over the past few years in this area.
- They've spent time fiddling at the edges (e.g. depth cameras) pouring money into new businesses and then dropping them. Not a bad idea when you need growth and should diversify your revenue stream (look at my first point above) but terrible if you have a 100% whiff rate.
- Of those whiffs above they have had some bad ones, like radio chipsets, when they earlier had said they were counting on them.
- Their architecture appears to be inappropriate for mobile/low power. This is a self-own. They not only had for its time the fastest ARM product line (StrongARM, from the DEC acquisition) but threw it away because they were focused on their high-margin quasi-monopoly x86 line.
- Their partners (Microsoft, Dell, etc) are enthusiastically exploring ARM and Intel at the moment has no counter.
- Their "only the paranoid survive" culture is gone; business decision making has been slow and lazy for more than a decade.
- They are heavily dependent on their partners. If there is a phase change in the market (MS finally ships a decent ARM Windows, Dell produces a decent ARM laptop that runs it), well, bye bye a big chunk of CCG revenue. They could save some share by slashing price, but it's still terrible.
Intel has ~23 billion in cash reserves [1]. MSFT in the 2000s (when lots of people were proclaiming their death) had cash reserves of ~40 billion [2]. Microsoft came back to compete with Apple as the most valuable company. Apple was far closer to death & managed to come back. AMD was routinely having problems competing & managed to stay in it enough to come back as the x86 leader.
Does Intel have a problem? Yes. They know it too. I think you're overlooking how long a runway $20 billion buys you though to correct things & try different strategies. It's also ignoring the huge push within the US government to subsidize silicon manufacturing in the US for political & security reasons, of which Intel will be a huge beneficiary.
I fully expect in 15 years Intel will still be a very valuable independent company with a market cap larger than today.
I agree that they will probably turn it around, but their annual operating expenses are about $20 billion. $23 billion in reserves is not much runway with that burn rate if sales continue to drop. They've got a tough task ahead to get back on a substantial growth curve.
Q42020 wasnt great, but for the year only two of their segments were down in revenue, the IOT group and the PSG group (looks like FPGA type stuff). Those were also two of the three smallest groups.
I dont think Intel is necessarily going to have an easy next few years, but they are still a massive company who is growing every year.
$23B is nothing to sneer at but they’re going to put $20B into fabs (while TSMC puts in $100B). Their revenues are also significant but again,mits essentially all from CCS, a declining sector under attack. I hope they make it and they do have resources to put to work, but the odds are against them.
Your rose coloured glasses come from survivorship bias. Apple was a magical story, true. AMD made it but is a tiddler by comparison. Based on history, they’re going to need abnormally good luck.
Well I have — haven't owned INTC for a long time and don’t own much Intel hardware now either.
More to the point: I would like Intel to succeed but they face long odds. Looking at localized data like top line revenue ignores secular shifts that have been moving against them, and to which they have so far been demonstrably unable to respond.
Looking at just the top line is like deciding how your journey is doing based on your current speed. It’s an input but tells you almost nothing on its own.
The problem is fabs need massive scale. If Intel loses the scale it won’t have the ability to invest at a good cost base in new generations and risks falling behind.
Profits today, decline tomorrow. Blackberry revenues grew for several years after the iPhone, but they were doomed.
This is Intel’s challenge. Present profits are misleading. The CEO recognizes it and they have a good shot of turning things around though.
You can't exactly compare a capital intensive manufacturing company to a smartphone company. The capital assets involved in what Intel does are so substantial that it would take time to unseat them in the best of circumstances, let alone right now when even semiconductor equipment companies are complaining that they can't get the chips they need for their machinery.
Looks more lackluster than gruesome to me. But I think they‘re going to have to slash their margins to keep revenue from falling off a cliff when data center ARM chips become competitive.
Qualified dividends are taxed at the same rate as capital gains in the US. There are benefits to the tax deferring nature of stock buyback induced capital gains, but there are also benefits to being taxed each year along the way via dividends (such as the risk that capital gains tax will go up in the future).
Many companies both pay dividends and do stock buybacks, Intel among them.
Also, think of pension funds, insurance companies and the like - they are huge investors, often pay no tax on dividends, and like the (usual) reliability of dividends so they can pay out cash as needed.
This isn't just a headline grabbing move. Even ignoring the obvious geopolitics, this is still beneficial for all parties. Intel, likely, has more idle capacity than TSMC and/or has enough leverage on its own demand (its own chips) to make room if necessary. It's possibly the only player out there that can deliver a 6-9 month turnaround time for the auto industry's needs.
On Intel's side, they desperately need to prove that they can have an amicable relationship with a customer if they have any hope of making their IDM 2.0 model work. This will help them build out the relationships they need, assuming they don't screw it up.
Speaking as an EE in industry. Most of us won't go near Intel with a 10 foot pole. They have shit on hardware designers in the past and they continue to shit on them now. They literally pump and dump products like Google without a care in the world of sudden discontinuation.
> Intel hasn't seriously been in the low margin embedded chip business in decades...
I don't see this as them getting into low margin chips. This is them selling manufacturing capacity to someone who wants what in ordinary times might be low margin chips. And some of them might not actually be all that low margin; I assume modern cars have one or two computers that are more like smart phones than Arduinos.
Have you ever worked in the embedded space? The technical work is often fun while the business side is miserable.
I worked with Toyota when they were literally trying to shave a ¥100 from the engine control unit of a new vehicle. A new design! Once they entered production they were going to shave the cost even more on the backs of their suppliers.
There's a reason why Intel got out of this business. Ever wonder why AMD can use x86? They got that license back when nobody would design in your part unless there was a second supplier of the identical part. So they got a license so that Intel could sell parts. Intel abandoned that world without a backwards glance.
> "literally trying to shave a ¥100 from the engine control unit of a new vehicle. A new design! Once they entered production they were going to shave the cost even more on the backs of their suppliers."
Nothing like the possibilities of massive economies of scale. There's a reason Toyotas are such good values.
Toyotas are not "good value" because they're cheap -- just look at the prices for new Toyota Tacomas! They're a good value because of the exceptional engineering, and they sell at a premium because of it.
People need to stop drinking this stupid "scale is all that matters" kool-aid.
Try talking to an American automotive supplier some time... it's generally a lousy business to be in. Fortunately for Intel, it's likely to only represent a tiny sliver of their business and the American autos are pretty desperate right now having emptied a few rounds into their own feet.
This is a pretty good strategy to flush out what's slowing down the company. In theory these automakers are willing to pay a premium for what is ultimately a commodity chip this year. Intel will find out quickly who and what is holding them back from delivery.
Why would you expect a stock bump? Aren't they likely to risk loosing a lot of money by shifting their production? I would expect them to be able to make money in long term by doing that shift though.
Chip shortages have significantly impacted automakers' ability to meet new car demands recently. Lots of chatter about the problem in the stock market community
Reading between the lines, it sounds like they are supplying chips domestically to remove a dependence on a foreign, unpredictable supply chain, and are able to use fabs that are losing relevance for server chips in a way that doesn't matter to the car manufacturers.
Sounds like a win-win, but I'm guessing the next thing we will hear is a pitch for federal subsidy for this under a national security banner.
Intel has a number of advanced foundries around the world, and they're jockeying for business as their cash cow sees a bit of threat. Every wafer-for-hire foundry is running at >100% utilization so it's basically printing money at this point, especially if you have a slightly older foundries that aren't up to par for creating the cutting edge of chip, but they're perfectly adequate for making most automotive electronics (e.g. 28nm).
Hilariously one of the backlogs I know of are PMICs from TI. TI produces most of these ICs domestically already, it's just car manufacturers fucked everything with their incompetence at supply chain forecasting.
tl;dr version: there's nothing unpredictable about the supply chain if you don't cancel your orders.
That's the narrative (re: dependence on foreign chips), but it's not what actually happened. Last year the auto manufacturers anticipated a slowdown in demand and cut back on inventory orders. This made sense at the time (to reduce orders) given the uncertainty but it sounds like they pretty much cancelled them. They likely figured that their suppliers would be happy for the business when they returned.[1] The semi companies just put other customers in line ahead of them and now the autos are screwed since they are facing incredibly long lead times for chips and don't have the inventory to bridge the gap to make the number of vehicles they need.
This benefits Intel because the line of customers looking for 14nm chips at the prices Intel probably wants to charge likely isn't very long. However, they've found a perfect (i.e. desperate) customer in the autos. So it's actually a win-win for the time being.
[1] This actually works if you're a supplier exclusively to one company/industry. It doesn't work so well if you have other options.
> there's nothing unpredictable about the supply chain if you don't cancel your orders
Unless there's a fire at an AKM plant. Or a fire at a Renesas plant. Or a drought in Taiwan. Or blackouts in Texas.
When you're running at low utilization, lead times are shorter and the market is more forgiving of order alterations and incorrect predictions of demand. But that's not the case right now, and there have been several exogenous setbacks for the sector.
Fair points re: disruptions... but you will have those issues anywhere in factories run by any company. I was responding to the implication that there's anything inherently unpredictable in the chip companies being foreign. My point was that the autos are uniquely screwed vs. many other customers of the chip companies due to their own decisions and actions.
Regarding utilization rates, that's probably where most of my snarkiness was coming from: the autos knew demand was high before they cancelled their orders and they chose to do so anyways. I'm sure they had every right to do what they did (contractual language allowing for cancellations etc), but when you step out of line for whatever reason it should come as no surprise that when you decide that you want to be in line after all that you're going to now be at the back of it. This has nothing to do with an unpredictable supply chain and everything to do with an unpredictable customer who didn't plan properly. Yet the story gets played up as the failure of a brittle supply chain.
Might as well unfortunately, if they aren’t going to cut all the regulations that drive up the cost of employment and manufacturing. At this point it feels like another hit of economic heroin is the only thing staving off fatal withdrawals.
Who knows, they've been trying to get into the fab business since I left there about 10 years ago. This opportunity could be what finally kickstarts that idea into reality.
I went from bearish to bullish on INTC when they hired a product guy instead of a bean counting guy. 5 years from now we’re going to look back on Intel as an incredible opportunity.
Swan wasn't the problem, as I understand it. Krzanich was an atrocious leader, and Swan's job was basically to put out the dumpster fire that Krzanich left behind after he was forced out.
Probably way off-topic but I hope this doesn't imply that cars are going the way of Smart TV's where they have some annoying and underpowered tech in them to force an early obsolescence on a machine that is otherwise fine and could last decades.
9 months from inception to first silicon is close to the speed of light, development and manufacturing-wise. I wish them good luck, as this is impacting several industries downstream.
Correct me if I'm wrong but I believe the article is saying that outside companies will come in to use their existing designs on Intel equipment; Intel won't be designing new chips themselves.
A fairly large amount of work is required to re-map the design onto Intel standard cells, which are not compatible with others. This means entire backend needs to be re-done. It's very significant amount of work.
That, and 3-4 months for manufacturing and test between tapeout and power-on. Automotive silicon has different test requirements than your average laptop widget.
Why would they port them to use new standard cells? Why wouldn't they just use the existing physical layout artwork to make new masks (i.e. GDSII files)? Assuming a closely compatible process. Maybe that's the catch? Intel's existing processes aren't close to anything anyone else has? Not that I think 6-9 months is reasonable.
If it’s just standard cells, then it could go quick. Change technology library and synthesize. But if there’s process-specific IP (analog serdes, non-standard cells, etc), then that takes work. I presume most automobile chips are not leading node high-speed switches.
Philips (NL) is going to have a spectacular financial year outcome, I believe they make a lot of fab line equipment. And anyone else in the space. Europe used to make the things, moved to making the things which make things.
If Philips would have held on to all the successful companies they spun off, they would now be worth 5 times as much. They were also one of the largest shareholders of TSMC when they started.
Yes, that is the typical timeline for getting silicon into cars from my experience. They make announcements like this to tell engineers, "hey we are interested in this area, please check out our dev kits." Most likely in the ADAS area is what they are targeting to compete with nvidia and others.
Intel I'm assuming did a brainstorm relatively recently and wrote down on a white board "what should we be focusing on".. and they probably wrote down:
-cloud server infrastructure
-something to compete with the Apple M series processors
-high margin businesses ( cars / self-driving and military / large super computer installs )
So basically my understanding is that they use the lead customer in each product segment they care about to help them define the cutting edge for that space. So they probably will use Microsoft/Azure for cloud customer leadership, some competitor of Tesla like VW or Mercedes for ADAS stuff, and military they probably are already doing fine there. Especially with the new Arizona fabs.
It doesn't sound like they're designing a new line of silicon, but rather offering up pure fab to someone like Infineon for Aurix or Renesas for R-Car or whatever their stuff is called lately.
Whether or not that's plausible or a marketing play, I'm not sure (since nobody outside of Intel really knows the details about Intel's process constraints), but it doesn't sound like they are targeting an area of competition where they would be introducing new silicon and expecting a whole iteration lifecycle. The intent seems to be drop-in replacements.
This is an interesting move - because it seems exceedingly unlikely that they'll be able to extract the same margin out of automative customers that they get with data centre chips. Which means that management in Intel is starting to think about pursuing new markets despite sacrificing gross margin - bad move financially short term for them, but could be very promising long term.
Isn't that technically what the "Eco" button in some cars does. The turbo button didn't make the computer go faster if I recall, it reduced speed when activated.
Yeah I googled it yesterday to see what it even did and it made the computer slower. I’m not sure I knew that back then...afraid I was setting computers slower.
You can see where consumers could be confused since they basically made a word mean the opposite of what it means. Someone needs a paddling for that.
Presumably this means that Intel expects margins on the auto chips to be higher than on what this capacity could be producing for Intel's own products. Given Intel's margins are already high this could mean:
- Very, very attractive margins on the auto chips.
- Much lower expected margins on Intel chips or idle capacity.
So which is more likely?
(and of course Intel quickly establishes a position in a new market in line with PG's strategy and gets some good PR).
Neither. Probably recycling/repurposing of older fabs. Afaik car manufacturers are not looking for cutting edge chips found in memory, cpus and gpus, so older fabrication lines can be repurposed for that role and provide an alternative revenue stream for intel until they manage to sort their CPU fab line out.
Not convinced. Multiple processes mentioned in the piece. Maybe there is capacity being freed up as 10nm comes on-stream but seems likely that they are anticipating some weakening of demand or moving some work to TSMC.
They certainly expect lower demand on their current chips as they run hot(er) and with fewer cores. They have bought a percentage of TSMC's production but TSMC is not very hot about them either as they are building new fabs for their 7nm chips.
I would not buy a car that has BCM/ECU modules with Intel chips inside. Undocumented instructions and hidden SoC inside the chip itself (https://en.wikipedia.org/wiki/Intel_Management_Engine) that you have zero control of, is enough reasons to not trust Intel anymore.
Is it easy to port a design over and start pumping out chips on a totally different process?. Is it easy to reconfigure an Intel "optimized" production line? Intel only make chips for themselves. Can they reconfigured their fabs to use standardized tool such as EDS software that most fabless and fab use? how long would it take?
Since these chips presumably don’t need 5nm does this mean Intel can use its old lithography machines? That might otherwise be collecting dust or something?
Oh, you want auto-park? We bundle that with our premium loudspeakers, it's the "advanced technology pack". Keyless entry? We bundle that with the heated steering wheel.
Automotive is hardly dying. It is however in a natural downcycle even before corona. The real story is people don't have money. Even before corona, used car prices have been absolutely exploding as a result of less people having money for even leasing cars.
I was, many years ago, employed as a manufacturing engineer in semiconductor fabs that, once no longer cutting edge enough to do the latest CPU's or memory chips, would transition to doing higher-voltage stuff. It's a reasonable thing to do. It does not necessarily speak well of Intel's current situation, though, with respect to CPU and memory chips, that they consider this a good move. But, given their current situation, it probably is making the best of a bad situation.