Wrong horse:
- clearly, the Biden administration bet on the wrong horse;
- creating a "zombie" company
- a "bailout" by any other name
- in the big scheme of things, this is just fine; Biden administration did the right thing for the country.
Big question(s):
- is the dividend at risk?
- is the new Ohio facility at risk?
Ticker:
From January 21, 2023, last week:
Reposting from January 21, 2023:
Disclaimer: this is not an investment
site. Do not make any investment, financial, job, career, travel, or
relationship decisions based on what you read here or think you may have
read here.
All my posts are done quickly:
there will be content and typographical errors. If anything on any of
my posts is important to you, go to the source. If/when I find
typographical / content errors, I will correct them.
Note: very brief notes, but this is where I will put notes on Chip War: The Fight for the World's Most Critical Technology, Chris Miller, c. 2022.
Intel job cuts:
Back in October, 2022, Intel was one of the first to announce huge cuts, starting with an announcement of cutting 20,000 jobs in late 2022. Previously posted.
With very little fanfare, more cuts were announced two days ago, in California:
Last year, Intel announced a new facility for Hillsboro, Oregon, but , announced January 20, 2023 (yesterday).
With regard to Biden's "chip bill" Intel is going to do very, very well.
The "US chip bill" will not only allow Intel to "save" its quarterly dividend, but actually announce a two-penny increase in the quarterly payout. Intel has not yet made any announcement regarding its next dividend.
The United States recently passed the chip bill – the “Chip and Science Act”. Analysis of the chip bill points out that American semiconductor manufacturers will be the main beneficiaries. Furthermore, analysts believe that Intel will take the largest share of the subsidies. However, it is still difficult to shake the current wafer foundry competition. In the U.S. chip bill, $39 billion will be to subsidize fab expansion. Also, $11 billion will be for advanced process research and development, and $2 billion will for defence programs.
Of the $39 billion in fab subsidies, Intel should receive no less than 32 per cent. Furthermore, Micron will get 31 per cent while Texas Instruments, Samsung and TSMC will get 14 per cent, 13 per cent and 10 per cent respectively. This means that about 1/3 of TSMC’s $12 billion investment in Arizona will be subsidized by the United States. This can ease the cost pressure of setting up factories there. Unless the United States continues to subsidize, it will still face costs in the medium and long term.
The agency also claims that Intel should receive the most subsidies in this bill. This will help it expand in the foundry field, but TSMC still has advantages in three key aspects: business execution capabilities, technology, and customer relationships. Therefore, although this plan will help the United States increase its share in the foundry market, it is still difficult to return to the market share level of the 1990s. Also, it will not significantly change the current competitive landscape of fabs. TSMC is currently 1-2 generations ahead of Intel.
According to Jon Peddie, an analyst at Jon Peddie Research (JPR), a market research agency, a recent article analyzed Intel’s GPU business. He believes Intel has invested about $3.5 billion in its discrete GPU development — investments that have yet to pay off. Intel’s AXG (Accelerated Computing and Graphics division) has lost $2.1 billion since its official launch in the first quarter of 2021. Given Intel CEO Pat Gelsinger’s track record, JPR thinks Intel will cancel the AXG division. Since early 2021, Pat Gelsinger has cancelled six “underperforming” businesses.
Meanwwhile, over at eetimes,
The U.S. Department of Defense (DoD) is Intel Foundry Services’ (IFS’s) “No. 1” customer, IFS president Randhir Thakur told EE Times, noting that IFS plans to be part of the DoD state-of-the-art heterogeneous integrated packaging (SHIP) program. That program will necessitate deep knowledge of gate-all-around (GAA) technology facilitating high-transistor–density 3D chips.
Intel’s new foundry unit has an initial $250 million contract with the DoD to provide chip design and development. The next step, for a much larger and unnamed dollar figure, will include manufacturing if IFS can meet certain national security criteria, Thakur said in an interview on the sidelines of Intel’s latest fab project in Columbus, Ohio.
“They [the DoD] produce a few chips, but boy, they better work and be secure,” Thakur said. If IFS hits the stringent quality targets of the DoD, other customers will feel much more relaxed, he said.
Sounds like a cozy relationship.
By the way, the "chips bill" probably saved the new Intel facility in Ohio. Back in August, 2022, Intel questioned the project because the government "was dragging its feet."
Meanwhile, in Germany, "Intel delays construction for an $18 billion
German chip fab as it angles foor more government funding." Link here, December 19, 2022 -- just last month.
Intel is using TSMC foundries to produce its 4 nm chips. I've long lost the bubble, but some time ago it was reported that Intel had to farm out its smaller chips to TSMC when Intel was having trouble with its 10 nm and 7 nm chips.
Disclaimer: this is not an investment
site. Do not make any investment, financial, job, career, travel, or
relationship decisions based on what you read here or think you may have
read here.
All my posts are done quickly:
there will be content and typographical errors. If anything on any of
my posts is important to you, go to the source. If/when I find
typographical / content errors, I will correct them.
******************
TSMC
Following the "chip bill" announcement, Forbes reported that TSMC will triple its Arizona investment to $40 billion, among the largest foreign outlays in US history, link here.
******************
The Chip War
Intel is nowhere to be found on the wiki graph with regard to new chips. See here, here, and, here. Wiki has updated the chart to 2023 (the new Apple M2 Pro and Max chips (5 nm) and 4 nm (2022). Apple will start shipping hardware with 3nm chips in late 2023.
The last time Intel showed up on the wiki scoresheet was in 2017, 14 nm. Holy mackerel.
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