HN Distilled

Essential insights from Hacker News discussions

US Intel

Original Article

Hacker News Discussion

Here's a summary of the themes discussed in the Hacker News thread:

Government Intervention and Trustworthiness

A significant portion of the discussion revolves around the US government's involvement, particularly the investment in Intel. Many users expressed deep skepticism regarding the government's ability to manage such an investment effectively, citing concerns about unpredictability, lack of planning, and potential for arbitrary reversals of policy.

  • "every decision the US takes could be considerate, but as likely also completely random and reversed and bent at any moment in the future." - 3D30497420
  • "This my main problem with this investment. I can certainly appreciate the benefit of US government investment to ensure 'homegrown' production capabilities. However, this depends a lot on a level of understanding, intelligence, and planning from the US federal government which is monumentally lacking." - 3D30497420
  • "If no one trusts Intel now, I cannot begin to imagine how anyone would view Intel plus the current US government as more trustworthy." - 3D30497420
  • "Unpredictable, vengeful, and declared with little plan or forethought. Why should we expect any differently from other policies?" - 3D30497420
  • "Add to this the fact that given the government is now propping up a poor performing company there's no possible reason to try to create a new domestic competitor. If you do and you start becoming successful, the government can just increase their 'investment' in your chief competitor and shut you down. It's ludicrous." - dpkirchner

The Need for Domestic Semiconductor Manufacturing and Geopolitical Risk

The underlying motivation for government intervention is the perceived geopolitical risk associated with reliance on foreign semiconductor manufacturing, particularly from Taiwan. Users acknowledged the strategic importance of domestic production but debated the best approach.

  • "The single most important reason for the U.S. to own part of Intel, however, is the implicit promise that Intel Foundry is not going anywhere." - rickdeckard
  • "I frankly look forward to see whether the US will actually CARE how Intel will conduct its business, instead of simply trying to just reap benefits from it." - rickdeckard
  • "Everything can for now be put under the umbrella of 'US semiconductor sovereignty', but actually making this happen involves much more strategic planning and investment from the government." - rickdeckard
  • "I agree with the article that there's a significant geopolitical risk to the status quo." - UncleOxidant
  • "This is recognized by the current administration but is also a continuation of the previous administration's pivot toward undergirding and supporting key industries." - mc32
  • "No country with an ability to avoid it wants to be subject to being held by the neck." - mc32
  • "What happens if China invades Taiwan tomorrow? They can cut off the supply of chips to most of the world and global economies will collapse overnight." - vonneumannstan
  • "The U.S. will be completely dependent on foreign companies for the most important products on earth, and while everything may seem fine for the next five, ten, or even fifteen years, the seeds of that failure will eventually sprout..." - themgt

Alternative Government Approaches and Private Sector Incentives

Several users suggested alternative methods for the government to achieve its goals without direct ownership, favoring incentives and facilitating private sector investment.

  • "I think it would've been better for the president & his economic staff to arrange a meeting of US companies that need foundry services and try to get them to a 'come to Jesus' moment re the geopolitical risk to their current operations relying so heavily on Taiwan. The government role here shouldn't be to own Intel (or other companies) but to incentivize those large fab customers (Apple, Nvidia, AMD, Broadcom, etc) to make a significant investment into Intel foundry services." - UncleOxidant
  • "Perhaps tax incentives." - UncleOxidant
  • "There's also the possibility that some kind of 3rd party consortium could be setup to run Intel. This way they're not trying to start from scratch (which would take too long and too much capital), but also allows those other investing companies to have some kind of control at a distance." - UncleOxidant

The Nature of "State Capitalism" and Fascism Concerns

The government's stake in Intel sparked a debate about the nature of this intervention, with some users drawing parallels to "state capitalism" and even raising concerns about potential overlaps with fascist or corporatist tendencies.

  • "I don't understand how they can say Democrats are Communists while they do this. It's going to be interesting hearing everyone who spent decades spilling volumes about the evils of communism and the failure of the USSR quickly pivot to being champions of state capitalism." - ModernMech
  • "I actually think the model here isn't communism, it's fascism/corporatism. They aren't nationalizing directly, they're intimidating private enterprises into compliance and cooperation." - empath75
  • "Is merging interests of the state and corporations marks a return to good ole fascism? or is it just an alternative way of taxing capital? instead of taxing wealth and capital, just take an equity stake in it ?" - slt2021
  • "'Fascism should more properly be called Corporatism because it is the merger of state and corporate power.” — Benito Mussolini" - nyc_data_geek1
  • "It's a tacit admission that the Chinese model can be effective at achieving a nation's strategic economic goals. (More effective than the model we previously championed.)" - bilbo0s

The Decline of US Manufacturing and The Rise of the "Software Economy"

A recurring theme is the de-emphasis on hardware manufacturing in the US economy over recent decades, with capital and talent shifting towards software and services. Users lamented the challenges of funding and sustaining hardware innovation compared to software ventures.

  • "We outsourced manufacturing because it's not very profitable. The Mag 7 make 50x as much money as TSMC. Apple and Microsoft are the most profitable businesses in history." - marbro
  • "Intel was very profitable until it was not. They spent over $800B on stock buybacks. That will buy you some fabs, some R&D. Its true they invested in R&D but not well." - georgeecollins
  • "Financialization is a dead end when you face a nation state determined to control steps in you value chain." - georgeecollins
  • "I still think Intel missed the boat when they had the dominant process in focusing entirely on their own chips and not taking customers for third party fabbing. Samsung and especially TSMC have demonstrated conclusively that the real money is in producing chips for other companies." - jandrese
  • "Intel switched to a 'service the stockholders before the customers' mode and they have never recovered." - jandrese
  • "There's a real folly in capitalist countries thinking they can be self-sufficient walled castles. Capitalism by its nature will seek out the lowest cost be it in labor or manufacturing. That means often means outsourcing." - zoeysmithe
  • "Workaccount2: To fund a software start-up you need 5 people and 5 laptops to get to tens of millions of value. To fund a similar sized hardware start-up you need a full lab andddd already the proposition is dead." - Workaccount2
  • "The infrastructure to rapidly iterate and manufacture just isn’t here anymore, so everything costs significantly more to the point where we’re noncompetitive. Even VCs with no experience see the top line numbers for hardware startups and nope out." - throwup238
  • "Many of these venture capital firms are flush with cash but only want to fund software companies because they’re easier to scale and have higher profit margins. Hardware startups simply require too much capital and time to scale, so VCs tend to avoid them." - bix6 (paraphrased sentiment from multiple users)
  • "Software sucked all the talent out of the hardware room. When you write the pros and cons of software vs hardware, pretty much the only positive on the hardware side is a subjective 'it's more fun'." - Workaccount2
  • "I saw the best minds of my generation writing spam filters" - Neal Stephenson (quoted by phendrenad2)

Intel's Specific Challenges and Management Issues

Beyond broader economic trends, several users pointed to specific business decisions and management failures at Intel as reasons for its current predicament.

  • "Intel was very profitable until it was not. They spent over $800B on stock buybacks. That will buy you some fabs, some R&D." - georgeecollins
  • "I still think Intel missed the boat when they had the dominant process in focusing entirely on their own chips and not taking customers for third party fabbing. Samsung and especially TSMC have demonstrated conclusively that the real money is in producing chips for other companies." - jandrese
  • "Intel switched to a 'service the stockholders before the customers' mode and they have never recovered." - jandrese
  • "The reason they are in the shape they are in right now is because they didn’t have the volume to invest in the next generation and even now the CEO said they aren’t going to invest in making a cutting edge foundry until they have customers committed to it." - JustExAWS
  • "Historically Intel has engaged in illegal wage suppression. Now we bail them out for their crimes." - deepsquirrelnet
  • "If Intel were well managed they would purge like 2/3rs of the managers and anyone in the bottom 50th percentile and then pay whatever it takes to get people skilled in their core industry back..." - packetlost
  • "Intel hasn’t been “the best” since the world cared more about mobile in 2010. There GPUs have always been also ran." - scarface_74
  • "Intel focus on low volume high end chips is another reason they are behind." - JustExAWS