How Intel Stock Falls to $10

[count]

So a lot of people think Intel has an execution issue, and they do. But they also currently have the wrong strategy.

When Steve Jobs went back to Apple, he famously joked with Bill gates that "The ship is taking on water, and my job is to get it pointed in the right direction". It's not Lip Bu's job to fix all the execution problems at Intel, it's his job to get the company pointed in the right direction. Intel needs a culture change and a strategy change. I would say he is in the middle pushing a culture change, but the strategy change has not happened - yet.

Dropping the IDM model won't fix Intel's past failures, but it will get the company moving back in the right direction. Once they have the strategy and culture fixed, better products will follow.

 

[hist78]

Do you think, without fabs, Intel will be a clear leader against AMD and Nvidia? Or just another horse in a big horse?

I agree with you by the way, the safe bet would be to off load manufacturing and milk the x86 cow. But safe bets do not get you maximum stock value over the long run.

Or can we ask an equally important question: Can Intel survive as an IDM in a semiconductor industry that has embraced the fabless/foundry business model for the past 30 to 40 years?

There are still some IDMs operating around the world, but most of them focus on analog, mixed-signal, industrial, or specialty segments. In the leading edge logic semiconductor space, aside from the smaller Samsung, Intel is the only remaining logic IDM, and both Samsung and Intel are struggling.

If Intel is trapped in an outdated business model, no CEO or strategy can save it.

 

[tomatoma]

I did support Pat G and his IDM 2.0 100%. That was short lived however due to Pat's rantings. I still think IDM 2.0 can succeed but there cannot be any more over-promising. I know Lip-Bu, he sets realistic expectations and exceeds them, he does not overpromise.

I was shocked that Lip-Bu took the Intel job. As you said, he is a busy man and his legacy is at stake. Why would he risk it when he is already golden in the EDA and semiconductor VC world? Lip-Bu clearly has a plan for Intel and I am looking forward to seeing it through. He still has my full support.

In the first place, when LBT doesn't quit IDM or IFS, I think the direction of the will itself is the same as the PAT.
And Intel Also, Intel 18A hasn't completely provided to external customers.
There are few initial external customers, but it may increase,
Also, even if 14A appears, it does not mean that 18A will not be necessary.

 

[tomatoma]

So a lot of people think Intel has an execution issue, and they do. But they also currently have the wrong strategy.

When Steve Jobs went back to Apple, he famously joked with Bill gates that "The ship is taking on water, and my job is to get it pointed in the right direction". It's not Lip Bu's job to fix all the execution problems at Intel, it's his job to get the company pointed in the right direction. Intel needs a culture change and a strategy change. I would say he is in the middle pushing a culture change, but the strategy change has not happened - yet.

Dropping the IDM model won't fix Intel's past failures, but it will get the company moving back in the right direction. Once they have the strategy and culture fixed, better products will follow.

I don't think just throwing away the IdM will not solve the problem.

 

[hist78]

I don't think just throwing away the IdM will not solve the problem.

If Intel is split into Intel Products and Intel Foundry, one or both may have a higher chance of survival. On the other hand, keeping both under the IDM model might end up killing them both.

There’s no clear reason to believe that the IDM business model, abandoned by most of the semiconductor industry over the past 30+ years, will suddenly start working for Intel.

 

[Y.H]

If Intel is split into Intel Products and Intel Foundry, one or both may have a higher chance of survival. On the other hand, keeping both under the IDM model might end up killing them both.

There’s no clear reason to believe that the IDM business model, abandoned by most of the semiconductor industry over the past 30+ years, will suddenly start working for Intel.

I think I read some one commented that the chips act might have prevented Intel from completely spinning out IFS. Perhaps they still need to maintain 51%

 

[hist78]

I think I read some one commented that the chips act might have prevented Intel from completely spinning out IFS. Perhaps they still need to maintain 51%

Everything is negotiable. Don’t take that clause too seriously. Trump can’t kill the CHIPS Act on one hand and then ask Intel to keep its obligations under the CHIPS Act on the other.

 

[Y.H]

Everything is negotiable. Don’t take that clause too seriously. Trump can’t kill the CHIPS Act on one hand and then ask Intel to keep its obligations under the CHIPS Act on the other.

I hope that’s the case. But he is trump. Haha.

 

[siliconbruh999]

Spinning off IFS will actually kill Intel products in long term right now they are maintaining share through IFS Simply due to the existence of Intel 7.
Intel Products haven't shown a good product on External node that is PPA Competitive.
AMD is winning due to having better product on TSMC Node while being half node behind(N4P vs N3B) which should be embarrassing to Intel products.

 

[Mickey]

Lip-Bu clearly has "a plan" for Intel and I am looking forward to seeing it through. He still has my full support.

@Daniel Nenni, I privately share the same thought as yours.

There has been a rumor this weekend, “someone instructed a plan for IFS to establish a joint venture ASMC, where tSMC would hold 49% and Intel/IFS 51%.” No doubt, tSMC would need to ensure its own ROE (49%) by close collaboration with IFS (51%) swiftly, e.g. tapping in top-tier foundry customers.

I summarized my observation here (on LinkedIn), the proper decision of High NA EUV depends on cost structure, secured production volume, pricing strategy, segment customer base and long-term scaling or migration strategy. If a manufacturer (implied IFS) prioritizes cutting-edge performance with "enough products", full High NA EUV adoption "might be" ideal (Seemingly, IFS 18A or 14A is on the opposite side in past few years). https://www.linkedin.com/pulse/pric...en-kwatc/?trackingId=yIR23ixVx7nvn7ormICZrw==

I had invited LB to read my LinkedIn post about two months ago and hoped it might catch his attention. Let's wait and see ... Let me know if you have any thoughts or feedback.

 

[Y.H]

@Daniel Nenni, I privately share the same thought as yours.

There has been a rumor this weekend, “someone instructed a plan for IFS to establish a joint venture ASMC, where tSMC would hold 49% and Intel/IFS 51%.” No doubt, tSMC would need to ensure its own ROE (49%) by close collaboration with IFS (51%) swiftly, e.g. tapping in top-tier foundry customers.

I summarized my observation here (on LinkedIn), the proper decision of High NA EUV depends on cost structure, secured production volume, pricing strategy, segment customer base and long-term scaling or migration strategy. If a manufacturer (implied IFS) prioritizes cutting-edge performance with "enough products", full High NA EUV adoption "might be" ideal (Seemingly, IFS 18A or 14A is on the opposite side in past few years). https://www.linkedin.com/pulse/pricing-strategy-vs-euv-selection-focus-foundry-nodes-mickey-ken-kwatc/?trackingId=yIR23ixVx7nvn7ormICZrw==

I had invited LB to read my LinkedIn post about two months ago and hoped it might catch his attention. Let's wait and see ... Let me know if you have any thoughts or feedback.

Isn’t that rumor been around for some time already ? Or is it a different one.

 

[hist78]

@Daniel Nenni, I privately share the same thought as yours.

There has been a rumor this weekend, “someone instructed a plan for IFS to establish a joint venture ASMC, where tSMC would hold 49% and Intel/IFS 51%.” No doubt, tSMC would need to ensure its own ROE (49%) by close collaboration with IFS (51%) swiftly, e.g. tapping in top-tier foundry customers.

I summarized my observation here (on LinkedIn), the proper decision of High NA EUV depends on cost structure, secured production volume, pricing strategy, segment customer base and long-term scaling or migration strategy. If a manufacturer (implied IFS) prioritizes cutting-edge performance with "enough products", full High NA EUV adoption "might be" ideal (Seemingly, IFS 18A or 14A is on the opposite side in past few years). https://www.linkedin.com/pulse/pric...en-kwatc/?trackingId=yIR23ixVx7nvn7ormICZrw==

I had invited LB to read my LinkedIn post about two months ago and hoped it might catch his attention. Let's wait and see ... Let me know if you have any thoughts or feedback.

There are both opportunities and challenges associated with such joint ventures. A significant hurdle lies in the ownership structure of those Intel’s most advanced fabs, which are all currently part of joint venture agreements with private equity firms Brookfield and Apollo.

If TSMC’s rumored investment pertains solely to Intel’s 50% equity stake in those fabs, then a proposed 51/49 joint venture between Intel and TSMC would effectively give TSMC control of less than 25% of the actual fab assets. Meanwhile, Brookfield and Apollo would retain their rights to guaranteed investment returns under existing agreements with Intel. This level of ownership dilution and limited operational control could raise serious concerns within TSMC’s board of directors.

This structural trap is a sinkhole created by Pat Gelsinger.

 

[meo9725]

Nobody is talking about the talent. Intel cannot attract top talent anymore. That in itself is a damning verdict.

 

[osnium]

Nobody is talking about the talent. Intel cannot attract top talent anymore. That in itself is a damning verdict.

For semiconductor manufacturing the talent is in Taiwan and South Korea so that’s one the reason why Intel can’t attract talent.

 

[horace]

I'm not sure why he took the job, high preforming leaders are attracted to big challenges, but that doesn't always mean they are going to be able to fix them. He probably didn't know the exact scale of the challenge he was getting into.

Personally I think the verdict is still out... I think Intel can be saved if they ditch the broken IDM model, and there are some signs that Lip Bu is coming to this realization as well based on his comments that 18A will be internal use only and they will not go forward with 14A unless they get a big customer commitment. So lets say we end up in that situation where Intel does not do 14A, that means they are probably on TSMC instead. If that happens what happens with the legacy fabs? I think if you keep going down this line of questioning you start to get to the answer that IFS will be spun out or sold. There is a lot of valuable equipment, IP, and knowledge in Intel IFS, and if a buyer gets a 5 year wafer agreement, it gives a would be buyer enough financial runway to figure out what to do with those assets.

They buyer could be private equity like silver lake, it could be a company like GFS or Tower semiconductor which would give them the capability to manufacture more advanced nodes, it could be a memory company like Micron that could expand into logic. There are options. And the way Intel is valued today, it could give away IFS for almost nothing and it would still be a net positive.

Without the fab, does Intel still worth saving?

We don't need yet another fabless company, they are plenty in supply. We do need alternative to TSMC.

 

[Barnsley]

Who would buy Intel Foundry? And for how much? I cannot think of any qualified buyers, more qualified than having Lip-Bu run it as it is being run today.

Some in house management buyout for pennies on the dollar , then sell at a premium when there is some light at the end of the tunnel?

 

[Barnsley]

Without the fab, does Intel still worth saving?

We don't need yet another fabless company, they are plenty in supply. We do need alternative to TSMC.

Hard Truths!

However shareholder value is the name of the game , the perception that as a Fabless Company the share value can get pumped is probably what is driving board level conversations.

 

[tomatoma]

Well, which way is not possible

 

[Paul2]

I would say it is a buy, if Chen will manage to spin Intel into even a modestly successful fab, even if 2nd tier, or even 3rd tier, they will still be making money again.

 

[XtorTourist]

So a lot of people think Intel has an execution issue, and they do. But they also currently have the wrong strategy.

When Steve Jobs went back to Apple, he famously joked with Bill gates that "The ship is taking on water, and my job is to get it pointed in the right direction". It's not Lip Bu's job to fix all the execution problems at Intel, it's his job to get the company pointed in the right direction. Intel needs a culture change and a strategy change. I would say he is in the middle pushing a culture change, but the strategy change has not happened - yet.

This is Jobs making fun of Gil Amelio, the Apple CEO who bought NeXT and brought Jobs back as a consultant. Jobs thought Amelio was clueless and likely played a large role in Apple booting Amelio and bringing Jobs back as CEO. He used this supposed Amelio quote as a an example.

"Apple is like a ship with a hole in the bottom, leaking water, and my job is to get the ship pointed in the right direction."