You are currently viewing SemiWiki as a guest which gives you limited access to the site. To view blog comments and experience other SemiWiki features you must be a registered member. Registration is fast, simple, and absolutely free so please, join our community today!
Is revenue per employee the correct metric for "agility" ?
I'm not sure you can directly compare revenue per employee for Intel and TSMC as Intel has a large proportion of it's employees in design and associated sales and marketing and is running a diverse set of business and not just one large one like TSMC.
My impression from things I've read is that the effective number of hours worked per week in TSMC (Taiwan) is significantly higher than at Intel (US). So we might also need to adjust for that.
$650K sales per employee at Intel doesn't sound like a "problem" to me. Especially when there is also a large profit margin.
You are forcing me into the unfamiliar position of defending Intel !
From benb's per employee revenue calculation or my per employee net profit calculation, TSMC's and Intel's scale of economy are in two different territories. It will greatly impact their ability to face challenges and opportunities in different ways.
The following is what I posted in another thread:
If we measure the employee productivity by net profit, TSMC is significantly stronger than Intel.
2021 TSMC average net profit per employee, based on 65,000 employees and US$21.354 billion net profit for 2021:
US$ 328,523
2021 Intel average net profit per employee, based on total 121,000 employees and US$19.87 billion net profit for 2021:
US$ 164,214
I agree Intel is much weaker in productivity, but just one random thought:
Intel's is both B2B and B2C and spent $1.1B on marketing in 2021, or about $10K per employee; does TSMC (need to) spend anything significant on marketing since they're exclusively B2B? B2C also drives need for entirely different support systems above and beyond B2B requirements.
I agree Intel is much weaker in productivity, but just one random thought:
Intel's is both B2B and B2C and spent $1.1B on marketing in 2021, or about $10K per employee; does TSMC (need to) spend anything significant on marketing since they're exclusively B2B? B2C also drives need for entirely different support systems above and beyond B2B requirements.
If anyone has an idea how to quantity the "cost of being threatened, blackmailed, or have facilities destroyed, by Russia or China" I think this is just as important as "agility".
Insurance companies don't even try to quantify these war-type risks, they just don't issue policies, which tells me one thing--this cost is real, and it high.
“This initiative is a terrific example of how integrated manufacturing is foundational to Intel’s success. Our global factory network and supplier ecosystem directly enable a more adaptable and resilient supply of products. Over the past year, as substrates were constrained across the industry, our ability to leverage internal capacity created more than $2 billion in revenue upside for Intel, allowing us to respond with agility to meet dynamic customer demand.”
We seem to be assuming this is only about money (revenues).
No one has stopped to question what "agility" actually means (i.e. using an undefined term - as an engineer it just irritates me ...).
I don't think this really has much to do with revenue per employee (which as I pointed out earlier cannot be directly compared between an IDM and a foundry without some adjustements).
Back to the quote: "allowing us to respond with agility".
That is not the same as actually "responding with agility" which is as much a function of the priorities and culture of the organisation. Here, certainly until Intel proves otherwise, TSMC has a clear advantage.
So "responding with agility" is a combination of financial capability/resources, robustness of supply chain (perhaps geographic spread, perhaps shorter supply chains), the inherent agility/customer service of the supplier and doubtless a few other factors (like process maturity, reliability, EDA and IP support, ...).
They do advertising for Intel processors to consumers via TV, internet, and other methods to convince them to buy Intel processors. They also wholesale processors which require advertising campaigns such as special boxes or other materials given to e- and retailers to help them sell to consumers.
They do advertising for Intel processors to consumers via TV, internet, and other methods to convince them to buy Intel processors. They also wholesale processors which require advertising campaigns such as special boxes or other materials given to e- and retailers to help them sell to consumers.
"Agile": Broadly, has more to do with cycle time than cost or quality, more to do with software than hardware, more to do with product launch than ongoing business, more to do with dates than dollars, more about amount of improvement than fixed targets, and has a halo compared to "lean", "competitiveness", older less PC terms, boomer terms.
Use it in a sentence: "Intel will achieve the agile KPI after Meteor Lake cycle time of 18 months shortened the previous product cycle time of 30 months by 12 months"
My take: Agile influences sales/revenue indirectly, which is why it's harder for management to invest energy in it. Yet in the long run reducing new product cycle times, bringing new high value, competitive products to market faster, obviously this should boost sales, support ASP, and have other measurable financial benefits.
In 2024, Intel reported expenditures of 856 million U.S.
www.statista.com
Maybe not the best source but the number seemed reasonable to me given the amount of partner selling they need to do, globally.
Agreed maybe not strictly B2C but Intel (and Nvidia, AMD, etc) do need a lot more marketing for their model than TSMC. It obviously doesn't close the gap on employee "productivity" but Intels model does have overheads TSMC never will.
In 2024, Intel reported expenditures of 856 million U.S.
www.statista.com
Maybe not the best source but the number seemed reasonable to me given the amount of partner selling they need to do, globally.
Agreed maybe not strictly B2C but Intel (and Nvidia, AMD, etc) do need a lot more marketing for their model than TSMC. It obviously doesn't close the gap on employee "productivity" but Intels model does have overheads TSMC never will.
Thank you for the pointer. I found the source from Intel 2021 annual report, page 86.
Advertising costs, including direct marketing, are expensed as incurred and recorded within MG&A expenses. Advertising costs were $1.1 billion in 2021 ($763 million in 2020 and $832 million in 2019).
From the above number, Intel 2021 advertising spending increased 44% from 2020 and dropped 32% in 2020 from 2019. This advertising spending pattern does not make too much sense to me because Intel 2021 revenue YoY growth was 1% and 2020 revenue YoY growth was 8%.
Intel spent 44% more advertising to get 1% revenue growth in 2021 and spent 32% less advertising in 2020 to achieve 8% YoY revenue growth. Is there any story behind it?
Note: Intel revenue for 2021 was $79.02 billion, 2020 was $77.87 billion, and 2019 was $71.97 billion.
Hist78 - one (minor, but definite) B2C thing that Intel does is ship chips to reviewers (with guidelines, etc) for major CPU launches. That requires some level of packaging, PR, salesmanship, technical support, legal, etc. engagement across the audience.
re: Intel increased advertising for less revenue -- I'd love to hear opinions, but maybe at least a combination of Pat Gelsinger joining (and opening the wallet), and Intel beginning efforts / recruiting for the ARC gpu launch. Despite minimal shipping product, Intel has began advertising ARC since August 2021.
The new graphics brand will cover hardware, software and services. The first silicon will appear in products in the first quarter of 2022, in both mobile and desktop form factors.
From benb's per employee revenue calculation or my per employee net profit calculation, TSMC's and Intel's scale of economy are in two different territories. It will greatly impact their ability to face challenges and opportunities in different ways.
The following is what I posted in another thread:
If we measure the employee productivity by net profit, TSMC is significantly stronger than Intel.
2021 TSMC average net profit per employee, based on 65,000 employees and US$21.354 billion net profit for 2021:
US$ 328,523
2021 Intel average net profit per employee, based on total 121,000 employees and US$19.87 billion net profit for 2021:
US$ 164,214
