The latest developments in the ongoing soap opera that is Intel sees the federal government considering purchasing a stake in the company in a bid to speed up completion of its delayed advanced fabrication facilities, while yet another executive is casting aspersions on CEO Lip-Bu Tan.
The rumored government purchase of a stake in Intel comes from Bloomberg reports this week and last, with the most recent saying the feds could take as much as a 10% stake in the company. The reports say that a potential deal emerged after a recent meeting between President Donald Trump and Tan, which happened only after President Trump called for the resignation of Tan then hastily walked it back.
The idea is rumored to center around the Feds providing Intel with additional financial support to advance its cutting-edge fabrication site in Ohio. The site, dubbed Silicon Heartland, was once promoted as one of the largest chip production sites in the world once it was built, but has since been scaled back.
Construction has been repeatedly postponed, and the latest delays have pushed at the start of mass production of chips into the next decade. Speeding up completion of the fab would be crucial not only for Intel’s foundry initiative but also the Trump administration’s goals of bringing semiconductor manufacturing to the US from Taiwan.
Although President Trump has repeatedly criticized President Joe Biden’s CHIPS Act and there were fears he would cancel the deal, now that he’s in office he is singing a slightly different tune. The article noted a recent
Although President Donald Trump heavily criticized Joe Biden’s CHIPS and Science Act, which provided chipmakers with grants, he has since entered a deal with MP Materials, a miner of rare earth minerals. The federal government took a $400 million stake in MP and in return promised a decade of business with a guaranteed purchase price floor, guaranteeing a minimal level of revenue.
It could be a good deal, it could be a bad one, says Jack Gold, president of J. Gold Associates, there’s too little information to tell.
“If it’s a loan like the feds did for other industries like aerospace and auto when they were down and out, that might be OK,” he said. “In essence the government got an IOU that they cashed out when the companies got back on their feet. If it’s just the administration owning a piece of Intel permanently, then it’s a very bad idea in my opinion.”
Intel could use the extra funding but not if the Feds control anything in the company, he added. But the devil is in the details, and we don’t know the details. “Until we have more clarification of this and what it means, everything is pure speculation,” said Gold.
More Jabs at Tan
Five months into his tenure as CEO and Lip-Bu Tan is facing more challenges to his authority, this time from former CEO Craig Barrett, who led Intel from 1998 to 2005. In a guest opinion piece for Fortune, Barrett argued that Intel is the only US company capable of matching TSMC at the leading edge but lacks the capital to do so, even with CHIPS Act funding. Barrett said neither TSMC nor Samsung intends to bring their most advanced manufacturing processes to the US (and he’s not wrong about that).
“The only place the cash can come from is the customers,” he wrote, proposing Intel’s eight largest customers, including Apple, Google, and Nvidia, should each contribute $5 billion in return for guaranteed domestic supply and pricing leverage against Asian competitors.
Barrett criticized Tan’s reluctance to invest in 14A without customer contracts first, calling the approach “a joke” and warning it risks falling permanently behind. ‘To win in this space you need to be the leader in technology not the follower,” he wrote.
While some of his criticism is legitimate, Barrett’s stewardship of Intel was not exactly a rousing success. He charged down the Itanium Road for way too long despite customer rejection and AMD coming out with 64-bit x86 extensions. He attempted to expand until his presence and communications with over a dozen acquisitions, all of which were dumped by his successor, the late Paul Otellini. And he turned the product line into a confusing mess. It was Otellini who came up with the tick/tock cadence of manufacturing that served the company well almost two decades.
Barrett is right about some things, but wrong about others, says Anshel Sag, senior analyst with Moor Research and Insights. “Spinning off Foundry doesn’t make sense until it can be a self-sustaining business with the help of Intel Product and other external customers,” he said.
“Talking about the future of Foundry prematurely is not a good way to do business, and I think that Intel should prove the strength of its process node by shipping a competitive product and making that process available to customers. This is a long process, but many people have lost patience prematurely,” he added.
Source:: Network World