News Investors pushing Intel to split off manufacturing

[NTMBK]

Exclusive: Hedge fund Third Point urges Intel to explore deal options

Activist hedge fund Third Point LLC is pushing Intel Corp to explore strategic alternatives, including whether it should keep chip design and production under one roof, according to a letter it sent to the company's chairman on Tuesday that was reviewed by Reuters.

www.reuters.com

(Reuters) - Activist hedge fund Third Point LLC is pushing Intel Corp to explore strategic alternatives, including whether it should keep chip design and production under one roof, according to a letter it sent to the company’s chairman on Tuesday that was reviewed by Reuters.

Were it to gain traction, Third Point’s push for changes could lead to a major shakeup at Intel, which has been slow to respond to investor calls to outsource more of its manufacturing capacity. It could also lead to the unwinding of some of its acquisitions, such as the $16.7 billion purchase of programmable chip maker Altera in 2015.

I wonder if Intel will take heed? They certainly need to change something.

 

[Gideon]

I dunno, to me it looks like AMD is selling a ton of Picasso. It also looks like to me that TSMC is unable or unwilling to expand to the point to be able to completely own the market. A large portion of the PC market is going to need to be fabbed on something other than TSMC's latest just simply due to capacity.

Not sure about Picasso, you might be correct. But regarding TSMC, yeah that's the main problem stumping the growth of ARM server and laptop/desktop efforts. I can see some stuff going to Samsung, but neither seems to be building new fabs en-masse.

 

[chrisjames61]

It is ironic a fabless company like AMD is helmed by Dr. Lisa Su who went to M.I.T. and is a fellow of the Institute of Electrical and Electronics Engineers (IEEE). Was an engineer at Texas Instruments, I.B.M., Freescale. But a company like Intel has an accountant in charge. Bob Swan has a MBA. Now tell me who is better suited to run tech company?

 

[chrisjames61]

PC centric is the biggest segment for intel and while that is not just desktop it's a big part of it.
14nm still works and still makes them huge amounts of money so why fix something that isn't broken? The only drive companies have to make better products is if they have to make more sales.

Operating Segments

Intel’s data-centric and PC-centric operating segments include technologies and solutions for processing, data analysis, storage, and data transfer.

www.intc.com

Also intel makes more money than tsmc amd and nvidia put together and if their upcoming GPUs are halfway acceptable they are going to take away a lot of nvidia's and amd's marketshare in GPUs.
It makes a lot of sense that intel does a lot of stock buy back before the release of them.

Intel Dominates Chip Revenue Forecast, TSMC, AMD, Nvidia Gaining

The wafer race is on

www.tomshardware.com

Elf, your rose colored interpretations of Intel remind me of people who think because we have a cold winter global warming isn't true. Intel makes a lot of money but what they make would literally be swallowed up to build a state of the art fab today. They don't have the capital to pull it off. They need the money for stock buybacks and paying dividends.

 

[jpiniero]

It is ironic a fabless company like AMD is helmed by Dr. Lisa Su who went to M.I.T. and is a fellow of the Institute of Electrical and Electronics Engineers (IEEE). Was an engineer at Texas Instruments, I.B.M., Freescale. But a company like Intel has an accountant in charge. Bob Swan has a MBA. Now tell me who is better suited to run tech company?

BK has a degree in Chemistry (looked it up) and was a fab worker and manager. Didn't exactly help, now did it?

 

[Hitman928]

BK has a degree in Chemistry (looked it up) and was a fab worker and manager. Didn't exactly help, now did it?

He has a Bachelor's degree in chemistry and from what I can tell mostly worked in validation/quality control before moving into management. There's a huge difference between that and having a Ph.D. and leading R&D / technical teams.

 

[jpiniero]

He has a Bachelor's degree in chemistry and from what I can tell mostly worked in validation/quality control before moving into management. There's a huge difference between that and having a Ph.D. and leading R&D / technical teams.

Do you think Lisa Su is personally reviewing chip designs herself? I don't. Management is the issue, sure, but I don't need you need a technical CEO to understand that TSMC getting that far ahead is going to end up causing a ton of problems for Intel. In that sense spinning off the fabs to new management who might take things more seriously does make sense.

 

[TheELF]

but neither seems to be building new fabs en-masse.

The last years have been a huge bubble in tech sales, it would be extremely risky to build fabs on the assumption that sales will stay the same after the human malware is gone.

Elf, your rose colored interpretations of Intel remind me of people who think because we have a cold winter global warming isn't true. Intel makes a lot of money but what they make would literally be swallowed up to build a state of the art fab today. They don't have the capital to pull it off. They need the money for stock buybacks and paying dividends.

What was interpreted from what I said?
These are the black on white numbers of sales.
The only thing that is an opinion is that you don't retire a product when its sales are the highest which is just common sense.

 

[Hitman928]

Do you think Lisa Su is personally reviewing chip designs herself? I don't. Management is the issue, sure, but I don't need you need a technical CEO to understand that TSMC getting that far ahead is going to end up causing a ton of problems for Intel. In that sense spinning off the fabs to new management who might take things more seriously does make sense.

Of course she isn't, but I prefer leadership of a very technical company to have at least somewhat of a real technical background. If they have a Ph.D. with real technical experience and understand the business side as well, even better. When you have purely business people leading highly technical companies they tend to make decisions that make the books look good in the short to medium term, but screw things up on the technical side which has long term consequences. Of course, there's no guarantee no matter which way you go, but based upon my experience working in the industry and following other companies for decades now, my opinion is not very high of business people running high tech companies.

 

[Gideon]

Do you think Lisa Su is personally reviewing chip designs herself? I don't. Management is the issue, sure, but I don't need you need a technical CEO to understand that TSMC getting that far ahead is going to end up causing a ton of problems for Intel. In that sense spinning off the fabs to new management who might take things more seriously does make sense.

As a matter of fact she occasionally sorta does:

https://twitter.com/x/status/1344176104068800512

My favorite story of her is Zen's bring up. When the first sample came back, she was there in the labs, being an engineer, helping the bring up.

Now contrast this to Intel's higher ups (the only exception being Raja according to Naveen Rao ) who will never visit the fabs on any tapeout, no matter how crucial

 

[UsandThem]

As a matter of fact she occasionally sorta does:

https://twitter.com/x/status/1344176104068800512

She's done great things so far at AMD, but I think that user is jumping the gun just a teeny bit declaring her as one of the greatest leaders in American history. Now in another 5-10 years she is still crushing it (at AMD or at another company), we can revisit her leadership/legacy. She's had a great start for sure, so I'm not dismissing that aspect at all.

History has shown there has been multitudes of leaders that had one good run over a short period of time, only to show they were simply lucky to be in the right place at the right time.

Edit: if my Google-fu found the right Jon Masters, it says he's 25 (looks older in profile pic), so that would explain their declaration based on their limited world experience.

 

[dmens]

Compared to the current crop of Intel management, Lisa Su might as well be Steve Jobs and John von Neumann combined.

 

[Gideon]

Just wanted to add that obviously overseeing Zen 1 tapeout is not something that makes her a better leader. If anything, it's more of a demonstration of camraderie - The willingness to "fight in the weeds with the grunts" so to speak.

What her first-hand engineering knowledge (PhD and years of work on "SMT" @ibm among others) gets her is something considerably more valuable. The understanding how work gets done, what is a value-add and what is a distraction.

This means that she is less likely to encourage:

• buildup of an oversized middle-management structure that would end up playing endless corporate power-games among their "gangs" (ahem, Intel).
• structuring the company in a way that would put artifical obstacle on engineers path
  • e.g: partitioning into departments which are physically isolated (often residing in different countries) end up in their "private fortresses" forr "sercurity". Meaning engineers are not allowed to communicate efficently without constantly going through middle management (worse yet if they have to sign off on every decision)
• setting up structures that would make internal departments and teams compete with each-other rather than focus on delivering the best possible product
• making engineering concessions to please marketing.
  • Engineering should always focus on building the best possible product possible with the materials and time available. Marketing should work with that

Not to mention that she can see and understand bullshit. If an engineering team gets a great but risky idea (with it's own set of advantages and drawbacks) it's probably way easier to pitch it to her than a bean-counter.

It's not to say that CEOs with marketing or finance background are useless, far from it. But if your company engineers high-tech hardware (and sells it, rather than being vertically integrated) you should have a CEO that's familiar with what it is you actually do. Te same is true if it instead focuses on marketing or finance sector business.

She's done great things so far at AMD, but I think that user is jumping the gun just a teeny bit declaring her as one of the greatest leaders in American history. Now in another 5-10 years she is still crushing it (at AMD or at another company), we can revisit her leadership/legacy. She's had a great start for sure, so I'm not dismissing that aspect at all.

History has shown there has been multitudes of leaders that had one good run over a short period of time, only to show they were simply lucky to be in the right place at the right time.

Agreed on that

 

[UsandThem]

Compared to the current crop of Intel management, Lisa Su might as well be Steve Jobs and John von Neumann combined.

They haven't righted the ship as quickly as some investors wanted after the mess Krzanich left them in, but at least they didn't bring in Eddie Lampert or Bob Nardelli.

I imagine within another 2-3 years, Intel should be in better shape (they're still doing pretty OK by all accounts). That is if they ever can move on from 14nm. Hopefully in 2025 they won't be on 14nm+++++++++++++++++++++

 

[moinmoin]

They haven't righted the ship as quickly as some investors wanted after the mess Krzanich left them in, but at least they didn't bring in Eddie Lampert or Bob Nardelli.

They failed to bring in anybody of note so Bobby Swan got to keep the job since he wanted it.

I imagine within another 2-3 years, Intel should be in better shape (they're still doing pretty OK by all accounts). That is if they ever can move on from 14nm. Hopefully in 2025 they won't be on 14nm+++++++++++++++++++++

Maybe sometime Intel will be in a "better" shape for people that can make a difference to be allowed to make a difference.

 

[Hulk]

Do you think Lisa Su is personally reviewing chip designs herself? I don't. Management is the issue, sure, but I don't need you need a technical CEO to understand that TSMC getting that far ahead is going to end up causing a ton of problems for Intel. In that sense spinning off the fabs to new management who might take things more seriously does make sense.

I think the main thing Lisa Su is doing is that her main goal is to produce the best products available in the market and she isn't afraid of the hard work it takes to make that happen. You can just tell by listening/reading about her that she is supremely driven about the technology.

Intel on the other hand seems to be constantly looking to "manage" their current assets (or lack of). "How do we position the shortcomings of this product to make it look better?" "How do we time this release to impress the board?" How do we squeeze another refresh out of this product?" They should of directing efforts at the products like the old Intel used to do. They've moved from one bean counter CEO to the next to rearrange the deck chairs.

I hope the old Intel is still there somewhere. You know, the one that designed and produced the 8086 (the chip that started the PC era) in two years, with basically no CAD and a team of a few dozen guys.

 

[TheELF]

I hope the old Intel is still there somewhere. You know, the one that designed and produced the 8086 (the chip that started the PC era) in two years, with basically no CAD and a team of a few dozen guys.

You mean the intel that has hardware image and video processing and on never systems AI build into every CPU, is making XE, has made xeon phi, has put a full computer on a pcie board, has put a CPU on a m.2 stick, has created 3dxpoint/optane and so on?!
They are doing fine, they just have a different vision of what is important for CPUs, they are not stuck in the past thinking that 3d rendering is the only thing needed in desktop space.

 

[chrisjames61]

You mean the intel that has hardware image and video processing and on never systems AI build into every CPU, is making XE, has made xeon phi, has put a full computer on a pcie board, has put a CPU on a m.2 stick, has created 3dxpoint/optane and so on?!
They are doing fine, they just have a different vision of what is important for CPUs, they are not stuck in the past thinking that 3d rendering is the only thing needed in desktop space.

They have a different vision that isn't getting them anywhere unless you call being overtaken and beleaguered and having your stock hammered positive developments.

 

[Panino Manino]

She's done great things so far at AMD, but I think that user is jumping the gun just a teeny bit declaring her as one of the greatest leaders in American history. Now in another 5-10 years she is still crushing it (at AMD or at another company), we can revisit her leadership/legacy. She's had a great start for sure, so I'm not dismissing that aspect at all.

History has shown there has been multitudes of leaders that had one good run over a short period of time, only to show they were simply lucky to be in the right place at the right time.

Edit: if my Google-fu found the right Jon Masters, it says he's 25 (looks older in profile pic), so that would explain their declaration based on their limited world experience.

Anandtech is an old forum, and in case it survives a few more decades (me, too), I want to revisit this post in the future (assuming the world will be still standing).

Oh, yeah, I side with John Masters and CartMerc.

 

[Hulk]

Anandtech is an old forum, and in case it survives a few more decades (me, too), I want to revisit this post in the future (assuming the world will be still standing).

Oh, yeah, I side with John Masters and CartMerc.

I am not implying Intel is at the end of the road, or finished or anything like that.

What I am saying is this is the first time I can remember them being apparently "shaken" by recent problems and actually considering selling off their fabs. They've always been a supremely confident juggernaut. Sure they've had their ups (8086, 386, Pentium, Pentium Pro, Core2Duo) and downs (P4, Itanium, Rambus) but they've always come through with pretty brilliant products. I would hate to see a great company lose focus and begin a painful-to-watch prolonged inexorable decline.

I think they need really smart, young, tech passionate people in the company, and they need a corporate restructure that attracts those kinds of people. They need to make designing/producing CPUs "fun again." What happened to the guys in the colorful lab uniforms?

As for the fabs, honestly I'm confused. On one hand we know they have been struggling with 10nm for about 5 years.

But on the other hand the last reports we've had were that 10SF (Tiger Lake) was going swimmingly well. TG is getting up to 4.8GHz mobile so unless the yields are horrific it's seems like they have a process not too far off TMSC's 7nm. And yes I know TMSC is about to move to 5nm but from what I've read Intel's 10SF feature size is pretty close to TMSC 7nm so they aren't that far off course. Unless as I wrote 10SF yields are simply not profiitable.

 

[dmens]

You mean the intel that has hardware image and video processing and on never systems AI build into every CPU, is making XE, has made xeon phi, has put a full computer on a pcie board, has put a CPU on a m.2 stick, has created 3dxpoint/optane and so on?!
They are doing fine, they just have a different vision of what is important for CPUs, they are not stuck in the past thinking that 3d rendering is the only thing needed in desktop space

Yes, that vision involves space heating and further x86 fragmentation for benchmarketing.

 

[Panino Manino]

I am not implying Intel is at the end of the road, or finished or anything like that.

And I'm only blessing Lisa, not thinking about Intel.

 

[Hulk]

And I'm only blessing Lisa, not thinking about Intel.

Sorry I thought this was a thread about Intel.

 

[UsandThem]

And I'm only blessing Lisa, not thinking about Intel.

So you're just here for her canonization?

 

[ondma]

She's done great things so far at AMD, but I think that user is jumping the gun just a teeny bit declaring her as one of the greatest leaders in American history. Now in another 5-10 years she is still crushing it (at AMD or at another company), we can revisit her leadership/legacy. She's had a great start for sure, so I'm not dismissing that aspect at all.

History has shown there has been multitudes of leaders that had one good run over a short period of time, only to show they were simply lucky to be in the right place at the right time.

Edit: if my Google-fu found the right Jon Masters, it says he's 25 (looks older in profile pic), so that would explain their declaration based on their limited world experience.

She certainly has done a good job at AMD. It is really hard to judge though, since she started with a company that had a very bad product, so lots of room for easy improvements. She was also aided by the continual woes at Intel. If Intel had performed competently, they would have been on 7 or even 5 nm by now, and AMD products would not look nearly so impressive.

 

[Heartbreaker]

I wonder if Intel will take heed? They certainly need to change something.

The need to do something, doesn't mean they should panic and do something as dumb as divest fabs.

Divesting Fabs didn't fix AMD. Good management and good designs, fixed AMD.

AMD only divested Fabs since it was totally desperate for cash. That divestiture didn't free them to use better Fabs, instead they were contractually obligated to Global Foundries for nearly a decade.

Intel not being desperate for cash, should simply explore using other fabs for some leading edge designs, while it attempt to get it's own in better shape, and using them for non leading edge parts like chipsets. Note that this is something that Intel already communicated it was exploring.

Divestiture doesn't offer any advantage for an actual Intel turnaround, it just presents an opportunity Vulture capitalists to make some money placing bets on the breakup.