News Intel might cancel 14A process node development and the following nodes if it can't win a major external customer — move would cede leading-edge ma...

[palladin9479]

Stay off the social politics and on the Intel news.

 

[jkflipflop98]

I'd go a step further and wager that Intel's lack of diversity in hiring and promotion has led to the kind of monoculture of thought that has resulted very directly in their digging themselves into this hole.

This is complete nonsense. Intel has always been extremely diverse. The company has always hired the best and brightest no matter where they come from or what color they are.

 

[bit_user]

I'm absolutely gobsmacked the board is playing along.

The board is who hired him.

 

[jheithaus]

If they write down the foundry to zero, isn’t the company bankrupt?? Nuts.

 

[baboma]

>Based on the wall street reaction to Intel releasing foundry financials this is false

Judging from market reaction to the earnings report, nobody is cheering. It's down by a few percent. The sentiment is to be expected: a sobering realization that Intel is undergoing major restructuring, which will take years, and with significant risks involved.

Regardless, investing is not a popularity contest, nor is Wall Street some evil cabal that seeks to strip companies of assets to sell off. [Well, there is. It's called private equity. But that's not in play here.]

>The supposed investors don't want to build a company's future if it interferes with making money now.

Yes, investors--you and me--all want positive returns for our money. That's why we invest. Healthy companies are the best bet for that to happen. It's insulting that you would malign investors--and yourself--as money-grubbing morons as above.

People with money to invest don't get there by being morons.

>What Tan is doing will likely end up making me money, but I don't believe for a second the Intel that I watched evolve over the years exists at the end of it.

A company ceasing to exist, at the same time making you money...Talk about pretzel logic.

Look, I'd give your doommongering more credence if your accusations of "Tan dismantling" the company had any substance other than just your say-so. Maybe it's this below?

>They're cutting people they can't actually afford to lose if they plan on having a successful manufacturing business.

And you know this, how? Do tell.

Of these "oh no they cut too much!" handwringing, I'm reminded of how Musk took the proverbial axe to Twitter's payroll. 80 percent! Holy schmuck! Yes, I was one of the "Twitter is d00med fer sure" crowd, which was pretty much everybody. But X is still alive and kicking today. It remains the key social media for important breaking news.

So, do forgive if Intel getting a 25% haircut doesn't cause me to collapse in hysteria.

>If it wouldn't cost me money I'd have done so already after they forced Gelsinger out.

Losing money is part and parcel of investing. I lost a huge chunk on Intel, but I sold off all my Intel holding last year for tax-loss harvesting, despite being bullish on Intel's turnaround prospects. I like Tan's no-nonsense approach where no cows are sacred--not fabs, not headcount, just a relentless focus on regaining competitiveness and profitability. I'm set to buy back in.

>A lot of the current big money losses seem to be tied solely to restructuring.

Yep. Put all the pain into one lump and don't drag it out. SOP for turnarounds.

>https://morethanmoore.substack.com/p/intel-2025-q2-financials

Yes, a good report. Ian Cutress is a respected analyst, and his piece lays out Intel's prospects well. Nowhere in there is Intel's demise an imminent event as you claim. Nor is there any mention of Intel "cutting employees it can't afford to lose." None about money-grubbing investors either. Perhaps you should read it.

The piece's commentary at the end concurs with one of the reasons I'm bullish on Intel (and its fabs staying intact.) The Trump admin is set to go to war with China on AI, and having domestic leading-edge semiconductor manufacturing is a key component. Hence the "AI Action Plan." I've said before, and I'll say it again: Intel (and its fabs) are too critical to fail.

 

[bit_user]

Tan's rationale resonates to me, as a fiscal conservative.

That has nothing to do with this. Companies are always run with an eye towards maximizing profit.

The only question is whether you're a short-term or long-term investor. If you're a short-term investor, then semiconductor manufacturing is the wrong sort of investment for you, because it's a cyclical business that involves big up-front investments that are needed to anticipate demand years in advance. There's inherent risk in that, but it's not traditionally been unmanageable. It does require some intestinal fortitude.

Cut headcount to no more than is needed.

This is difficult to do, in an engineering and highly-technical manufacturing contexts, because you can't just ramp up team sizes overnight, when you decide you need more staff. Also, the exact team size is hard to quantify and cutting too much puts you behind schedule or leads to poor quality, in an industry where neither missing market windows nor delivering sub-par products is acceptable.

Don't build factories unless you can ascertain demand.

It's a bit of a chicken-and-egg problem, but it's much more a problem that construction on new fabs need to be started several years in advance of when customers would have chip plans at the stage where they're looking to buy wafer capacity.

Let's not forget that R&D costs are the real problem that IFS was intended to solve. Either Intel needs to get out of the fabrication business or they need external customers. And in order to run enough volume for external customer, they need to have enough production lines.

These are all sensible moves.

They're only sensible if you don't actually know anything about their business.

 

[Giroro]

Rip and Tear, until it is done.

Lip Bu Tan's only skill is in liquidating companies to the benefit of the board, and at the expense of the investors.

But lay off the guy. He's just doing the terrible, depressing job that he was specifically hired to do.
It's the board's fault, and it will happen too fast for investors to vote them out.
Business majors will be taught about Intel as an object lesson for why you shouldn't pack your board of executives with people who are deeply invested in the success of your biggest competitors.

ALLEGEDLY.

Also, I guess no company should ever hire Gregory D. Smith into a position of power. It's just not going to work out for you, buddy.

 

[baboma]

>>Cut headcount to no more than is needed.

>This is difficult to do, in an engineering and highly-technical manufacturing contexts, because you can't just ramp up team sizes overnight...

As said, the question is whether you believe the CEO can do the job. I'm not an HR expert, and I don't see you or anyone here claim to be one, either. His rationale is sensible, and I've yet to see anyone mounting a counterclaim, other than some vague conspiracy theory of Wall Street cabal seeking to dismantle the company. If you have something of substance, do share.

>>These are all sensible moves.

>They're only sensible if you don't actually know anything about their business.

And you do? More than the CEO? Or is this more conspiracy talk?

 

[bit_user]

I'm not an HR expert, and I don't see you or anyone here claim to be one, either.

What does HR have to do with anything? Every HR person at every company I've ever worked for has absolutely no clue about engineering. They deal with pay & benefits, personnel policies, the administrative aspects of hiring & firing, and maybe they buy some industry surveys to find out what the company's pay scale should look like and how much to budget for annual raises.

His rationale is sensible, and I've yet to see anyone mounting a counterclaim,

We lack specifics to make a solid case that he's cutting too much. We will only know in hindsight, once it starts to become apparent what's been lost.

And you do? More than the CEO?

You can only judge them as sound if you know his endgame, which we don't.

What I was talking about is how you apparently don't know the lead time on new fab buildouts, nor how much time or investment is required to take a new node like 18A from the IMEC roadmap all the way to production ramp. If you don't know these details, I think it's impossible for you to know whether the changes he's making to their foundry business are sound.

 

[thestryker]

Judging from market reaction to the earnings report, nobody is cheering. It's down by a few percent. The sentiment is to be expected: a sobering realization that Intel is undergoing major restructuring, which will take years, and with significant risks involved.

I'm referring to when the value halved after Intel split out their foundry reporting. Nobody who understood Intel's business model should have thought the foundry was in a good place and not Intel's single biggest loss. A reaction like that, if the market was actually knowledgeable investors, never should have happened. If that was going to be the reaction then it should have happened when Gelsinger outlined his plans.

Yes, investors--you and me--all want positive returns for our money. That's why we invest. Healthy companies are the best bet for that to happen. It's insulting that you would malign investors--and yourself--as money-grubbing morons as above.

People with money to invest don't get there by being morons.

This seems like you're either completely ignorant as to how wall street works today or you just don't care. I'm guessing it's the latter because you're obviously not stupid. See my above paragraph as to what I'm referring to with regards to investors.

And you know this, how? Do tell.

It's not hard to figure out when you see who's leaving. When Gelsinger did the removal of around 15000 last year engineers were leaving and going to other tech companies. The WARN notices also include what the general function/job titles of those being let go. We're not talking about managers and superfluous staff but rather engineers from their R&D hub.

A company ceasing to exist, at the same time making you money...Talk about pretzel logic.

No it's just you not understanding what was written. I'm saying it will not be the same as it has been which is a vertically integrated engineering company. I suspect this strategy will end up with high returns even if it's awful for the market (meaning silicon fabrication).

Yep. Put all the pain into one lump and don't drag it out. SOP for turnarounds.

This was going on before Tan arrived and has been the biggest source of losses. This comes back to covid times and over buying of equipment.

Also apparently OEMs would rather have CPUs using Intel 7 as they're cheaper even though Intel has capacity of Intel 3 now which is not a great sign. Of course the only client part on Intel 3 is MTL which wasn't faster than RPL or more efficient (though on Intel 3 efficiency should be better).

 

[baboma]

>We lack specifics to make a solid case that he's cutting too much. We will only know in hindsight, once it starts to become apparent what's been lost.

You would have done well to stop there. Instead of implying that the CEO's rationales aren't sensible, or that you know something about Intel's business, more than the CEO, which you don't.

>They're only sensible if you don't actually know anything about their business.


>What I was talking about is how you apparently don't know the lead time on new fab buildouts,

Backseat drivers tend to assume the actual driver is an idiot.

Intel isn't an idiot. It can gauge 14A demand without building actual fab, by sending prospective customers its 14A Process Design Kit (PDK) and getting their input. Per below, "multiple customers have expressed their intent to build test chips on the new process node."

https://newsroom.intel.com/intel-fo...athers-customers-partners-outlines-priorities

Now, if the 14A process is so terrible that no customer are interested, then the idiocy would be in building a 14A fab in advance that nobody wants.


I get it. Everybody wants to be a backseat driver, replete with conspiracy theories about Intel board being in cahoots with Wall Street baddies to stripmine the company. If you want to rise above the hoi polloi, then stop casting aspersions on people and company you know little about.

 

[ejolson]

Is this the beginning of the fire sale Jim Keller warned about that does not unlock share holder value?

While it's important for Intel to be realistic, it's also important to not be undermined by powerful people making decisions that don't further their best interests.

At this point Intel has sold off so many assets and stopped developing others that only one egg is left. If you have only one egg, then it's impossible to not put all ones eggs in the same basket.

Seen in a different way, Intel got rid of Omni-path networking, addressable Optane persistent memory, Xeon Phi accelerators and processors with on-package HBM just before the AI boom made those technologies highly desirable. To avoid the further effects of cascading failure, why sell the fab just before the rush to make custom AI accelerators?

 

[Giroro]

Don't build factories unless you can ascertain demand.

But that's not how bleeding edge works, and I feel like this is a very obvious thing that shouldn't need to be explained. But I'll do it anyways.
These production lines are not evergreen, they have roughly a 3 year lifespan, and a 3 year setup time.
If you start building the factory after the demand hits, then your ability to fill the demand will be 3 years late. The demand will be gone, and the obsolete product will be worthless.
Intel is already severely struggling because they are 2 years behind, which limits their window of opportunity to recoup their losses and then profit down to 1 year. Gelsinger recognized this, and implemented an expensive but necessary plan to aggressively recoup that lost ground and eventually return to profitability.

But if they cancel even one new node, at least without a plan to bypass it and jump ahead, then they go from being 2 years behind to 5 years behind. 5 year old chips are completely worthless to bleeding edge customers. Their product is simply gone.
And for those smart business thinkers out there, no product means no revenue.
No revenue means no company.

At that point, all they have left is inferior chip designs that will be far, far more expensive to manufacturer at their competitor's factory - which will be last in line and years late behind the big ballers Nvidia, Apple, and AMD... if TSMC even decides to let Intel make them at all.
Well, Intel also has some smaller businesses and a huge library of IP that they could repackage and exploit, a la Atari... Or at least they used to. I'll have to double check just how much of that has already been stripped for parts.

Or how about a hypothetical analogy that even Intel's remaining investors can understand: it would be like if Disney said they were going to shut down all movie production and put Marvel, Fox, and Pixar up for auction. They do this to pursue the higher margins on their more lucrative hotel business.
You see, they realized too many people want to come and stay at their Florida hotels. So the plan is to tear down Disney world and build even more hotels, but they'll cut cost by only building as many hotels as are in demand by current market conditions.... Completely forgetting that the only reason people pay a lot to stay at their hotels is for the theme parks and the characters.

But it's ok, you see, because they could pay out the nose to simply just license back their most-popular characters from WB, Comcast, or whoever else buys them.
They put together a fancy spreadsheet with numbers going up, and everything!

But if they were to do that, I bet you wouldn't think that they were making reasonable decisions with the intent to improve the business. You would think they either completely misunderstood the most basic foundation of their business to a ridiculously impossible degree, or you would think that they were deliberately trying to break the piggy bank open and cash out. There's not a lot of middle ground in between, and neither extreme is worthy of investment.
Because that's obviously not streamlining a business to gain a competitive edge. It's squandering your only advantages and declaring defeat.

This is Intel's "Iomega" moment.

 

[PCWarrior]

I think this threat may work. The US cannot allow not to have a semiconductor leading edge manufacturer and/or rely on a foreign company that doesn’t even have their most advanced node in the US. So this means that either there will be a CHIPS Act 2 with money handed to Intel to build these 14A fabs OR the government will force (at least some) fabless US companies to use (at least partially) Intel fabs even if they wouldn’t normally want to do so.

 

[TerryLaze]

Rip and Tear, until it is done.

Lip Bu Tan's only skill is in liquidating companies to the benefit of the board, and at the expense of the investors.

But lay off the guy. He's just doing the terrible, depressing job that he was specifically hired to do.
It's the board's fault, and it will happen too fast for investors to vote them out.
Business majors will be taught about Intel as an object lesson for why you shouldn't pack your board of executives with people who are deeply invested in the success of your biggest competitors.

ALLEGEDLY.

Also, I guess no company should ever hire Gregory D. Smith into a position of power. It's just not going to work out for you, buddy.

Lip bu had to buy 25mil in shares, unless he has a shady deal that will compensate him for his troubles plus the 25mil he spend (not to mention the possible turn around of the shares spiking up in value) then what you say would be nonsense.
https://www.tomshardware.com/tech-i...on-in-intel-investment-value-as-stock-tumbles

 

[TerryLaze]

But that's not how bleeding edge works,

Bleeding edge is also not the only thing that makes enough money.
If intel can stay "bleeding edge adjacent" they can stay in profitable fab (and CPU) business.
A lot of the comments include sources to how intel 7 is still selling more than their newer nodes.

 

[rluker5]

I think this threat may work. The US cannot allow not to have a semiconductor leading edge manufacturer and/or rely on a foreign company that doesn’t even have their most advanced node in the US. So this means that either there will be a CHIPS Act 2 with money handed to Intel to build these 14A fabs OR the government will force (at least some) fabless US companies to use (at least partially) Intel fabs even if they wouldn’t normally want to do so.

Was CHIPS 1 ever disbursed?

Also, if you are TSMC and want to eliminate the rest of your potential leading edge competition, how long do you need to cut prices on your services before you get to raise them to get ROI.

 

[dalek1234]

I called it but by 2030... Intel will be fabless, no other way around...

I think it will happen sooner. They are bleeding money and their credit rating is being lowered bit by bit. Eventually they will not be able to borrow more, and the only meaningful cash they will be able to generate (short term) will be to sell all the fabs sooner rather than later.

 

[ottonis]

Of course, no major vendor will commit to Intel's 14A before Intel 18A has been successfully released. Intel's manufacturing processes have been plagued for quite a few years, so people first need some proof that Intel is capable of mass-producing leading edge new chips. So, Intel better buckle up and get the 18A on track, before you expect anybody to invest billions in your anticipated 14A chips.

 

[ottonis]

Intel should spin out the Foundry business at this point, it's clear that it's not a priority for Lip-Bu. Otherwise I just don't see customers having faith that Intel in its current form will be able to compete and without investment it will just die. I think the Foundry would have a better chance on their own of both drawing investment and drawing external customers. I'm not saying it would or wouldn't be successful on its own, just that I think it would have a better chance at succeeding vs what this announcement sounds like (abandonment).

They should rather "spin out" their board of directors, which have made the strangest decisions in the past 10-15 years and are directly responsible for the current desolate state of Intel.

 

[jp7189]

Bart Simpson:
Let me get this straight: we're behind the rest of our class and we're going to catch up to them by going slower than they are? Coo Coo!

 

[Flayed]

One foundry to rule them all

 

[Jame5]

I don't buy into a thing he's doing and I also have skin in the game. He's exactly what wall street wants not what Intel as a company needs to execute. Every move he's made since being hired has been in service of dismantling the company and this is no different.

Yeah, he pretty much seems hell bent on prepping the company for dismantling, or a private equity takeover pump and dump.

 

[abufrejoval]

Threatening to cancel them could end up being a self-fulfilling prophesy.

True, but it could be a call for government intervention...

Which may not change the end result, only cost more in the mean-time.

 

[logainofhades]

This is what happens when you put a bean counter in charge of a company that should be run by an engineer.