In the context of the the lack of confidence investors seem to have in Intels long term vision this makes sense but it really doesn't feel like a good sign for their future
Intel is circling the drain. At this point I'm of the opinion that the sooner it dies the better. Its death will probably result in a lot of spin-offs and startups, which might be what the US chip industry needs.
Yeah it's interesting that a RTO is included, as if remote work was somehow part of the problem. Intel's spiral started at least 10 years before remote work was normalized, and you can make a pretty good argument that they stopped innovating in the early 2000's.
This is a company that declined to supply chips for the iPhone because they didn't think the margins would be good enough. Consider how much that one decision has favored competitors. And that's just one bad decision of countless.
TLDR: "we've gotten ourselves into deep shit by saving money for shareholders. That caused a financial disaster so we'll fire 15% of you and save some more money. What could go wrong?"
Some mutterings were heard about the definition of insanity ...
"Streamline" must be one of the most weaselly buzzwords floating around today's corporate jargon, and, for some inexplicable reason, LLMs seem particularly fond of it too.
> we have decided not to move forward with previously planned projects in Germany and Poland
Did they end up getting any German/EU money to build that cutting edge foundry? EU's chip strategy seems to be in shambles, and they took their eyes off the ball since the end of the Covid chip crisis.
There are too many companies out there that started with a good product/service - and then bureaucrats took over. Smart companies minimize layers of management, and manager headcount. Bad companies don't - and they eventually are unable to grow/innovate. A shockingly high percentage of corporate America is parasitic management.
Intel happens to be in an industry that moves so fast that this doesn't work for long, relatively.
Another flipflop. Canceling the Germany fab, bringing SMT back.
> Looking further ahead, we’re developing Intel 14A as a foundry node from the ground up in close partnership with large external customers. This is essential to designing a process that meets specific customer requirements and enables us to address a broader segment of the market. Going forward, our investment in Intel 14A will be based on confirmed customer commitments. There are no more blank checks. Every investment must make economic sense. We will build what our customers need, when they need it, and earn their trust through consistent execution.
are these large external customers in the room with us right now?
I see lots of doomers in here talking about Intel failing. Well, the truth is the government will just bail them out again.
But instead let's discuss some turnaround suggestions, starting with:
(1) Acquiring at least one or two AI chip technology startups. (Lightmatter, Cerebrus, etc)
(2) Assembling an AI hardware research team focused on efficient AI + software compatibility with existing AI accelerator libraries.
(3) Investing heavily in the PyTorch team at Intel.
(1) is the most important and urgent action that Intel can do to sort out their issues.
The strangest part to me about the current trends: why do all these business leaders all do the same things at the same time? E.g. Layoffs + micromanagement + cost focus etc... Is this truly about macroeconomic forces that every business is responding to? Or is it just following the latest fad?
There seems to be significant opportunity to zig as others zag. Imagine the Intel letter saying "we are going to take advantage of the current hiring environment to scoop up talent, and push forward on initiatives."
I think if it's not a collusion then it's concentration of wealth. CEOs are basically employees to the board, and the board is or is representing pretty much the same people in most major companies.
My personal theory is that it is ultimately the same reason you see things like software engineers blindly using the same tech stacks, because most people, most of the time, aren't working off first principles.
They're just trying to get the job done and copying your partner's homework can save time, even if your partner didn't get the right answer or also just copied their partner.
CEOs, on average, don't know what they're doing any more than anyone in most other professions. They just happen to be born part of the ruling class.
I tend to think all these business leaders are actually business larpers. They dress up as what they see other business people dressing up in, they lay off loads of people because they see other companies doing that, they send stupid letters like this out because they think that's what they're supposed to do while dressed up as a business leader. You get business larpers at every company, sometimes they happen to be good enough at the larping that people put them into actual leadership roles and then this sort of thing happens.
These companies are members of WEF and owned by major investment funds. That's the likely source of these shenanigans. The rich just want to be richer and to hell with normal folks.
One theory that I saw earlier was that the industry is bloated, big tech companies executives knew that but they continued to hire anyway to make sure that the people they don't hire don't start competitors when there was funding, there is less funding now so that risk is no longer there so companies can reduce their size to their actual needs, but maybe that does not apply to intel since they seem to be really in a bad situation now.
It’s not just the same things - they do the same things to similar degrees. They are reading from the same playbook (and have, mostly, the same investors).
Most CEOs follow trends so as to not get criticized and fired. It’s the same in American football. The “book” says you do certain things under certain circumstances- 4th down and 5, you punt. Everyone drafting linemen, you do too. If you zig and others zag you get criticized on ESPN (CNBC For CEOs) and if it doesn’t work you get fired. Better to have a few years of 8-8 performance than risk it for a 14-2 season.
All the layoffs and such have been going on for a bit and there's been more and more leading up to the end of the R&D tax credit. Their headcount has been planned for years.
AI was a wonderful scapegoat. If it wasn't AI it'd be the economy or some other excuse. No one wants to admit mismanagement and overspending, but of course a business is going to take advantage of a discount. It's just a shame that wasn't a discount on property or hardware, it was on people.
Some other smaller companies are swept up in this because they follow moves from the larger companies. Everyone is trying to copy the leader, right? Everyone is asking "what's that big successful company do? That's what we need to do." So you have this absolutely horrible job hiring process in tech too as a result of that. You have excess and toxicity because people are trying to make something work that doesn't make sense for their business.
What do you think the whole $100 million bonuses for these AI people (which so far have been rumors) is going to do? It'll cause idiots elsewhere to go overpay and over hire because of FOMO...and once again more layoffs in the future.
It's a herd mentality for both. AI may be the next big thing. And the old things need realignment.
So the "market" demands sacrifice basically and there is cover when everyone else is doing it. You can be contrarian but your stock may get punished. Intel may not have a good plan anyway. The reason the market demands sacrifice is likely because of predicted unfavorable economic headwinds (etc... so signs of recession or what not). These predictions could be wrong though. Companies do constantly realign though, product initiatives fail etc...
While we often praise leadership for their decision making ability, the reality is most leaders aren't leaders, they're followers.
Particularly in tech and tech adjacent, there's a belief that doing what everyone else is doing is safe. It's the "nobody ever got fired for buying IBM" approach but for corporate decision making.
If other companies return to office, you return to office. They're successful, so they must have good reasons - no need to investigate or come up with your own reasons. If other companies eliminate QA, you eliminate QA.
Most tech companies are just following what the big dogs are doing, but worse and stupider. When it backfires, nobody cares.
Is this truly about macroeconomic forces that every business is responding to? Or is it just following the latest fad?
Look at it like an economist, who sees everything as market, and the answer to both is: Yes. Fads are just market bubbles. Excess employees are sometimes an asset, regardless of their effectiveness. It gives value to the team manager and sometimes the company itself, and it prevents other companies from having access to those employees. It's not a very efficient tactic, so even a small amount of overemployment can be a bubble that quickly turns from an asset to a liability. What you end up with is employment bubbles at the trailing end of economic rises. They can collapse while the economy is still growing, just because the growth slowed down.
Just like any bubble bursting, that is the best time for any well-positioned company to invest in that market. The problem with Intel is that they are far from well positioned. AMD and nVidia each have about a quarter of the employees that Intel has and TSMC has about half. Intel over-invested in employment so the over-employment bubble bursting will hit them hard. Their best bet is to refocus their current employees, but they might not be the right mix, so they may need to have even larger layoffs, while simultaneously highering new employees in pertinent fields.
> why do all these business leaders all do the same things at the same time
It's like fashion, humans follow trends, almost always, and in the case of big companies, the CEOs are quite wealthy and that means the people they hangout with, the parties they attend, and the general circles they are part of, is pretty small (not that many people at that level of wealth), and so they're all mostly part of the same "clicks" that talk about and share the same ideas.
"If everyone is doing {unpopular thing} then we can do {unpopular thing} and not get bad PR from it."
Layoffs and cost focus are two of those. There's also additional pressure from major shareholders (institutional) to reduce opex, even if the better strategy would sometimes be to stretch for some strategic goal when everyone else is contracting. Your stock is going to take a hit in the short term.
Lastly, some is just the "yell harder" mentality kicking in for management that doesn't actually know what to do.
When the economy slows down, people and companies spend less. Less spending means fewer sales, which means less work and less money to pay staff. Since salaries are a big cost, companies cut jobs.
Before the downturn, spending was up, sales were up, and companies hired more people. Now they see they hired too many or inefficiently, so they cut headcount not only because demand is down, but also to fix those inefficiencies.
And about the argument of investing now to scoop up talent and push initiatives forward: downturns often come with higher interest rates. That makes it more expensive to raise money to invest. So why would companies do that now?
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[ 3.5 ms ] story [ 78.8 ms ] thread> Return to office in September
So 15% reduction now and another stealth reduction in September
This is a company that declined to supply chips for the iPhone because they didn't think the margins would be good enough. Consider how much that one decision has favored competitors. And that's just one bad decision of countless.
Some mutterings were heard about the definition of insanity ...
Extremely sad. What's the justification for ignoring ARM / RISC-V?
Did they end up getting any German/EU money to build that cutting edge foundry? EU's chip strategy seems to be in shambles, and they took their eyes off the ball since the end of the Covid chip crisis.
There are too many companies out there that started with a good product/service - and then bureaucrats took over. Smart companies minimize layers of management, and manager headcount. Bad companies don't - and they eventually are unable to grow/innovate. A shockingly high percentage of corporate America is parasitic management.
Intel happens to be in an industry that moves so fast that this doesn't work for long, relatively.
A small startup can just go bankrupt if it fails, but in a big company (like Intel) there can be more collateral damage
> Looking further ahead, we’re developing Intel 14A as a foundry node from the ground up in close partnership with large external customers. This is essential to designing a process that meets specific customer requirements and enables us to address a broader segment of the market. Going forward, our investment in Intel 14A will be based on confirmed customer commitments. There are no more blank checks. Every investment must make economic sense. We will build what our customers need, when they need it, and earn their trust through consistent execution.
are these large external customers in the room with us right now?
But instead let's discuss some turnaround suggestions, starting with:
(1) is the most important and urgent action that Intel can do to sort out their issues.There seems to be significant opportunity to zig as others zag. Imagine the Intel letter saying "we are going to take advantage of the current hiring environment to scoop up talent, and push forward on initiatives."
They're just trying to get the job done and copying your partner's homework can save time, even if your partner didn't get the right answer or also just copied their partner.
CEOs, on average, don't know what they're doing any more than anyone in most other professions. They just happen to be born part of the ruling class.
AI was a wonderful scapegoat. If it wasn't AI it'd be the economy or some other excuse. No one wants to admit mismanagement and overspending, but of course a business is going to take advantage of a discount. It's just a shame that wasn't a discount on property or hardware, it was on people.
Some other smaller companies are swept up in this because they follow moves from the larger companies. Everyone is trying to copy the leader, right? Everyone is asking "what's that big successful company do? That's what we need to do." So you have this absolutely horrible job hiring process in tech too as a result of that. You have excess and toxicity because people are trying to make something work that doesn't make sense for their business.
What do you think the whole $100 million bonuses for these AI people (which so far have been rumors) is going to do? It'll cause idiots elsewhere to go overpay and over hire because of FOMO...and once again more layoffs in the future.
And on and on we have these cycles.
So the "market" demands sacrifice basically and there is cover when everyone else is doing it. You can be contrarian but your stock may get punished. Intel may not have a good plan anyway. The reason the market demands sacrifice is likely because of predicted unfavorable economic headwinds (etc... so signs of recession or what not). These predictions could be wrong though. Companies do constantly realign though, product initiatives fail etc...
Particularly in tech and tech adjacent, there's a belief that doing what everyone else is doing is safe. It's the "nobody ever got fired for buying IBM" approach but for corporate decision making.
If other companies return to office, you return to office. They're successful, so they must have good reasons - no need to investigate or come up with your own reasons. If other companies eliminate QA, you eliminate QA.
Most tech companies are just following what the big dogs are doing, but worse and stupider. When it backfires, nobody cares.
Just like any bubble bursting, that is the best time for any well-positioned company to invest in that market. The problem with Intel is that they are far from well positioned. AMD and nVidia each have about a quarter of the employees that Intel has and TSMC has about half. Intel over-invested in employment so the over-employment bubble bursting will hit them hard. Their best bet is to refocus their current employees, but they might not be the right mix, so they may need to have even larger layoffs, while simultaneously highering new employees in pertinent fields.
It's like fashion, humans follow trends, almost always, and in the case of big companies, the CEOs are quite wealthy and that means the people they hangout with, the parties they attend, and the general circles they are part of, is pretty small (not that many people at that level of wealth), and so they're all mostly part of the same "clicks" that talk about and share the same ideas.
Layoffs and cost focus are two of those. There's also additional pressure from major shareholders (institutional) to reduce opex, even if the better strategy would sometimes be to stretch for some strategic goal when everyone else is contracting. Your stock is going to take a hit in the short term.
Lastly, some is just the "yell harder" mentality kicking in for management that doesn't actually know what to do.
When the economy slows down, people and companies spend less. Less spending means fewer sales, which means less work and less money to pay staff. Since salaries are a big cost, companies cut jobs.
Before the downturn, spending was up, sales were up, and companies hired more people. Now they see they hired too many or inefficiently, so they cut headcount not only because demand is down, but also to fix those inefficiencies.
And about the argument of investing now to scoop up talent and push initiatives forward: downturns often come with higher interest rates. That makes it more expensive to raise money to invest. So why would companies do that now?