The Slow Demise of Intel
Posted: Thu Apr 21, 2016 5:33 am
DEC, IBM, HP, and now... Intel?
Intel, cutting 12,000 jobs, tries to bend the company without breaking it
A coworker and I were discussing this the other day. Some friends and ex-colleagues of his in Intel's fab research group (working on processing nodes 2 steps out) spoke of particularly deep cuts to that group. Intel is cutting about 11% of its workforce, which is staggering, all the more so given that the company is as profitable as it is (60% gross margin). However, Intel has been suffering from a collapsing PC industry in recent years and they totally missed the mobile boat. Samsung (Korea) and TSMC (Taiwan) are rapidly converging on Intel. The latest Skylake processors are built on a 14nm process and some say that Intel's competition may already be ahead in 10nm node progress. Each process shrink is taking longer and nobody is certain what comes next once single-digit nm transistor channel lengths are reached. Note that the spacing between two crystalline silicon atoms is ~0.2 nm, if memory serves.
Why is this important? In a nutshell: the worst case scenario is that the US loses its edge in a vitally strategic domain.
Semiconductor fabrication is arguably the pinnacle of human technical achievement. New fab facilities cost on the order of $10B (and future nodes will be significantly more costly). If it turns out that cuts to fab R&D are deeper than elsewhere, Intel may be signalling a willingness to abandon this costly effort. Samsung, TSMC, and their governments will be happy to pick up the tab to maintain their technical advantage in the field. Former Intel CEO Andy Grove famously warned of the consequences of nations losing their manufacturing edge in this 2010 article. It's not just about the current generation of technology, but about the know-how to innovate, prototype, and bring new technologies to market. Once the supply chain decays, it can't be snapped back into life at will.
No easy solution to this one. The market doesn't care about America's competitiveness -- it will be happy to hand that over to Asian technocracies. And there isn't much the US government can or should do to save an ailing 100,000+-employee giant.
Intel, cutting 12,000 jobs, tries to bend the company without breaking it
A coworker and I were discussing this the other day. Some friends and ex-colleagues of his in Intel's fab research group (working on processing nodes 2 steps out) spoke of particularly deep cuts to that group. Intel is cutting about 11% of its workforce, which is staggering, all the more so given that the company is as profitable as it is (60% gross margin). However, Intel has been suffering from a collapsing PC industry in recent years and they totally missed the mobile boat. Samsung (Korea) and TSMC (Taiwan) are rapidly converging on Intel. The latest Skylake processors are built on a 14nm process and some say that Intel's competition may already be ahead in 10nm node progress. Each process shrink is taking longer and nobody is certain what comes next once single-digit nm transistor channel lengths are reached. Note that the spacing between two crystalline silicon atoms is ~0.2 nm, if memory serves.
Why is this important? In a nutshell: the worst case scenario is that the US loses its edge in a vitally strategic domain.
Semiconductor fabrication is arguably the pinnacle of human technical achievement. New fab facilities cost on the order of $10B (and future nodes will be significantly more costly). If it turns out that cuts to fab R&D are deeper than elsewhere, Intel may be signalling a willingness to abandon this costly effort. Samsung, TSMC, and their governments will be happy to pick up the tab to maintain their technical advantage in the field. Former Intel CEO Andy Grove famously warned of the consequences of nations losing their manufacturing edge in this 2010 article. It's not just about the current generation of technology, but about the know-how to innovate, prototype, and bring new technologies to market. Once the supply chain decays, it can't be snapped back into life at will.
No easy solution to this one. The market doesn't care about America's competitiveness -- it will be happy to hand that over to Asian technocracies. And there isn't much the US government can or should do to save an ailing 100,000+-employee giant.