Intel Get $5.7 Billion Early. What's the Government's Strategy? (msn.com) 93
Intel amended its deal with the U.S. Department of Commerce "to remove earlier project milestones," reports Reuters, "and received about $5.7 billion in cash sooner than planned."
"The move will give Intel more flexibility over the funds." The amended agreement, which revises a November 2024 funding deal, retains some guardrails that prevent the chipmaker from using the funds for dividends and buybacks, doing certain control-changing deals and from expanding in certain countries.
The move makes the Wall Street Journal wonder what, beyond equity, the U.S. now gets in return, calling government's position "a stake without a strategy." The U.S. has historically shied away from putting money into private business. It can't really outguess the market on where the most promising returns lie. Yet there are exceptions. Sometimes a company or industry risks failing without public support, and that failure would hurt the whole country, not just its shareholders and employees. Intel meets both conditions. It isn't failing, but it is losing money, its core business is in decline, and it lacks the capital and customers needed to make the most advanced semiconductors. If Intel were to fail, it would take a sizable chunk of the semiconductor industrial base with it. At a time of existential competition with China, that is a national emergency...
[U.S. Commerce Secretary Howard Lutnick] said as a shareholder, the U.S. would help Intel "to create the most advanced chips in the world." And yet the deal doesn't provide Intel with new resources to accomplish that. Rather, to get the remaining $9 billion, Intel had to give the U.S. equity. This is more like a tax than an investment: Shareholders gave up a 10th of their ownership in return for money the company was supposed to get anyway... Some of the administration's forays into private business do reflect strategic thinking, such as the Pentagon's 15% stake in MP Materials in exchange for investment and contracts that help make the company a viable alternative to China as a supplier of rare-earth magnets for products such as automobiles, wind turbines, jet fighters and missile systems. But more often, companies recoil from government ownership...
Though the U.S. stake dilutes Intel's existing shareholders, its stock has held up. There could be several reasons. It eliminates uncertainty over whether the remaining $9 billion in federal funds will be forthcoming... [B]ecause Washington has a vested interest in Intel's share price, investors believe it may prod companies such as Nvidia and Apple to buy more of its chips.
But that only goes so far, the article seems to conclude, offering this quote from an analyst Bernstein investment research. "If Intel can prove they can make these leading-edge products in high volume that meets specifications at a good cost structure, they'll have customers lined up around the block. If they can't prove they can do it, what customer will put meaningful volume to them regardless of what pressure the U.S. government brings to bear?"
CBS News also notes the U.S. government stake "is being criticized by conservatives and some economic policy experts alike, who worry such extensive government intervention undermines free enterprise."
Thanks to Slashdot reader joshuark for sharing the news.
"The move will give Intel more flexibility over the funds." The amended agreement, which revises a November 2024 funding deal, retains some guardrails that prevent the chipmaker from using the funds for dividends and buybacks, doing certain control-changing deals and from expanding in certain countries.
The move makes the Wall Street Journal wonder what, beyond equity, the U.S. now gets in return, calling government's position "a stake without a strategy." The U.S. has historically shied away from putting money into private business. It can't really outguess the market on where the most promising returns lie. Yet there are exceptions. Sometimes a company or industry risks failing without public support, and that failure would hurt the whole country, not just its shareholders and employees. Intel meets both conditions. It isn't failing, but it is losing money, its core business is in decline, and it lacks the capital and customers needed to make the most advanced semiconductors. If Intel were to fail, it would take a sizable chunk of the semiconductor industrial base with it. At a time of existential competition with China, that is a national emergency...
[U.S. Commerce Secretary Howard Lutnick] said as a shareholder, the U.S. would help Intel "to create the most advanced chips in the world." And yet the deal doesn't provide Intel with new resources to accomplish that. Rather, to get the remaining $9 billion, Intel had to give the U.S. equity. This is more like a tax than an investment: Shareholders gave up a 10th of their ownership in return for money the company was supposed to get anyway... Some of the administration's forays into private business do reflect strategic thinking, such as the Pentagon's 15% stake in MP Materials in exchange for investment and contracts that help make the company a viable alternative to China as a supplier of rare-earth magnets for products such as automobiles, wind turbines, jet fighters and missile systems. But more often, companies recoil from government ownership...
Though the U.S. stake dilutes Intel's existing shareholders, its stock has held up. There could be several reasons. It eliminates uncertainty over whether the remaining $9 billion in federal funds will be forthcoming... [B]ecause Washington has a vested interest in Intel's share price, investors believe it may prod companies such as Nvidia and Apple to buy more of its chips.
But that only goes so far, the article seems to conclude, offering this quote from an analyst Bernstein investment research. "If Intel can prove they can make these leading-edge products in high volume that meets specifications at a good cost structure, they'll have customers lined up around the block. If they can't prove they can do it, what customer will put meaningful volume to them regardless of what pressure the U.S. government brings to bear?"
CBS News also notes the U.S. government stake "is being criticized by conservatives and some economic policy experts alike, who worry such extensive government intervention undermines free enterprise."
Thanks to Slashdot reader joshuark for sharing the news.
Where's the money, Lebowski? (Score:1)
Using I check quotes for accuracy, but it's a FP race, so...
Questions? Or wait for the clarifications in a followup reply?
"We don't need no stinkin' strategies!" (Score:2)
So the new Subject is supposed to be a joke, but first you have to figure out who "we" is. The FP is also supposed to lead to humor, and again the who is key, though I bet the why involves cryptocurrency, so it will be difficult to prove in court.
As far as the YOB is concerned, the tactical level is pretty clear. The YOB wants his cut off the top and with no work on his part or liability for any little problems that come up.
As far as Intel is concerned... Well I think one word sums it up pretty well: Sadnes
Re: "We don't need no stinkin' strategies!" (Score:2)
Re: (Score:3)
It's called "retreating upmarket." ARM made a chip that was better in one key way: power efficiency. But they were behind in other ways so Intel shrugged them off and figured they still had the market. Then ARM got a little better. And a little better. And each time, Intel shrugged because they still had the top of the market. In fact, letting go of the lower end actually improved their profit per unit. It keeps going that way. ARM gets a little better, Intel retreats while making more profit per unit. Until one day, there's no market left.
This cycle was described in a classic book, The Innovators Dilemma [wikipedia.org]. I remember getting this book recommended by Matthew Szulik, back when he was the boss at Red Hat.
Re: (Score:2)
Re: (Score:2)
Thanks for the book references. I'm pretty sure I've read at least one of the mentioned authors, but I'll need to check the other titles... No one mentioned the famous "paranoid" book by Grove, which I remember reading a while ago.
Re: (Score:2)
It's called "retreating upmarket." ARM made a chip that was better in one key way: power efficiency.
Power efficiency was a byproduct. The ARM was first and foremost cheap. They needed to keep the power low enough to avoid the expensive high thermal conductivity ceramic chip packages, and went a little overboard. It was the cheapness which allowed it to become the dominant high end embedded controller.
Funny thing though the OG ARM (ARM2) was more than a match for the contemporary 386.
Your analysis sounds ab
Re: (Score:2)
Definitely many of the workstation crowd considered x86 to be a toy CPU.
Which it was until Cyrix came along and gave it "modern" features like register renaming. :)
Obligatory typo, too (Score:2)
s/Using/Usually/
My fingers not only think they know where the keys are, they also think they know where the words are.
Anyone else suffering from that one? Is it another symptom of aging as gracelessly as Intel?
Re: (Score:2)
Using I check quotes for accuracy, but it's a FP race, so...
Questions? Or wait for the clarifications in a followup reply?
Correcting a typo is somehow off topic? Or worth censoring? WTF, Slashdot?
Slight problem with that (Score:1)
[U.S. Commerce Secretary Howard Lutnick] said as a shareholder, the U.S. would help Intel "to create the most advanced chips in the world."
Using the government's vast resources -- that they just fired or abolished, to "save money". /s
Re: (Score:2)
The china shop wanted some interior decorating done and, in an ill-advised moment, hired the bull.
Re: (Score:2)
The china shop wanted some interior decorating done and, in an ill-advised moment, hired the bull.
Hah, nice - and on-point for this administration.
That said, , have you seen this? MythBusters - Bull in a China Shop [youtube.com]
Re: (Score:2)
have you seen this? MythBusters - Bull in a China Shop
Just watched it... So an *actual* bull would have been a *better* choice... [sigh]
Soviet Republic Party (Score:4, Insightful)
Re: (Score:2)
It's just the GM bailout all over again.
GM Bailout [Re:Soviet Republic Party] (Score:2)
It's just the GM bailout all over again.
Interesting take. The lesson of the GM (and Chrysler) bailout, of course, is that if done right, bailouts work.
Re: (Score:2)
Sort of. The Feds lost billions when they sold their shares in 2013. It certainly worked well for GM.
Re: (Score:2)
Sort of. The Feds lost billions when they sold their shares in 2013. It certainly worked well for GM.
It worked out well for America.
Re: (Score:2)
It certainly worked out well for GM, but the more pertinent question is did the government get a good deal? GM (and Ford) were on the verge of bankruptcy and without intervention they like would have declared bankruptcy. What would have been the consequences if that had happened? GM employs a lot of people and in turn they do a lot of business with suppliers.
Bankruptcy doesn't necessarily imply liquidation, so there probably would still be enormous consequences. Suppliers wouldn't dare supply anything witho
Re: (Score:1)
The government is there to serve the people,
The current administration (and the current Republican party) interpret this very narrowly - if they accept it at all. They seem to think the only business the national government should really be in is funding / backing the military... everything else is superfluous.
Re: (Score:2)
I complete understand - the current administration seems to think that government is there to personally serve themselves. Billionaires (the people really running things) do care about how the economy as a whole is doing. A good economy means more money to be made. So "serving the [right] people" still would include saving a company like GM. I don't have that high confidence that the current administration have the competence necessary to see this... it does require listening to experts and careful planning
Re: (Score:3)
That was a loan and it was paid back.
Re: (Score:2)
TI might have something to say about that.
Re: (Score:1, Flamebait)
Trump is a socialist.
False. Trump is a fascist.
Re: (Score:2)
Kinda like a national socialist.
Re: (Score:3, Informative)
Kinda like a national socialist.
More like a Nazi, as they weren't actually socialists. They were nationalist, though, so they were half honest.
Re: (Score:2)
Kinda like a national socialist.
More like a Nazi, as they weren't actually socialists. They were nationalist, though, so they were half honest.
They weren't socialists the way we describe them because we use the marxist-lenninist definition.
One of the defining characteristics of fascism is a distinct attempt to redefine language and culture. Hitler and the Nazis were exemplars here. Along with trying to ban all the French sounding words from the German language "socialism" was another word Hitler wanted to redefine. The Nazi definition of socialism was a communal participation in nationalism. That you'd have communal spaces like parks and public
Re: (Score:2)
Kinda like a national socialist.
I love people who take brutal dictators at their word and believe what they say. Do you also think North Korea is a democracy? It must be right, because it's right there in the name: Democratic People's Republic of Korea.
Re: (Score:2)
Re: (Score:2)
They also believe Don really loves them and has a big wad of cash for them. So, there is at least a consistency.
Re: (Score:2)
It's actually more stupid than that. Hitler famously *opposed* adding the word "socialist" to the name of his party, but was out-voted. (For Americans who don't understand why it was added in the first place, in Europe the word "socialist" has largely positive connotations especially for the the working class who associate it with workers protections etc.)
And then there's a certain poem. Third line. "Then they came for the socialists". Do the morons who keep harping on about the word "socialist" in the name
Re: (Score:2, Flamebait)
False. Trump is your president.
Those two things are not mutually exclusive like the other two things. This kind of lack of grasp on logic among voters is how Donald Dump became president.
Re: (Score:2)
> State intervention overriding economic forces and free market. Big government controlling means of production.
What the fuck makes Americans think that this is the definition of socialism?
Socialism is the workers having control over the means of production, and prompting cooperation rather than competition. The only reason some instances of the government taking over some of the means of production is sometimes described as socialist is because sometimes the government is democratic and accountable to t
Re: (Score:2)
The Trumpist approach to “big government”, through market interventions, state investment, and influence over key technology and military-industrial companies, carries a distinctly Stalinist f
Intervention (Score:5, Insightful)
"[...] is being criticized by conservatives and some economic policy experts alike, who worry such extensive government intervention undermines free enterprise."
Obviously, no one who dislikes government intervention would vote for the current Republican party. They intervene in 3 or 4 things before breakfast.
Re: (Score:2)
Ummm
https://www.cbsnews.com/news/t... [cbsnews.com]
Re: (Score:2)
And the attitude of conservatives has been that whatever the DT administration does is conservative by definition, regardless of whether it is the opposite of what conservatives were for a week ago.
Re:Intervention (Score:4, Interesting)
And the attitude of conservatives has been that whatever the DT administration does is conservative by definition, regardless of whether it is the opposite of what conservatives were for a week ago.
Dead on. he says something then Fox, OANN, Newsmax and all the GOP media sycophants will amplify it and force a new reality unto their viewers.
Rothbard? Friedman? Those guys were woke "experts" and we don't care for "experts" anymore. It's rule by vibes now.
Re: (Score:2)
[...] media sycophants will amplify it and force a new reality unto their viewers.
Remember that episode in From the Earth to the Moon [wikipedia.org], about Apollo 13. There was a subplot in which the veteran TV journalist starts to be edged out by the younger, more tabloid-style TV journalist.
Surely the transformation of "news" from an intelligent collation and broadcast of events, to a fight-for-attention "show" - a dramatic weakening of the media in its democratic role - must be a major cause of the overturning of norms in American politics.
Re: (Score:2)
Fox News does not get enough credit/blame for changing the reality of how news worked. It certainly wasn't them alone but Roger Ailes had a ideological vision for a network that hadn't been considered before and both the people and media landscape were not prepared for how it has changed the face of the media. The Clinton scandal was exactly what they needed to bust it out into the open and the rest is literally history.
Just another way From the Earth to the Moon is just terrific though, that makes we wan
Re: (Score:3)
Just another way From the Earth to the Moon is just terrific though, that makes we want to do a re-watch
Like you, those films and documentaries about the Apollo project fill me with awe. I still consider the Apollo project the greatest project of the 20th century. It couldn't have been done without that combination of audacity, ambition, and optimism that was in the air at the time.
As someone who is not American, sure, I could point out problems with America, but I never lost the admiration for a country that could change the moon from a concept into a place.
So I see how things have changed so much, and so fu
Re: (Score:2)
The 2019 Apollo 11 documentary is also simply a fantastic production.
The only feat I would put higher than Apollo is the smallpox eradication effort since while Apollo was a good example of what America could do if it actually commits itself the vaccination effort was an example of of what the world can be capable of if we actually cooperate on a common goal.
Re: (Score:2)
Have no fear, even the smallpox eradication can be undone. There are still samples stored. The CDC's new hire (from the Robert Kennedy Jr school of medicine - motto : "infection diseases are a myth") will enter the vault labeled "Smallpox" (possibly not even knowing what smallpox is) and go "hmm... this can't be as dangerous as all those warnings I just bypassed"...
Re: (Score:2)
Every time he starts talking I think it's a joke. I know he had cancer but that guy, the former heroin addict who sounds like that is the top man for health in the nation, it's just ridiculous.
Also smallpox? Pfft, just do 100 push ups.
Re: (Score:2)
Multiple conservative think tanks have come out swinging against the Feds acquiring shares in Intel. There is no monolith of unified thought in the conservative movement.
Re: (Score:3)
Unless it's Heritage I don't think this admin cares about think tanks, Trump even lashed out against FedSoc.
We can say there's no monolith of thought but only one school of thought has any amount of sway in the party today, the base flat out rejected the intellectual wing of the party.
Re: (Score:2)
There is no monolith of unified thought in the conservative movement.
There kind of is though. I don't see any Republicans in Congress or in the senior party hierarchy complaining about Trump taking all of Congress' powers from them for instance. I don't see them complaining about this or much else Trump does as well. "Whatever Trump wants" seems to be their guiding light.
Of course maybe the point is when it comes to Trump it isnt exactly "thought".
The right wing is about hierarchy (Score:4, Insightful)
The real world is chaotic and horrific. Right wingers can't deal with that. So they impose order where there is none.
This is how you get nonsense like job creators instead of bosses telling you what to do. You want to believe that someone above you is creating an order that will take care of you because otherwise you have to look at the world as it really is and realize you live in a world where you could just be randomly crippled tomorrow through no fault of your own. For that six of the 8 billion people on this planet live in abject poverty and you're closer to them than you are to Bill Gates or Elon Musk...
I get it. As someone who is fully aware of how fucked up the world is I'm not sure knowing is really worth it especially given how little I can actually do about it...
It would be so much easier to tell myself that guys like Elon Musk and Bill Gates and Donald Trump are going to create a beautiful future for me and my family.
Re: (Score:2)
I've come to the same conclusion. Conservatives like the chain of command, in government, politics, military, and religion. Chain of command resonates well with their simpleton brains.
Re: (Score:3, Insightful)
The "don't tread on me" flag flyers are oddly silent with all that is going on. Guess they like armed military patrolling US soil.
Re:Intervention (Score:4, Interesting)
Anectodical but I have noticed a marked drop-off of Gadsden flags in my area. They love being the boot.
And the fascist march continues unabated. (Score:1)
With Cheeto Benito and Howard Nutlick leading the charge.
“Fascism should more properly be called corporatism because it is the merger of state and corporate power.” — Benito Mussolini
Simple (Score:4, Insightful)
What's the Government's Strategy?
Simple, launder some of the money Intel makes from Stock Buy Backs into Trump's + some of his lackeys pockets.
I failed economics and politics but (Score:2)
Re:I failed economics and politics but (Score:5, Insightful)
[...] why is the Republican Party [...] eschewing free market principles [...]?
It's almost as if they laugh at the idea of "principles".
So we can't let Intel collapse (Score:2)
And I've said it before I'm not entirely opposed to the government buying shares in a company instead of just handing out billions of dollars of my taxpayer money for nothing in return except maintaining a functional market for CPUs.
That said I think it's safe to say that this is the most
Re: (Score:2)
The government having a wealth fund with a diversified and broad portfolio representing a large scope of important American enterprises across a variety of sectors: pretty based.
The government enacting the purchase of 10% of a singular company when US competitors to said company exist enabling a flurry of perverse incentives and potential corruption, really bad precedents for the future and throwing even more uncertainty into the business world and America's global economic power; pretty terrible.
Re: (Score:2)
Let 'em crash and burn. Apple ARM processors are fast enough that users don't even know the difference. IBM is still making the POWER line of processors if you need enterprise level power. Prices on those would certainly come down if they had more widespread adoption.
Re: (Score:2)
IBM is still making the POWER line of processors if you need enterprise level power.
When I see POWER benchmarked against amd64, the results are generally only competitive.
Re: So we can't let Intel collapse (Score:2)
AMD is also producing x86 CPUs and it's very good at it. Moreover, handing out money to Intel, regardless of transferring part of its shares to the government, is still a bailout and it's completely unfair to Intel's competitors like AMD, Apple, or Nvidia. AMD and Apple has gone in the past through long periods of financial losses and nobody came over to bail out those companies. They had to work hard to build better competitive products to stay relevant. It was also proved in court that Intel was using pre
Re: (Score:2)
AMD, Apple and (I think) Nvidia don't actually make their chips. They design them. If the Intel deal makes sense (let's say I am far from convinced that it does), it is to preserve/enhance Intel's manufacturing capability and not their ability to come up with new designs for x86. I understand that with Intel, design and manufacturing aren't easily separated.
The CHIPS act was specifically created to make it worth it to put factories in the US - given that collectively the industry decided it wasn't. The mean
Re: So we can't let Intel collapse (Score:2)
This is another one of BS comments that fall under "too big to fail" so we have to bail them out
Re: So we can't let Intel collapse (Score:2)
If Intel's chip manufacturing business is so important, make intel sell it and then bail it out, but no.. we have to bail iut the whole stupid Intel
State owned industry!! (Score:1)
Don't get the hate on this move (Score:2)
Plus for Intel, it works as a great defense against the PE vultures, circling them, greedily eyeing their patents and being able to end all this "Open Computing" nonsense. My guess is that these PE vultures, want to make all the computers run on ARM so they that they are essentially glorified smartphones, complete with locked bootloaders, locked hardware compatibility and a fully locked down OS.
No more Linux or the Open Source
Re: (Score:2)
Vultures don't move in until after their food dies.
Intel is killing itself with incompetence.
Re: (Score:2)
Re: (Score:2)
The 14th gen Intel I have in my machine is really great value
How much was it discounted? If you paid anything like MSRP, you were robbed.
Intel getsâ¦.. (Score:3)
This is a US site with some foreign readers. Iâ(TM)d prefer we consider intel a singular noun, and not some sort of family.
Dire straits for Intel (Score:3)
If they need the money that bad, they're hurting more than they let on. This could end very badly for taxpayers.
Re: (Score:2)
They're certainly getting money for nothin' - but this is the first I've heard of them also getting chicks for free.
Re: (Score:2)
The amount of money is so low it could be stuck under that sign saying "Beware of the leopard". It's less than one tenth of the national debt of Belgium.
Tax payers will likely feel the tariff madness more.
Two Companies, Should Not Choose Sides (Score:2)
Split them up already (Score:2)
Re: (Score:2)
This is probably one of the good answers but we need a government that believes they can and should take actions like this in power.
Re: Split them up already (Score:1)
It's called State-owned Enterprise (Score:4, Interesting)
Soon, maybe Trump will start issuing Letters of Marque, too!
Leave it to Donnie's regime ... (Score:1)
... to mimic communism in the most stupid way possible.
If, if, if (Score:2)
Intel carefully launders the money through irreversible foreign LLCs and then successfully sues to get their shares back. The cash winds up in the pockets of the CxOs and Board as they wind down operations and convert to a patent troll that lives in a lawyer's filing cabinet.
I know which countries take stakes in domestic fir (Score:2)
The government's strategy? (Score:2)
I'm sorry, with the current regime in power in the US, it's an massive error to assume they know what the word "strategy" means.