US Intel

The other day when the US's stake in Intel was announced, people assumed it was a political stunt. I suspected it was because of national security interests. The CHIPS act probably didn't get the result US Defense wanted quickly enough. Some details that were glossed over include that there was a chip shortage a few years ago as a result of COVID and TSMC supply chain disruptions that led to a shortage in electronics and automobiles even. This started to look like a national security interest back then.

Second, there is an AI race going on. US intelligence is taking it very seriously and views supremacy of our AI as very important. Recently, the US was pushing NVDA to start using Intel's foundry. I assume it's for national security reasons.

Finally, a couple of details from the Intel deal that were not widely discussed is that the US is taking a passive seat[1]

The government’s investment in Intel will be a passive ownership, with no Board representation or other governance or information rights. The government also agrees to vote with the Company’s Board of Directors on matters requiring shareholder approval, with limited exceptions.

There are also warrants being given whose status is based on Intel's foundry. That suggests the foundry was the interest all along.

[1]: https://www.intc.com/news-events/press-releases/detail/1748/...

> Recently, the US was pushing NVDA to start using Intel's foundry. I assume it's for national security reasons.

The real reason is simple, if you've been following IFS: Intel's foundry has no large customers. The free market has spoken and almost every single customer prefers TSMC or Samsung silicon. America was boxed-out of serious world-class chip manufacturing ever since Intel swerved on EULV. If it was for natsec reasons then I doubt the fed would waste their time taking a passive seat when they could claim Intel as eminent domain.

It's not about national security whatsoever; this is part of a last-ditch effort to force Apple and Nvidia to buy American silicon.

The issue is that Intel manufacturing chips in the US wouldn’t have solved the chip problems with cars for instance.

What TSMC traditionally does is keep trailing edge fabs online that are fully depreciated and use those to produce chips that don’t need to be leading edge. It wouldn’t make sense to create a new fab for trailing edge chips.

Car manufacturers aren’t going to all of the sudden start using 2mm expensive chips for their cars.

Even for TVs, the BOM for the “smarts” need to be under $10.

But NVidia chips are now part of national security, I suppose.

The chip shortage only came about because everyone cancelled their chip orders and then had to re-queue in a different order and they found themselves at the back of the line.

Their lack of planning doesn't constitute an emergency on the public's part

And to China with a 10-15% tax

I always hear about Taiwan and TSMC for Nvidia, but what I never heard until recently is that all these forbidden and banned chips are still assembled into GPUs in China. I am not sure how the US beleives any of this will do much good when the the chips are still sent to China to be completed into GPUs and other AI devices.

I'm not sure they need to claim Intel as eminent domain and that type of move is beyond what I know about but I suppose they could've done that previously but opted instead for market based solutions like with the CHIPS Act. That is really what led to the equity stake. The purpose of the CHIPS Act had more to do with the AI Cold War and securing the supply chain than it did trying to save one particular business. So I believe national security is the major concern and not saving one particular business.

> The purpose of the CHIPS Act had more to do with the AI Cold War and securing the supply chain than it did trying to save one particular business

I just don't think we're ever going to see eye-to-eye if this is your belief. In realpolitiks terms, Intel hasn't been a player on the AI board since Gaudi. And even that was a total flop.

If securing AI compute was the goal, buying Intel is about as large of a mistake as you can possibly make. Even Samsung has more skin in the game at this point. The only logical explanation, given Intel's history, is that they're desperate for customers and need help from the fed. If this is our plan to win the "AI cold war" then we've already lost.

> The CHIPS act probably didn't get the result US Defense wanted quickly enough.

It might have helped if they actually distributed the authorized funds. CHIPS act was passed just over 3 years ago now, and Intel never received their grant money (which has now turned into the cash for equity deal of dubious legality).

I think it's simpler than that. I think US intelligence is looking to make sure a secure supply chain exists for AI and really that just means NVDA's chips. I have never stated at any point this plan would work well. This is all stated in the reasoning for the CHIPS Act. That may mean pressuring people to use the foundry but I don't actually think the concern was chiefly to win back jobs. The funding from the CHIPS Act was actually withheld since Intel wasn't making satisfactory progress. Also the warrants I mentioned are executable only if Intel drops it's stake in the foundry. I believe this was added since there was talk of Intel spinning that out. So the government seems very interested in the viability of the foundry and less so in jobs.

So my point is that I think US Defense is motivated by national security interests but that doesn't mean this plan is going to work well or that we haven't already lost the AI war. It's probably too little too late. I am just pointing out over and over that I don't think grandstanding is the motive. I am sure that will happen but I think at some point it hit US Defense that relying on Taiwan put's us in a precarious situation.

14nm is mature and would suit this purpose fine, and they have existing capacity. The business, tools, and everything else around would need to get built out.

Yes. But Intel doesn’t have any customers and do they even have 14nm fabs online and how long will take to move customers to it in the case of a disruption?

To have customers they need to do the actual work of closing deals, building the customer-facing support teams, building all the tooling integrations (PDK, simulation, etc). On the manufacturing side they have to figure out who will do all the stuff besides fab, I think they have 14nm currently in the US and Ireland but the packaging might all still be Asia. It's not something to be done in case of disruption, it's essentially starting 80% of a new company to serve customers who want a US and Europe based supplier. Government customers could work, or public/private joint venture to build commodity parts, but either way they need patient customers who can help work out the problems and pay a premium to do it.

I mean obviously it's about chip production, but shitting on the chips act is a political stunt and nothing more.

Building fabs takes lots of money and time. Intel also doesn't have customers except themselves and have fallen far behind in the fab business and has a decade+ or mistakes to make up for.

What we have here is picking a winner and potentially insider trading/market manipulation with Trump shitting on Intel leading up the "deal".

That was what I was arguing against. It seems like people cannot stop themselves from making this about Trump. I guess he does that himself though. The problem with saying he was shitting on the CHIPS Act is that Biden himself didn't even pay out the money. It's because Intel made no progress on the fab. It's pretty clear behind both Biden and Trump is a desire to have Intel's foundry working. With Intel making no progress on it, I am assuming the call to take a stake in Intel was done to mitigate all the benchmarks Intel said they would make but failed to do. Perhaps the government figured they could pass the money to Intel without giving up the reigns this way. Either way, I am very convinced there is a national security motive under all of this and neither Trump nor Biden went down this path to grandstand on it.

Modern cars are powering multiple (as in 3+) screens at the same time, including games, streams and videoconferencing.

Yeah, behind all the partisan chaff, serious people think falling behind in AI could be disastrous. Getting locked out of it altogether because you lost your only source of advanced chips would be even worse.

which can already be done with >7nm chip.

Yes, everything we have out there can already be done on 28nm chips, that doesn't mean that the goal stays idle. And in a car you have hundreds of subsystems to control and monitor too.

What subsystem you mean?

Your infotainment tracks everything from temperatures, lighting, temperature, car asset, etc.