Four former Intel board members say Intel is in the process of "gradual exit" from chip manufacturing and the US needs to act fast to save the company's fabs before "the rust of time makes them worthless". Writing in Forbes, the four industry veterans paint a dire picture of the state of Intel.
Charlene Barshefsky, Reed Hundt, James Plummer, David B. Yoffie have combined tenure of over 70 years on the Intel board and it's safe to say they are worried, really, really worried. The quartet describe "missed deadlines, poor execution, and a misguided strategy" for Intel's current woes, the consequence of which is that the "once-leading Intel" now appears to be "dropping out of the race" to manufacture the most advanced chips.
Intel itself, of course, has warned that it may have to give up on cutting-edge chip manufacturing if a major customer for its future 14A node can't be found. So, even Intel agrees that the future of its fabs are in the balance.
The Forbes four also lament that their recommendations to spin off Intel's fabs into a separate entity in order to give them a "fighting chance" have yet to be adopted. The broad thrust of their argument is that while it likely makes commercial sense for Intel itself to exit advanced chip manufacturing, Intel's fabs are too strategically important to the US to allow them to be wound down.
"All of these announcements strongly imply a gradual exit from the chip manufacturing business, turning Intel into a fabless company over time. Given that Intel’s internal demand is no longer big enough to justify continued capital investment in leading-edge technology, this may be the right strategy for Intel.
"Still, it is the wrong strategy for the United States. With Intel’s likely retreat from advanced chip manufacturing, America’s future and the future of its leadership in AI and all advanced electronics will be firmly in the hands of two firms: Taiwan Semiconductor Manufacturing Corporation (TSMC) and Samsung, two firms headquartered on the other side of the planet," the open letter says.
So, what's the solution? “Operation Warp Speed II” apparently, a reference to the US government effort to drive development of a vaccine for COVID-19, known as Operation Warp Speed.
"The Trump administration should build a public-private partnership, where future customers (e.g., Nvidia, Qualcomm, Broadcom, Google, Amazon, Apple and others), Japanese investors such as Softbank, and private equity, backed by government financing and/or investment, would buy Intel’s fabrication assets before the lack of investment and the rust of time makes them worthless and leave the United States dangerously dependent on a single manufacturing firm."
There is, the four conclude, no time to waste in building this new "American Foundry". That note of urgency obviously chimes with other industry observers, such as the analyst who recently gave Intel 18 months to find a major customer for its fabs else see its ambitions to be a cutting-edge chip manufacturer wither.
To say the very least, these are unnerving times for Intel. But there does seem to be gathering momentum for the idea that Intel's fabs need to be spun off into a separate entity if they are to be saved, and it needs to happen sooner rather than later if the effort is to succeed.
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