Intel’s woes are far from over. Pat Gelsinger, the company’s CEO, has announced that Intel’s chipmaking business will be spun off and turned into a separate company.
A subsidiary structure will unlock important benefits. It provides our external foundry customers and suppliers with clearer separation and independence from the rest of Intel. Importantly, it also gives us future flexibility to evaluate independent sources of funding and optimize the capital structure of each business to maximize growth and shareholder value creation.
There is no change to our Intel Foundry leadership team, which continues to report to me. We will also establish an operating board that includes independent directors to govern the subsidiary. This supports our continued focus on driving greater transparency, optimization and accountability across the business.
↫ Pat Gelsinger
This is a big move, and illustrated the difficulties Intel is facing. Its foundry business lost $7 billion last year, and it’s cutting 15% of its workforce – 15000 people – indicating it needs to do something to turn the ship around. Intel is also pausing construction on two additional plants in Europe, but will continue its expansion efforts in the United States. Bitter note is that Intel received a massive cash injection from the US Biden administration, yet then proceeds to fire 15000 people.
Socialism for the rich, capitalism for the poor.
Ohh, again the unlock synergies, bring flexibility, create focus, optimize capital bullshit.
Haven’t we seen the same ppt when AMD unloaded its money drain to an ignorant oil sheikh?
Who will bear the bill now? And good luck Americans, in securing your silicone supply.
They didn’t actually spin it off—they just moved it to a subsidiary. Perhaps preparation for spinning off, but not yet. The OSnews headline is aggressively wrong.
It’s very unlikely that intel will fully spin off their foundries, given that would reduce their overall size (and market cap) significantly and put them in a serious disadvantage for not benefit vs keeping it as a subsidiary.
The move is mainly to make potential foundry clients more confident that the boundaries between foundry and design orgs are very well defined and enforced. Which makes sense as intel is pivoting more and more towards being a player in the foundry for pay market.
How that newspiece got spun into a full blown debate about the merits of different economic systems, in the rest of the comments in this thread, is beyond me.
Related:
https://www.extremetech.com/computing/intel-announces-cancellation-of-20a-process-will-use-external-foundry-for
Intel is pulling a GlobalFoundries. Good for them. Modern chip foundries are a risky and expensive business, so it’s better to subcontract it to others and focus on chip design (which is more predictable if you know what you are doing, and Intel does know what they are doing, it’s how they are still somewhat competitive despite their chips being made on an obsolete process).
Nope, the US government wants a chip foundry on US soil (even if it’s not as advanced as TSMC’s in Taiwan), because having the entire US chip design industry being dependent on a foundry located in a country that’s not even a country but a “self-ruled area” is considered a threat to the US government’s defense needs. So, the US government has a need and Intel is the supplier (and gets paid for it). This is different from socialism, where people are given things because of their needs, regardless of what they can supply. Of course, I don’t expect anyone to get this difference, soundbites such as “Socialism for the rich, capitalism for the poor.” are much easier to process.
kurkosdr,
You make an interesting point, but can the net result be socialism even if the motivation was not?
We often preach the virtues of capitalism, but in many ways the way we follow through is anything but. The corporate subsidies and bailouts for these mega corps are really hypocritical. Corporate tax cuts are another form of this since the rest of us have to cover their share. The tariffs are another mechanism by which consumers are taxed for choosing more competitive manufacturers to protect less competitive ones. Without questioning whether the government has a justification for it, can’t it still be considered corporate socialism either way?
BTW: I agree that there is good reason to be concerned over the fate of fabs in Taiwan.
Nope, Intel isn’t demanding anything, and Intel certainly isn’t demanding to be given something for nothing (like your average socialist demands to be given unconditional income aka UBI for nothing). The US government is free to subsidize any company they want in any country they want. The US government chose Intel because they think it’s better for them in the long run. The US government was free to subsidize Global Foundries instead if they thought it would benefit the US government the most in the long run.
Similarly, no government or state was forced by any corporation to give corporate tax cuts. They do it because they think they have more to gain in the long run by giving those tax cuts.
Tax cuts are exactly the same as cash hand outs. The only difference is the side of the ledger they fall upon. This is why many call that socialism for the rich, when compared to cash handouts for individuals. Does that make it socialism? No. But let’s not kid ourselves about what it is – a tax cut is the same as a cash hand out.
There is one big difference: Handouts for individuals are entitlement-based. If the US government were to terminate EBTs to people who declined job offers tomorrow (as the US government should), there would be considerable uprorarm, because again, EBTs are entitlement-based. Instead, tax cuts and subsidies are given to corporations on a case-by-case basis when the US government needs a corporation (or its foundries) more than the corporation needs the US government.
kurkosdr,
Even granting you all of this, this is EXACTLY what happens with corporate tax cuts. There’s an uproar when corporations get taxed, just like you are saying of individuals. CaptainN– hit the nail on the head in saying “Tax cuts are exactly the same as cash hand outs”. Just because it’s done through the tax code doesn’t really cancel out the fact that it’s real money and that it’s become a matter of entitlement for corporations to get that money at taxpayer expense.
There is one crucial difference: Corporations produce goods and services, pay taxes (even if at reduced rates), and provide income to the workers they employ, while people who want to sit on their asses and collect handouts (be it UBI or EBTs) contribute bugger-all. Sorry to burst the myth that people are entitled to money because they exist (they aren’t). The government should give people handouts to help them get back on their feet, but the moment they decline offered income (in the form of a job), any handouts should be cut immediately.
Do you consider public school, public healthcare, social security insurance, food banks – do you really consider all that “entitlement?” You don’t think there would be any return on those as investments?
I’m curious about the mental gymnastics that let you turn cash payouts – for food and poverty alleviation, in to “hand outs” and “entitlements” but doesn’t turn “tax cuts” which are in absolute terms, used to buy private jets and yachts which can hold other yachts – somehow, those are not “hand outs” and “entitlements.” Please explain that one. I’m super ready to hear it.
And skyscrapers no one lives in, and protected land ruining mansions, and on and on… Those somehow aren’t “entitlements” and “hand outs” – but food, food is. I think I’m missing something.
kurkosdr,
Most people receiving government assistance are either working or seeking work. Nobody aspires to be at the bottom of the barrel. But the cost of living is so damn high and many fall on hard times. Even with a job sometimes it’s not enough to buy food/clothing/shelter/medical insurance/etc. Meanwhile large corporations keep getting a disproportionately large share of the pie. The increase in worker productivity over the past 50 years is unprecedented, yet worker pay hasn’t kept pace. Large corporations get handouts in the form of tax reductions but still pursue tax avoidance schemes. Taxpayer funds subsidize their new data centers and offices, but corporations keep the profits themselves. Most corporations have replaced employer sponsored pensions with employee contributed 401ks. They are cutting employee insurance benefits and while putting executives on a better plan (this happened at one of my jobs). Workers are being screwed over…still these corporations keep sticking their hands out for more handouts.
As you would defend the criticism of handouts for the poor, I will point out the hypocrisy of it all and defend the criticism of handouts for the rich.
kurkosdr wrote: “Sorry to burst the myth that people are entitled to money because they exist (they aren’t). The government should give people handouts to help them get back on their feet, but the moment they decline offered income (in the form of a job), any handouts should be cut immediately.”
Have you ever been out of work ,involuntary, for an extended period of time at all, guy? With bills to pay and dependents to feed? Reading through the comments, I honestly can’t tell if you’re trolling or being serious. I hope it’s the former.
kurkosdr,
Wall street didn’t demand bailouts either.
Yes, the government is free to give hand outs, but it’s still a hand out regardless of why. Not for nothing but we criticize china for manipulating markets to protects its industries. Why would it be any different when the US does it? I can see why this “socialism” label would be used.
Politicians are under tons of pressure from those who fund their campaigns. Not only are they incentivized to befriend corporations, but not playing ball can cut their political careers short. This status quo is par for the course here, but at the same time it’s a kind of a legal corruption to buy favor in government.
They did demand bailouts when they held everyone’s deposits hostage. I am one of those people who think banks are a special kind of company and shouldn’t be part of the “free market” and shouldn’t have the autonomy a normal company that makes widgets has (in other words, what banks do with depositor money should be heavily prescribed by law).
Governments “manipulate the markets” with every defense procurement they make (which is what the CHIPS act is about, don’t fool yourself). So, if you apply that label, every government is “socialist”.
At the end, politicians are accountable to people who vote though, not their donors. Do you know what can really cut their careers short? Failing to stimulate growth and failing to make the right kind of defense procurements. Imagine if China invades Taiwan tomorrow and suddenly the US military-industrial complex can’t make any more F-35 fighter jets because they can’t get their hands on the necessary chips because no foundry outside Taiwan can make them.
One more thing: When people whine about corporate tax-cuts, they forget that it’s better to collect less taxes from a company than have this company open shop in another jurisdiction (or transfer shop to another jurisdiction) and not collect any tax from them at all. In other words, jurisdictions compete with each other to attract corporations. Taxation is a careful balancing act between collecting money needed to run the government and not driving away growth.
But again, good luck telling that to the average person addicted to Twiter soundbites, in fact, I probably exceeded my allocated 280 characters in the above paragraph.
kurkosdr,
without uncle sam’s money, those banks failed In a free market.. To the extent that the government had to spend taxpayer dollars to fix this, maybe they should have bailed out the individuals rather than the banks themselves. But they chose to reward the bank failures 🙁
I agree that banks as for profit corporations is weird. Same deal with disaster insurance. But big money pushed for things to be this way. I’m sure we could have an interesting discussion about alternatives. Ultimately though, I still doubt that there’s enough political power to change it. Remember how intense the wall street protests were? Not much came from it.
IMHO it depends, government contracts can be based on free market principals. Although in practice there may be a lot of backroom corruption that we don’t even see.
Good one 🙂
I wasn’t questioning your justification.
How would this “bailing out the individuals” work exactly? Give every deposit holder their exact deposit amount in $100 bills? Do you realise how much money printing would this require and how much it would devalue the dollar? So the government preferred to save the fractional reserve system as they knew it, aka the banks, undeserving as the banks were.
Yes, you don’t want any “creative destruction” when people’s deposits are involved, this is why I say banks holding people’s deposits aren’t normal companies and shouldn’t be treated as such (or have the autonomy of a normal company). The closest thing we ever got was the Glass-Steagall btw, but it only applied to the US and was unfortunately repealed.
Politicians also like it that way, their parties owe a lot of money to the banks so bank regulation that would make banks more conservative (with regards to who they lend depositor money to) is against their interests. Maybe this bit should receive more attention, I doubt most voters are aware of this little detail.
There was nothing fierce about the Wall Street protests, it was just a bunch of time-wasters wasting time in a nearby public park. Wall Street (as in, the building that houses the stock exchange) was never occupied, because if this had happened, they’d be immediately kicked out to the curb by burly policemen and then arrested. Social media made it seem like a big deal because it was the first sitting protest where social media was extensively used, but in reality, no it wasn’t a big deal. Sorry to dispel the myth.
Unfortunately, in practice sometimes they can’t be. Sometimes, governments have to build something before they can have it because there is no private demand for it. I mean, how many companies out there make aircraft carriers without a contract from the government first? Or nuclear submarines? Or stealth fighter jets?
kurkosdr,
Are you being sarcastic or do you really think they’d use paper money? They could send out checks like we’ve seen them do with stimulus packages. They don’t have to reinvent the wheel here. I’m sure there’s already a process in place to handle the restitution of accounts under FDIC insurance. They could transfer the accounts over to a new bank. Private banks do this kind of thing all the time. I can’t even remember how many times this has happened to me personally. Sometimes they even kept the same account numbers. It would have been doable if they wanted to.
It was one of if not the largest social movement of our time, not just one city but across hundreds of cities. I concede that peaceful protests may not stop those in power doing what they want anyway.
Companies are supposed to bid for those contracts. The federal government ought to be protecting competition on government contracts. Otherwise you can end up with companies like Boeing becoming a monopoly for a contract, which creates dangerous dependencies. Arguably this is not only bad for the lack of competition, but it’s strategically bad to have all one’s eggs in the same basket.
It’s always the same non-thought, I have to argue against…
Companies are not going to move to another jurisdiction – see Musk’s threat to move Telsa to Texas – didn’t happen, not going to happen.
That is a threat dressed up like wisdom. They aren’t going anywhere, but if they want to – I’ll help them pack. Buh-bye you traitorous bastards!
Yes, I was a bit sarcastic, because every one of those plans involves giving every depositor the full amount in their bank account, essentially converting the fractional reserve system into a non-fractional one. The amount of money the US government would have to print (physically or metaphorically) for something like that would make the US dollar worthless. Also, FDIC coverage has become so low thanks to inflation that it doesn’t cover half a house’s worth in some cases (even back in 2008), and even then, the government would have to backstop the FDIC by printing a ton of money, because every account with less $250K in it would have to be converted from fractional to non-fractional. And even then, the loss of trust in the banking system would have other consequences.
Nope, it was a group of people small enough to fit in a small public park near the New York Stock Exchange. Compared to the various anti-austerity protests in Europe or the Arab Spring in the Arab world, it was positively tiny, but it had good social media coverage.
Yes, voting does that, but unfortunately, most voters reject the re-enactment of a Glass-Stegall legislation as “goldbuggery” (despite dealing with fiat currency). Most people out there carry tons of credit card debt too, so they probably like the current system with reckless banks giving out reckless loans, what can I say.
Problem is that, when it comes to defense, there aren’t many companies left to bid for those contracts. It’s Boeing and Lockheed Martin for aircraft and Boeing and SpaceX for space stuff. So one of the two wins no matter what. But they do compete amongst each other. For example, Boeing’s competitor to the X-35 was the X-32. But in either case, the US government had to make a decision based on prototypes, not a final product, because no company wanted to invest the amount to make the prototypes into final products without a contract with the US government signed.
Let’s see:
– Elon Musk moved the headquarters of X Corp from California to Texas (will probably do the same with Tesla)
– Larry Ellison moved the headquarters of Oracle from California to Texas
– Fiat moved its headquarters from Italy to the Netherlands
These are just off the top of my head, companies will move if the cost of moving is lower than the cost of staying + inertia. Jurisdictions compete for investment and to keep companies in their jurisdiction, deal with it.
Which reminds me: There was a bidding war of tax incentives between US states for Tesla’s Gigafactory
…and watch your state or country become poorer as a major taxpayer moves elsewhere to pay taxes there.
kurkosdr,
Just to be clear though, you have prescribed that, not me. It’s important to note that the investor money was always at risk. Having taxpayers cover uninsured private debts sets a pretty bad precedent IMHO. What I literally said was “To the extent that the government had to spend taxpayer dollars to fix this, maybe they should have bailed out the individuals rather than the banks themselves.” In other words, the banks should not have gotten any bailout money for themselves. They should face the music.
Of course the joke’s on us, we paid up and the executives gave themselves huge bonuses.
https://www.cbsnews.com/news/16b-of-bank-bailout-went-to-execs/
I won’t speak speak for europe, but tens of thousands was huge compared to the other protests here in this millennia.
I’d agree we should do more to limit debt, unfortunately it’s a self perpetuating problem. Even though stereotypes portray debt as a consequence of bad financial planning. it’s also a consequence of the growing income gap. When GDP grows, we should all be better off, however corporations have systematically used worker productivity gains to enrich themselves instead. Combine this with skyrocketing consumer costs, our buying power has collapsed from one generation to the next. Be it food, medicine, housing, education, transportation, etc, nothing’s affordable any more. I don’t think that younger generations as a whole are actually worse with money, but that that modern economic realities are pushing more people into debt. It’s not their fault they’re getting a smaller piece of the pie 🙁
Clearly, but I think the government needs to be more proactive at encouraging and creating competition to make sure this doesn’t happen. A failure to curtail monopolization of industries over decades not only fails us, the consumers, but also themselves. Yes, it’s a tough problem to fix, but politicians with a pass the buck mentality and short term agendas has made things much worse.
You still haven’t explained how the whole “bailout the individuals” would work. Converting every fractional account to non-fractional would require insane amounts of money printing (physically or metaphorically) and would destroy the value of the US dollar, so what other option existed?
I don’t think we have to overthink it, keep it simple like I said before.
https://www.osnews.com/story/140767/intel-to-spin-off-its-chipmaking-business/#comment-10443551
I don’t understand why you are talking about printing money? We’re obviously miscommunicating. The banks holding toxic assets got bailed out using taxpayer dollars… instead of bailing out the banks though, they could have been left taking responsibility and the same money that was used to bail them out could have gone to account holders instead.
It’s the taxpayer’s money, either directly or in the form debt that we pay the interest on.
https://www.thebalancemoney.com/national-debt-by-year-compared-to-gdp-and-major-events-3306287
Aside: oh god this debt data is depressing. It’s forgivable for debt to accumulate in bad years. But the problem is that in good years, rather than paying debt down, we give big businesses tax breaks instead.
At face value, looking at the debt outlook, it’d be logical to say the government cannot afford to offer public benefits like medicare, social security, etc. But the government used to do this while balancing the budget. so what happened? Big businesses keep lobbying for (and getting) lower taxes and the revenue dropped as corporations became wealthier.
https://en.wikipedia.org/wiki/Corporate_tax_in_the_United_States#/media/File:US_Effective_Corporate_Tax_Rate_1947-2011_v2.jpg
And therein lies the source of most of our economic problems. This debt situation ultimately isn’t sustainable, so we as a society have to decide what’s more important: more corporate profits, or funding government benefits. Many people hate the government, which I understand, but I also think their faith that for profit corporations will provide for society at large is either disingenuous or greatly misplaced.
You don’t have a very strong case if it requires you ignore one of the, if not the, most important details. I don’t believe this is corporate socialism and is clearly driven by a very serious & present national security threat.
friedchicken,
Well, I don’t see these as being mutually exclusive. You having a strong reason to protect companies doesn’t negate the fact that it’s no longer true capitalism.
For what it’s worth, I agree that it’s not socialism. It’s just capitalism – it’s how capitalism has always worked, and is nothing new. Socialism fwiw, would do the same thing – bolster a company that produces something vital to a national interest. So would Stalinism (or that thing most call communism). This activity is not a differentiator.
Another problem with using “socialism” this way is it’s only about government spending, which reinforces this extremely incorrect notion that socialism is about government spending, almost exclusively. In reality capitalism requires large government to manage many aspects of the markets it needs to maintain (free markets are not a myth, so much as a lie). But yeah, don’t expect a sophisticated understanding of these concepts even among relatively well educated pockets of internet denizens.
I think is is important to differentiate between a “free” market and a totally unregulated market. The latter is a rather dangerous place and exists only in things like the dark web or among drug dealers or in former times in pirate hubs like Nassau.
A free market is a market with minimal but strikt rules, but free for everyone to take part of. Ideally the rules are the exactly the same for all parties. If the powers that rule over such a market give favors to some players put not to others, like in this case, it becomes at least somewhat unfair to all the other players.
Overbearing regulations and unequal tariffs are an other form of gigging the market, to protect a certain group of participants (e.g. domestic).
What favor do you think the US government is giving Intel here?
What I mean is that, there is never (ever) anything like what is described as a “free market” in reality. Ever. Not with contemporary definitions. It’s a lie. It was made up specifically to deceive people, and it was never intended to actually exist. Markets are built and maintained by authorities. Even dark web markets have someone making and enforcing rules. They are not some natural phenomenon. There is no such thing, and there will never be such a thing, as free markets (by contemporary, or laissez faire/neoliberal definitions).
If you want to go back to a time when “free” didi mean this crazy notion of “you can’t tell me what to do, and I have no responsibility to anything or anyone except me” – which is what the contemporary definition is, then sure, the phrase could mean something else, but in contemporary times, it doesn’t mean that. Your definition even includes “strict rules” – that’s not what most people mean.
But it’s not that important, the important part is, there has NEVER been anything like a free market, free from someone putting their thumb on some scale or another. EVER. They have never, and will never exist. The only appropriate question is, who’s thumb is on the scale, and for what purpose?
A free market is a market where the government doesn’t unfairly compete with private corporations. My country (Greece) once had all kinds of government-owned corporations (from airlines to steel-nickel mills to sugar mills) unfairly competing with private corporations by receiving bailouts from the government when they predictably went bankrupt, with the debt being transferred to the national debt. Fortunately, the EU put an end to all that because, well, it was unfair competition. Then there are countries where private corporations are banned altogether (North Korea comes to mind).
But I agree, the term “free market” is a misnomer, a better term is needed. Maybe “open market” (as in, open to competition).
TSMC and Samsung already have stablished fabs in US soil to meet the US government’s trade requirements.
America has been consumed by this psychopatic management culture, which treats people as “resources” and believes that “incentives” drive innovation (easily debunkable nonsense.) They’ve created these horrendous micromanaged, top down management structures, run by algorithms, which don’t ask for or require buy in from workers, who are treated as mindless drones. As long as this management culture is supreme in the US (who are currently chasing their LLM mirror reflections) the US will not be able to scale a fab company. LLMs will more easily replace management than it will replace technicians and engineers. Boeing, Intel, Google – all in decline, for the same reason. The US is dead in the water.
Socialism for the rich, capitalism for the poor -> socialism.
A subsidiary and a spinoff are two different things