Intel might be too big to fail — Washington policymakers are already discussing potential solutions if the chipmaker cannot recover
Too big to fail.
American lawmakers have quietly been discussing options on how they could help Intel get back on its feet should its financial situation deteriorate. According to a Semafor report, sources say this possible rescue package will be above and beyond the scope of the CHIPS Act, which would award the company at least $8.5 billion before the end of 2024.
It should be noted, though, that these are just precautionary discussions of backup plans in case the company folds. After all, the company had reported a strong outlook on its third quarterly earnings call for 2024.
These discussions show how much Washington, D.C. values Intel, primarily as the U.S. competes with China for global dominance in advanced technologies. Although both AMD and Nvidia, semiconductor giants in their rights, are also American companies, Intel is the only one that both designs and manufactures chips. “Intel is the only American company that designs and manufactures leading-edge chips and is playing a critical role in enabling a globally competitive semiconductor ecosystem in the U.S.,” said an Intel spokesperson to Semafor.
If Intel were to fail, the U.S. would have to rely on TSMC and Samsung to make its most advanced chips. Even though both of these companies already have fabs in the U.S., they only provide a fraction of their total output. Furthermore, although both companies have headquarters based in allied countries, South Korea and Taiwan are at risk because of their proximity to China.
Another reason why the Capitol and the White House wouldn’t want to see Intel fail is because it’s one of America’s top exporters, with its export revenue in 2023 exceeding $40 billion. Aside from that, the company is also working with the Pentagon’s Secure Enclave program to build leading-edge chips for the military, making it crucial for the country’s economy and security. It’s also a major employer — even though it’s in the process of laying off over 16,000 people, it still has over 120,000 employees on its payroll.
However, sources say policymakers are shying away from lump sum bailout payments as the White House did for Chrysler and General Motors in 2008. Instead, one of the solutions they’re considering is a government-encouraged private-sector merger, potentially with other Intel rivals like AMD or Marvell. After all, there have already been some rumors that Arm and Qualcomm are allegedly interested in acquiring a part or all of Intel—but some experts say that breaking up Intel will not do anyone good.
Whatever the case, let’s hope that Intel will not get into a position where it would require federal assistance to ensure its survival. Intel’s 18A chip is already showing promise, with the company saying that Amazon and two other companies are committing to using its technology for their next-generation semiconductors. If everything goes according to plan, Intel should be able to pick itself up and compete again. Still, it wouldn’t hurt the American government to have a backup plan ready if something else goes wrong.
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Jowi Morales is a tech enthusiast with years of experience working in the industry. He’s been writing with several tech publications since 2021, where he’s been interested in tech hardware and consumer electronics.
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umeng2002_2 Don't make STEM degrees easier to afford. Don't pay to train workers in America. Don't stimulate science and technology education and careers. Just hand out money to a multi-billion dollar corporation who look overseas for workers and manufacturing. Washington DC at it's finest.Reply
With a robust technology industry in America, having leading edge chip manufacturing in America wouldn't be like pulling teeth. Too big to fail is code for your country has already failed because there isn't marketplace competition. -
ezst036 CHIPS act 2 incoming - followed by CHIPS 3Reply
More bailouts for billionaires and kickbacks for lobbyists -
derekullo The biggest reason Intel is failing is because it is hard to create those chips at such nanoscopic angscopic? scales.Reply
A silicon atom is only 2.1 angstroms in size and 18 angstroms is less than a single order of magnitude larger.
TSMC hasn't had nearly as many problems as Intel, but eventually going smaller will be physically impossible. -
tommo1982 Current Intel situation is a good thing. It forces internal changes, which it seems were long overdue. What is worrying is stock and press foolishness. Let the company stand on its own feet. It's stupid to allow it to be sold to some other entity. Perhaps merger or closer ties with AMD might be required. Whatever comes, I don't see Intel going bankrupt, not if they see what brought them where they are.Reply -
Gururu An intelligent article concerning a looming national security nightmare. Right now, Intel is probably the only relatively secure major IP holder for CPU chip design the U.S. has. Everyone else sending IP to Taiwan, which is like 10 feet from China.Reply -
bit_user
The author is either trolling or being very sloppy. Those were loans, and they got repaid.The article said:sources say policymakers are shying away from lump sum bailout payments as the White House did for Chrysler and General Motors in 2008.
@JarredWaltonGPU Jowi isn't trolling, is he?
The design side of Intel is fine. It's profitable, even. In a pinch, Intel will find a buyer for its fabs and continue to design CPUs, GPUs, and AI chips.
The fabs are the big concern, because it's the last leading-edge US-owned foundry. The Department of Commerce should simply ensure that whomever ends up with them is US-based and omitted to continuing to invest in new nodes. If government-backed loans are needed to facilitate that, I think it's a worthwhile insurance policy to mitigate against over-dependence on Asian fabs. -
bit_user
Apparently, you didn't hear that Intel's latest consumer CPUs (Lunar Lake and Arrow Lake) are also being manufactured by TSMC. So, Intel has now joined the club of designers "sending IP to Taiwan".Gururu said:Right now, Intel is probably the only relatively secure major IP holder for CPU chip design the U.S. has. Everyone else sending IP to Taiwan, which is like 10 feet from China.
That said, you're apparently under the mistaken impression that what a fab receives is of much use to competing chip designers. It's not. Trying to reverse engineer a design from those masks is worse than trying to disassemble the binary code that ends up on your machine, when you install a piece of software. It's effectively impossible. -
bit_user
They might need to do something, in order to gain access to the finances necessary to continue developing the foundry business. If they're unable to borrow money to make the necessary investments, then all new fab buildouts and manufacturing technology development would promptly grind to a halt and the fabs would just continue to make products on their existing nodes, as long as that much remains profitable.tommo1982 said:Let the company stand on its own feet. It's stupid to allow it to be sold to some other entity.
The world is changing. Semiconductor fabrication is massively more expensive than it used to be. Intel's biggest customers and markets are all splintering and turning away from x86. Apple is no longer an Intel customer. China is turning inward, for its CPU needs. Much of the enterprise IT sector has migrated to the cloud, which is in turn migrating to ARM. A lot of the remaining datacenter x86 market is going to AMD.tommo1982 said:Whatever comes, I don't see Intel going bankrupt, not if they see what brought them where they are.
So far, desktops and laptops are still a strong market for Intel, but maybe next year will finally be when Windows-on-ARM cracks the corporate PC market?
So, you tell me: what do you do when your costs start increasing and your customers all begin to scatter? -
bit_user
CHIPS has specific provisions to avoid the funds flowing through to investors' pockets. It's meant as an investment in technology and infrastructure, not a giveaway. It was actually a pretty well-crafted bit of legislation and doesn't deserve to get dragged through the mud, like this.ezst036 said:CHIPS act 2 incoming - followed by CHIPS 3
More bailouts for billionaires and kickbacks for lobbyists
This knee-jerk, uninformed cynicism is pretty lame.