The Dead Shall Be Raised

‘That’s gonna be tough. Not much from back then. And what’s there is thick milky.’

Blade Runner 2049

These are dark days in the USA. There is no candy coating the breakdown of our institutions and values. Violence, whether it’s everyday murder, terrorism or assassination is symptomatic of our psychosis and not the cause let alone the solution. 

Which brings us to Intel. It’s clear that Intel is the recipient of some hefty strategic blunders. Although there is plenty of blame to go around the Santa Clara campus. That said, these were not simply errors contained to Intel – neither US industry, the Tech Bros Complex, nor US Government Commerce and Security leaders understand the challenges with Intel. They are starting to. We did this to ourselves.

The Company operates through three segments: Intel Products, Intel Foundry, and all Other. Intel Products segment includes Client Computing Group (CCG), Data Center and AI (DCAI), Network and Edge (NEX). The Intel Foundry segment comprises technology development, manufacturing, and foundry services (making chips, integrated circuits, etc). All Other segments include Altera, Mobileye, and Others.

Sounds simple enough but it is not – not really.

Soon after Lip-Bu Tan took over Gelsinger’s sinking ship, the message was clear – ‘We Need to Change’. And around the end of April a plan was articulated that included streamlining operations, reducing management layers, and refocusing on core computing leadership. Those are all great HBS (Harvard Business School) buzz themes for your everyday run of the mill $50B+ corporate transformation mumbo jumbo but hold up, where’s the meat and potatoes?

Intel needs investment, a lot of it. Which is hard to pull off when you are swimming with other significantly bigger industry sharks with trillion dollars + market caps who have basically dis-intermediated your business with cloud computing alongside a bifurcated architecture subsidized by foreign governments while you are taking on losses without a technology strategy let alone roadmap that anyone can understand outside of your own engineers in Oregon.

So, first move included a joint venture with TSMC to expand manufacturing capacity and the divestment of non-core businesses along with AVGO throwing their name in the hat to buy off piece parts should a fire sale occur. Sounds more like a McKinsey inspired opportunistic fantasy than a turnaround strategy.

Then, on August 18, Bloomberg reported the potential for the Trump administration to commit some or all the committed CHIPS (Creating Helpful Incentives to Produce Semiconductors) Act Funding – artifact of the Biden administration, originally $8B in funding – into a 10% equity stake in the company. That’s a start but it is fighting a forest fire with a teacup in our view. 

If the Stargate endeavor, a Trump administration Hail Mary, is a $500B investment, how is clearing up the ‘thick milky’ mess at Intel an $8B problem. Numbers. Well, it’s not, not even close by at least one order of magnitude.

Intel needs a vision. We do data centers and not vision statements unless a customer or a friend needs one, but we’ll throw one out there for the sake of brotherly love. Intel needs QUANTUM. They need to own it, dominate it, and set the agenda for anyone that matters, including headline partnerships with IBM and Alphabet. Everything else is puff, fluff, and futile.

What about AI you say – Gene Roddenberry and Gene Coon created that vision in the 60s with Star Trek: OpenAI, xAI, Microsoft, Amazon, Meta, Alphabet, Broadcom, Nvidia and everyone else are beneficiaries of that vision just now – which is partly why the world is the way it is – part spaghetti western, part keystone cops with a little Master of the World circa 1962 for good measure. That’s us, all of us, stuck in a lost episode of Star Trek – Mr. Spock please ask the computer for our coordinates. 

Sure, Intel will make money from AI, there is no doubt about it, but the vision for AI is too narrow and frankly too crowded and weird for a company with the innovation chops and engineering talent of Intel. FOCUS.

Note to everyone not listening. There are no Data Centers without Intel. There is no AI without Intel. There is no USA without Intel.

Do Androids Dream of Electric Sheep. Philip K Dick thought so back in 1968. We are certain they do if their bodies and brains are made with Quantum computers.

So, while we watch the Starship Enterprise flying overhead with the cast of billionaire oligarchs on the command deck, Boldly Going Where No Man Has Gone Before, it feels more like the rest of us are bunking below deck with the Bladerunner in a gene-edited, technology surveilled, geo-engineered dystopia. It would be nice if we could avoid that.

The Dead Shall Be Raised: current share price notwithstanding -INTC mid-day: $24.66. Buy some.