The Six Five team discusses Intel $20B Chips Act Funding.
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Transcript:
Daniel Newman: Intel finally gets some money from the CHIPS Act. Now, I want everyone to remember when this CHIPS Act actually came into play. It was approved in ’23? No, it was in 2022. So, you want the government to drive the future of innovation, look how fast they move. Now, just remember, when they actually approved this, nobody was using ChatGPT yet.
Patrick Moorhead: By the way, look who started it too. It wasn’t even under this administration.
Daniel Newman: No, it’s brutal how slow this stuff proliferates and progresses. The good news is, it happened. The bad news is, it’s not enough. And by the way, this was a big part of the Pat Gelsinger discussion. I think they gave them about 8.5 billion in grants, another 11 billion in loans. And based on the way we’re running up our global debt in the U.S., it was a trillion a quarter now that we’re creating in debt. It feels like 52 billion is not enough money for the most important technological revolution on the planet and the U.S.’s ability to substantiate, legitimize, and protect its long-term interests. Now, having said that, this will go a long way to getting Intel superfabs off the ground. We will need somewhere in the U.S., somewhere in the west to be able to produce all these XPUs, to be able to produce all these GPUs to be able to, and Intel is a viable option for this.
Pat, I’ve been on the record for a while. I’ve said the foundry business might be the most interesting business that Intel has. That’s not to say the other parts of the business aren’t interesting. I’m just saying that right now with this AI growth, TSMC cannot take 100% of this on. I’m sorry, it will not happen. Pat, I don’t feel like it was optimal though. I don’t feel like what they got was really what they had hoped for or what they wanted. I feel like this was a little bit, there were some concessions here. 11 billion of loans versus 20 billion including grants felt like a bit of a kick in the teeth for the company that has raised its hand, stepped up and said, we will be the company that will bring manufacturing at the leading edge from a U.S. domestic company back. And now you are also hearing about Samsung getting money, TSMC getting money.
Lots of non-U.S. based companies are seemingly lined up to get dollars here and that’s okay. Those are our partners and allies. But, having said that, I don’t know that we’re solving as much of the problem as we need. And again, I go back and say, there is no way in heck that 52 or 53, whatever it was, 52, $53 billion is enough if we want to maintain global leadership in technology. And the way we spend money on other things, wars and other things that do not apply to us, it just absolutely blows my mind that we are not spending more money to make sure we lead in the most important technological revolution that will drive national security, technology leadership and supply chain resilience around the world.
Patrick Moorhead: I’m going to hit, just do some really quick hits here. I was asked by a press, who’s the loser here? And the loser’s TSMC. TSMC will get money, but based on the fact that TSMC isn’t going to bring their best to Arizona A, and B, their chairman and senior executives-
Daniel Newman: That’s right. They’re only bringing seven.
Patrick Moorhead: Their chairman and chief executives are calling U.S. workers lazy, which by the way, even if it were true, you don’t have one hand, and then slap somebody across the face. But, some even historical stuff is coming out from TSMC in the way that they’ve talked about other cultures and companies. And by the way, it’s driving U.S.-based semiconductor companies crazy at how TSMC, executives pull me aside and tell me how disappointed they are in the way that TSMC is operating here. The other question I get is, is this enough? And the short answer is no. There will need to be a CHIPS Act two and a CHIPS Act three until we get to some form of automation and replication to build these foundries.
Congratulations to Intel. By the way, I was one of the only analysts three years ago that gave Intel a chance. If I got a dollar for every person who came along and said that they should divest, I said, you are completely freaking crazy because Intel’s not ready to do that. Maybe when they get lift off with 18A and they’ve got Columbus up and running, then you might be able to do that, but now, dumb.
Daniel Newman: Hey, I just want to say that there was another analyst that gave them a chance that actually has written the bull case, has taken a lot of shit, a lot of flack from people.
Patrick Moorhead: A lot of beep.
Daniel Newman: Should we beep that out? Nevermind. Let’s just keep going.I want this pod to be authentic, Pat Moorhead, beep. We said it, we stick by it. We get it right a lot more than we get it wrong. We aren’t going to say we never get it wrong. We’ll just never remind you that we got it wrong. You’re going to have to find that stuff yourself
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
