The Six Five team discusses Latest Intel Conversations (20A, Arrow Lake, 18A, I-Bankers, IFS Broadcom, Lip-Bu Tan)
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Transcript:
Daniel Newman: Interesting. 36 hours actually. Interesting. 10 years we could say. But a really interesting week and you kind of come across the top here. I’m going to talk about pieces of this. You can talk about some other pieces of this. There’s a whole bunch of 18A stuff. There was a deprioritization of 20A, a prioritization of 18A, a TSMC node. I knew that. I tweeted something a little bit inaccurately. I apologize for it. Thank you. By the way, all of you that corrected me. It was really important. That was the takeaway of my 2000 word dissertation. What do you say about credibility, Pat? I guess I blew it early.
Patrick Moorhead: Dude, dude, anybody with a brain know … Yeah.
Daniel Newman: And it’s fine. I just laughed because like I said, did you read any of the rest of it? Is that all we got out of it? It’s like being at home, dude. It’s like I give the whole story and then someone tells me your shoelaces untied. Thank you. All right, I digress. So, I’ll hit a couple of these things. Maybe you want to hit a couple and then we can go back and forth on what you think is worthwhile of talking more about. So, just really quickly, Lip-Bu Tan, board member at Intel, left the board, did it amicably in terms of his public note. But this guy, a legend in semiconductors, a cadence CEO clearly disenfranchised with the direction of the company. Not a good look. And of course we heard after that, risks about activists, risks about starting to do further breakups of the company. We saw that there was basically a board meeting coming up. Everything is on the table. We’re now hearing, by the way, I read a new note in Reuters today about Qualcomm circling Intel to potentially acquire parts of its business. If they end up having to spin them off, check the Reuters report, Pat, if you didn’t see that one.
I could see Mobileye, for instance, being a really interesting play for Qualcomm at this moment. Other things too, potentially. But that caught my attention. Not a good look right now to have really, really credible board members leaving in this particular moment in time. Going to be interesting how they respond to that. I’ll kind of tie a couple of 18A threads, because you mentioned it says Broadcom 18A, 20A. First of all, there was of this narrative about Broadcom in a sample, a pre 1 dot OPDK not getting the performance out of Intel. Interesting that these rumors have dropped. There was a SoftBank rumor. There was a confirmed, or confirmed not rumor, story related to SoftBanks and others that have been sort of testing on Intel. I think there’s an enthusiasm and excitement from Intel to get things out, but clearly there’s this weird leaking that’s going on, Pat. By the way, you’ve been around this industry even longer than I have. So, I’m doing this more from hearsay of my experience in learning over the last decade. But this stuff doesn’t typically leak. Things like this. When you sample and you’re letting customers touch this stuff, the fact that this is leaking is very odd.
But at the same time in my long tweet, I’ll put it in the show notes, I kind of talk about how there’s a bit of this feeling. And I don’t want to use the word “conspiracy,” but I’m going to use it because I don’t know what else to use right now that Intel’s like the prize fighter that’s on the ground and it’s on the four count and it’s like you have the chance to punch it while it’s on the ground and keep it from getting back up there. Feels like there’s a little bit of this circling around Intel right now that maybe it’s because they were determined that the government-backed national champion of Foundry. Maybe it’s because of the ongoing channel and feedback we’ve gotten from the market that says, “We love TSMC. We don’t care. We’ll just work with them forever.” Maybe it’s all the risks associated with that. But having all of its woes, all of its woes leaked out these days. But then again, we had Blackwell leaks too, so who knows. And then of course there was the deprioritization right now, where they’re basically going to double down on 18A. So, right in the heels of Broadcom supposedly getting low performance on a sample pre 1.0, they also came out and said, “Look, we’re going to skip to 20, we’re going to go straight to 18. We’re going to compromise our five and four.” But we all sort of knew, Pat, that not all five were going to be serious nodes, not serious. That’s not the right word. Like full nodes maybe was the right word I’d use. Serious.
Patrick Moorhead: Yeah.
Daniel Newman: You’re not serious people, Moorhead. But in the process it kind of was like a flip of indication to me though that they actually feel really confident in 18A and they feel they can get capacity and they feel they can deliver a really strong part. So, that was a really interesting conflict or maybe rebuttal in that moment after the Broadcom story leaked. And then what it also brings some question to its own foundry and what it’s doing with 20 and what it’s going to be able to do going forward. So, there’s just all this kind of coming together at one time, Pat, and I know this is where I start to try to take four or five threads and not conflate them. But man, are they a new cycle right now. And it just feels like there’s so much conviction that nobody quite wants to see it go well. And I think that’s why I think you and I are trying to just be balanced about what this is. There’s some good things happening, some good indicators in this and some really concerning ones.
Patrick Moorhead: Yeah, I’ve never babe-ruthed Intel. I always said, “Here are the conditions for success that Intel would have to do to get back on top again.” But Daniel, it is knives out on Intel. And those who don’t have history don’t understand why knives might be out. I mean, Intel was the NVIDIA of today. Okay. Let’s just be very clear.
Daniel Newman: Memories.
Patrick Moorhead: They are a convicted monopolist in the EU. That’s just a fact. I’m not making stuff up here. And they’re still debating the fine 15 years later. But if you go and read the complaints from AMD and even when the FTC took a swing at it, I mean it was ugly, exclusionary pricing, tying, even selling below cost at certain, it was crazy. So, yeah, there are people who want Intel dead. I’m not surprised at all. Just look at the people who would benefit if Intel were dead and they want Intel dead. Now that doesn’t separate-
Daniel Newman: I said that in my tweet.
Patrick Moorhead: Oh, you did? Okay. Intel has shot themselves in the foot many, many years ago and it’s hard to get back. I mean, a semi-turnaround takes five years. But let me try to fill in not blanks or some oxygen you left for me. I was wondering about Lip-Bu Tan and by the way, you’re right, absolute icon on the board of HPE, Schneider, Softbank, the guy won the freaking Robert Noyce Award in 2022 from the SIA. Robert Noyce, an ex-Intel guy. And the rumor said he was frustrated with the large workforce, risk-averse culture, lagging strategy in AI. Now the interesting thing is the thing that Pat rolled out last earnings seemed to address the large workforce course. We know what their strategy is in AI. It looks like that’ll probably be a GPU that will make an impact as early as 26 and risk-averse culture, I don’t have the spreadsheets or how they make decisions in there.
So, yeah, I first thought that maybe Lip-Bu was putting together a group of people to maybe go and put pressure on Intel, maybe get Pat fired or something like that. I’m not thinking that anymore. There was a lot of conversation. It’s so funny. Talk about knives coming out. I think I had 60,000 people look at my post on LinkedIn about spinning out IFS. Let me be crystal freaking clear. You spin IFS out before the design company is healthy and IFS is healthy, it will fail. Now, my only caveat on there would be to take it private and don’t put this thing out on the market and then you have to find private investors and it’s negotiation of how you fund that, cap equity, debt, things like that. What could make sense is you take it private and its biggest investors, let’s say you do a third debt and you do a third capital allocation and then a third of it are investments by its potential customers. You get Apple to pony up money. You get NVIDIA to pony up money. You get Broadcom to pony up money and then you wait until 2027 to where Intel Foundry will be driving significant profits and then I think 2028 before you start seeing profits. Okay? So, that’s where it is. Well, why do you say that? Why wouldn’t that work?
Listen, I ran corporate marketing at AMD when we spun off GlobalFoundries. I know how this works, man. Talk about two at the time, two sick puppies. You had AMD that was locked into long-term wafer agreements that they never kept. But they had to do that to keep GlobalFoundries going. And the only reason that didn’t fail is you had Mubadala who is bankrolling GlobalFoundry and internalized all the losses. Final comment on here. God, I love this could be a show itself. We just have the Intel show.
Daniel Newman: Actually, we probably should just do the Intel show.
Patrick Moorhead: Yeah, final comment, had a little bit of a side eye on, okay, 18A is going so well. And by the way, their defect density does look really good before going into mass production. That’s super, super helpful. And by the way, that’s true. I have no reason to believe that’s not true, is a very positive sign for 18A. If 18A is going so well, then why are you getting rid of 20A? It seems like you could do both. Well, first-
Daniel Newman: Okay, go. I had an answer. You have an answer.
Patrick Moorhead: Yeah. First off, 20A. 20A was designed to be a pipe cleaner for 18A, but moving resources from 20A to 18A, it just gets better. And you reduce risk by doing it. You reduce likely design risk on Panther and I know the resources are different, but you also, you can apply to make those transistors, let’s say, even more power efficient. You have a thousand engineers, where are you going to put them? Going to keep them on 20A, you’re going to move into 18A. So, that foots for me. I had a little side eye in the beginning, but I totally get it and it foots with me. What were we going to say, Dan?
Daniel Newman: Yeah, listen, great take. This was a show. We need to do the Intel run-up. Pat, they have to focus. I mean that was my biggest take was in this moment in time, they have to focus resources. They’re promising the world that they’re going to be intelligent with their spend. They’re going to lean out and get out of businesses that aren’t driving profit for the company. More nodes mean more cost. It’s more setup. It’s more planning. There’s more engineers. All those things, Pat. If they think they can get on 18A more quickly and ramp it get to, and by the way, focus can mean more profitability, on a per wafer basis.
Patrick Moorhead: Yeah, man, that was a great comment. We didn’t even talk about potentially Brandenburg not happening. Not to be confused with Hindenburg.
Daniel Newman: That’s coming next. I bet.
Patrick Moorhead: Listen, the Germans didn’t come up with as much money. I could see them getting rid of that. I don’t understand dishing off Altera completely unless they have a buyer in mind. I think what that could do is that brings them cash to be able to do something else. Pat did talk about getting out of businesses that were upside down or zero revenue. I think Quantum is on the table. I think neuromorphic is on the table. And one thing that never gets talked about, but I know is a reality is Intel has backup teams. They used to have three teams that they would put to attack a problem. But you look at the AMB numbers, number of people they have and it’s like, “Wait a second, how does that work?” But I’m sure there are a lot of multi-hundred million dollar projects that add up to billions that are going to get whacked.
Daniel Newman: Yeah, I look at three things, Pat. This is PC Copilot AI thing, nail the Gaudi. Then of course to the GPU transition and become an actual player in AI. The market absolutely hates that they messed this up and it’s unforgivable in many ways. It’s not a Pat thing by the way. This happened well before Pat. He just inherited.
Patrick Moorhead: Picked the wrong architecture. That’s what they did. They picked an HPC architecture that was really good at 64- and 32-bit flops and they did really well out there and they had an ASIC. But the ASIC didn’t save the hyperscalers enough money and they just did their own as Broadcom.
Daniel Newman: And so, we’ll be doing some testing on Gaudi. We’ll get more out there in the future because there is some level of compellingness there.
Patrick Moorhead: Gaudi is compelling. And as we’re going to talk about in Broadcom, Broadcom’s not even focused on the enterprise.
Daniel Newman: Nope, nope, nope. And then of course, the third is Foundry. And I think it’s part of the differentiation is that it’s under the umbrella. Spin-off would be pretty devastating in my opinion. I just don’t know that we need another fabless and I just don’t know how successful Intel will be. Being the IDM was always sort of what made them special. So, spinning off another fabless in this era of ARM and risk and everything else that’s going on, I don’t know. I don’t love it. I don’t love it. I understand why they might have to do it. I just don’t love it.
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.
