The Intel Split – Stratechery by Ben Thompson

Intel is in a tough place right now, and new CEO Pat Gelsinger is making some pretty incredible bets to turn the ship around. I can’t help but want to root for Intel. They are a stalwart of technology, and we need to have multiple companies innovating for the best circuits.

It is pretty interesting to read this take from Thompson, and the extensive excerpts he pulls in.

The problem is that Intel, used to inventing its own tools and processes, gradually fell behind the curve on standardization; yes, the company had partnerships with EDA companies like Synopsys and Cadence, but most of the company’s work was done on its own homegrown tools, tuned to its own fabs. This made it very difficult to be an Intel Custom Foundry customer; worse, Intel itself was wasting time building tools that once were differentiators, but now were commodities.

So Intel became too vertically integrated and as a result couldn't take advantage of the innovation happening all around it? That can be okay if you are leading in all categories, but if any one of your capabilities falters everything goes down with it.

Intel is obviously not splitting up, but this TSMC investment sure makes it seem like Gelsinger recognizes the straitjacket Intel was in, and is doing everything possible to get out of it. To that end, it seems increasingly clear that the goal is to de-integrate Intel: Intel the design company is basically going fabless, giving its business to the best foundry in the world, whether or not that foundry is Intel; Intel the manufacturing company, meanwhile, has to earn its way (with exclusive access to x86 IP blocks as a carrot for hyperscalers building their own chips), including with Intel’s own CPUs.

This is a huge bet. I hope it works out! 🤞