The vultures are circling—and America could potentially lose one of its most important manufacturing assets. After a horrendous earnings report last

Why breaking Intel in two is the only way to save America’s most important manufacturer, according to its former board directors

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2024-10-26 08:30:03

The vultures are circling—and America could potentially lose one of its most important manufacturing assets. After a horrendous earnings report last quarter, Qualcomm, ARM, Apollo, and probably others have been looking at how to pick the flesh off Intel’s bones.

After 30 years of holding the crown as the world’s most valuable semiconductor company, Intel is selling below book value. At today’s price, Intel is an affordable acquisition for many, even much smaller tech companies. But what happens to Intel’s factories, designers, and intellectual property is vitally important.

Intel is the only large-scale American manufacturer of advanced logic semiconductors, even if it is no longer leading at the cutting edge. During the pandemic, we learned that shortages of semiconductors can have a devastating impact on the economy. Moreover, we need to develop leading-edge capacity to stay ahead in many advanced computing and defense-related technologies, including artificial intelligence. Most potential buyers of Intel would likely focus on cost-cutting and see little value in a money-losing manufacturing subsidiary (known in the industry as a foundry). In other words, profit-seeking buyers cannot be depended upon to maintain America’s manufacturing capability.

The entire world benefits if Intel has world-class capacity. TSMC and Intel have been competing for chip leadership for 30 years. Until seven or eight years ago, Intel was winning this battle. While this never-ending competition has made the world richer and must continue, depending on a single manufacturer strategically located with its most advanced factories in Taiwan is a global risk. In semiconductors, process research and development and leading-edge manufacturing must be co-located. So TSMC will never move its most advanced technology to the U.S. It is simply too expensive, requires too much infrastructure and too many key employees would have to move. The U.S. needs Intel.