EDITORS NOTE: Over 48 hours a go the Herald posted news of layoffs coming to Intel. Now, after 40,000 reads and hundreds of interactions, other sources are following in. https://share.newsbreak.com/80ys01hd
The Herald continues to be blocked from Executive Session meetings at the City by the City Atrorney and City Manager Hammond on thr basis we are not MAJOR MEDIA. You can’t stop a tidal wave with sand bags. We continue in our work to speak up, ask the hard questions, and represent the people
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Right now, the news is crashing on the shores of every major media site worldwide. According to Bloomberg, Intel is set to announce another round of massive layoffs. The Herald has covered this extensively in the past, and we continue to watch this play out. The biggest question for us and stockholders in the massive computer chip company is whether the company can correct the course it is on. It seems almost impossible that Intel does not go the way of HP, IBM, Tektronix, and a littany of other companies that were at one time “Too Big To Fail.” Competition is fierce, and the Titanic-sized company has already hit the iceberg and is leaking at multiple seams. Yet, much news has been pushed out to indicate that the company is making a turnaround. The layoffs keep coming, and other stock and earnings indicators have insiders saying, “Iceberg Dead Ahead”.
I am in NO WAY suggesting Intel will leave Hillsboro. That is unimaginable. But how many Billions can the US Government throw at the company via The Chips Act? Will towns like Hillsboro, Oregon, whose leaders have tied the city’s future to the company, survive a catastrophic collapse that could cut the number of jobs by a big percentage?
More than likely, the company will die a long, slow death and never really die; rather, it will be pieced off into many divisions that will continue into a lesser future. One thing is for sure. As our leaders at the City and State level clamor for more Intel and more “high-paying jobs,” the company is listing. The call needs to be made for diversity in our economy and to re-evaluate where our tax incentives and giveaways are going.
As noted by Mike Wheatley’s article Intel reportedly set to announce another round of layoffs, involving ‘thousands’ of workers
Last year, Intel laid off about 5% of its workforce, which came after a previous round of job cuts in October 2022. The company has also reduced spending in other parts of its business as it looks to balance the books.
How can we put all our land, revenues, and faith in a company that will quickly turn on its employees and the towns they call home? We can’t. That is your answer. This is all about profit, all the time, every day. CEO Pat Gelsinger, once hailed the messiah who would save the company as an insider who innovates things, is now just another bean counter CEO.
AI and robotics will pressure the company to automate and cut more jobs to squeeze that bottom line. Like everything in life, I believe this mutually beneficial relationship between Hillsboro and the BIg I has become decidedly one-sided, and the value-added proposition is totally in the company’s favor.
I am cheering for them- but I don’t see where this will be a shining city on the hill so many have promised us. I hope I am wrong. But there is NEVER a bad time to diversify, and Hillsboro needs to get about that business quickly. Also, let me once again put out the idea that our massive data center build-up is a cash cow that we need to tap as a community. Because they offer no jobs and nothing but Wall Street profit, I think a tax or power/water service charge could become the revenue stream we need to keep our City moving!
Now, here is some big picture back story:
Intel, a cornerstone of the semiconductor industry, has faced increasing competitive pressure from rivals such as TSMC and AMD. To bolster its position, Intel has sought substantial government grants and subsidies. This analysis examines the efficacy of such financial support, the potential risks of overreliance on Intel, and the broader implications for the community of Hillsboro, Oregon.
The Challenge of Size and Speed
Intel’s substantial size and historical dominance have contributed to a corporate culture often associated with bureaucratic inertia. While scale offers certain advantages, it can also hinder agility, particularly in a rapidly evolving industry like semiconductors. Competitors like TSMC, with a more focused business model and a culture of innovation, have demonstrated remarkable speed in capitalizing on emerging market opportunities.
The question arises: Can massive infusions of government funds counteract Intel’s inherent size-related challenges? While these funds can undoubtedly support research and development efforts, they do not guarantee a cultural shift toward greater agility and responsiveness.
The Risks of Overreliance
Hillsboro, Oregon, has become synonymous with Intel. The city’s economic health is heavily tied to the company’s fortunes. This overreliance creates a significant risk. If Intel’s market position continues to erode, despite government support, it could have severe consequences for the local economy.
Diversifying the economic base is crucial to mitigate this risk. Attracting other technology companies, fostering entrepreneurship, and developing alternative industries can help insulate Hillsboro from the potential fallout of an Intel decline. Agriculture has the potential to return to a position of bigger support, which the area has always been known for and relied on.
The Efficacy of Government Subsidies
Government subsidies can temporarily boost a company’s competitiveness, but their long-term impact is debatable. If the underlying issues hindering Intel’s performance, such as organizational culture and process inefficiencies, remain unaddressed, subsidies may delay inevitable challenges.
Moreover, government spending has an opportunity cost. Funds allocated to Intel could be used to support other sectors of the economy, potentially yielding greater returns. A careful cost-benefit analysis is essential to determine the optimal allocation of public resources.
Conclusion
While government support can provide a lifeline to struggling companies, it is not a panacea. In Intel’s case, the effectiveness of subsidies hinges on the company’s ability to leverage the funds to address fundamental challenges and accelerate innovation.
Hillsboro, Oregon, must proactively manage its economic reliance on Intel. By diversifying its industrial base and cultivating a supportive environment for startups and other technology companies, the city can reduce its vulnerability to potential setbacks in the semiconductor industry.
Ultimately, Intel and Hillsboro’s futures depend on a delicate balance of government support, corporate innovation, and community resilience.
Editors Note: NVIDIA- Ok, I will say that I know just so much about NVIDIA –
NVIDIA is a significant player in the semiconductor industry, but it’s more of a catalyst than a threat to Intel and TSMC.De. NVIDIA’s immense success in the AI and gaming markets has increased demand for high-performance chips. This, in turn, has driven growth for chip manufacturers like TSMC and, to a lesser extent, Intel.
NVIDIA’s dominance in certain segments pushes Intel and others to innovate and improve their offerings. This healthy competition benefits the overall semiconductor market. I understand that NVIDIA, like many other chip design companies, relies heavily on foundries like TSMC for chip manufacturing. This interdependence strengthens the position of both companies.
Significant news earlier this year indicated that NVIDIA and Intel were close to a deal. https://www.investing.com/news/stock-market-news/will-nvidia-select-intel-for-its-gpu-fabrication-process-3333937
We appreciate any of you readers weighing in on this issue. Could Intel eventually compete with and take market share from NVIDIA?
Hillsboro will likely not be tied directly to Intel’s production of those sorts of chips, but the R and D we do here could certainly be bolstered in the long term.
Tricky thing these machines we use and the evolution of AI and the world we are building. I wish the best for everyone concerned on all sides.
It would be funny if Intel was to fail since Hillsboro’s growth is based primarily off of Intel. Might bring prices back into a little more realistic realm
If no other towns were nearby, you’d be right, but a single town in e metro area won’t suddenly become much cheaper than all the rest.
Exactly right. Hillsboro is a bedroom community for the entire Portland metro. The vast majority of Hillsboro residents dont work at Intel. My wife and I dont even work in Hillsboro. We bought a house in Hillsboro because it was an affordable place to live.
Uh… Some tough times at Intel and you act as if we should all run away. Are things tough, yep. Is Intel dieing a slow death, no. While Intel isn’t the juggernaut it was a few years ago, it continues to expand/build in Hillsboro, Arizona, New Mexico, Ohio, Ireland, Malaysia, etc.
Just a few months ago there was a negative story written here about how Intel was doubling it’s air exhaust permits. Why would it need to do that? Because Intel continues to expand. You don’t continue to expand if the end is coming.
If layoffs come, will Oregon see some of those layoffs? Can’t see why not. But is this the end of the Intel semiconductor business in Hillsboro? No. This story sounds like Intel is on its way to laying off everyone, turning off the lights, locking the doors, and walking away. Feels a bit over thw top.
Should Hillsboro try to diversify? Sure. But again, just a few weeks back there was another negative story about Hillsboro expanding to the northwest to develop land for business. So what should Hillsboro do? Diversify its business base, with no place for those businesses to set up shop?
For Intel, I’d say that folks should look at Intel’s history which may be far from perfect, but even farther from failed. Look to the future and at what Intel is doing to get back to the top and see the effort being made to get there. It won’t be easy, but I think you’ll see that the current leadership at Intel is doing all it can to clean up the mess left behind by prior leadership who put stock dividends and buybacks in front of manufacturing and technology development.
As it may seem implied by this story, I would suggest it’s not all doom and gloom and don’t run away at the first sign of trouble.
You really need to read the story, and I usually don’t allow posers hiding behind fake screen names and BS gmail accounts to come on here and participate, but OK- I will accept your tone. I am sure you work or profit from the company like almost everyone in Hillsboro.
You are saying I stated or intimated that Intel would leave Hillsboro. Bullshit. What I said was, “I am in NO WAY suggesting Intel will leave Hillsboro. That is unimaginable.” I have been involved with this valley for 58 years and helped promote Intel, and a host of others. Epson was here and promised big growth, so did Fujitsu and NEC, and Planar, and Mentor Graphics and FEI and the list goes on. Not to mention Tektronix which had a high water mark of 20,000 apx employees in the 1970s. They are still here but a very small work force is left. And if Intel is going to double their pollution and harm people they should stop doing that.
It is not all doom and gloom. I am trying to be the Adult in the room to point out what we are backing ourselves into and that we might want to be smart with whats left of our Valley. So, there you have it.
Go Intel!
Dirk, Dirk, Dirk, you always have it in for Intel. If you look at their history, they have fairly large layoffs forever, it is how they get rid of their dead wood. They tighten things up for a short time and then they always start hiring .
I am pulling for them. But I will say we are in different times- we are in a major Paradigm shift. Offering thoughtful questions about the state of affairs is not me having it out for them. I am asking these questions to our community. And it is my firm belief that they have been a positive factor in our community but not by a wide margin. Housing, water, sewer rates, storm run off, ari quality, traffic, construction costs- a littany of other items are all huge negative factors. Jobs and personal income have bene positive. The City, County, and State have all benefitted by the tax revenues and have grown exponentially as a result. We now have a situation where reductions in jobs comes again- and why? Because Wall Street is unhappy. We are in a time of intense change- I believe our Government will bail Intel out but not without significant changes. One of those is a shrinking employment base. And Ann, no one else has the gumption to ask these questions, at least not openly. So part of my goal here is to stimulate thousands of views and brains. It is good for the zeitgeist and I hope everyone is asking themselves these things. God knows their enviromental record is now being looked at closely and they are trying to do better. I appreciate you participating and I will say we are the only media locally that allows open and civil discussion!
Dying? In a death spiral.
– A happy ex employee –
It’s not just Hillsboro that needs Intel to be successful, it’s the entire US economy. Nvidia is the uber-sucessful company right now, but guess what? They don’t manufacture a single GPU chip. That’s done at TSMC in Taiwan. Same situation for AMD. Apple as well. So much dependence on a small Island that’s in a geopolitically unstable region. If China invades Taiwan a huge percentage of advanced semiconductor manufacturing will essentially be gone overnight. The impact on the world and US economies will be significant. In the US we have Intel and Micron as pretty much the only companies able to manufacturer advanced semiconductors (yes, there are some smaller companies with fabs, but they’re fabs are older, not on the bleeding edge). How did we get into this situation? Underinvestment and wrong priorities. We were going all in on social media companies that were the darlings of Wall St in the late aughts and 2010s. We were so focused on an easy return on investment that we neglected the necessary things.
Your post has more accuracy than the article.
I did read the article and it does come off a bit like a hit piece on Intel without necessary background knowledge.
Robotics and automation? You’re unlikely to find a factory implementing more of that anywhere in the world than a high end chip fab, of which Intel runs several here. Anything that isn’t highly automated is in a low volume research area where it wouldn’t provide much benefit anyway. It’s important to remember that Hillsboro is a development site for Intel, and there are truthfully very very few “operators”.
Secondly, on the company’s model and comparing them to Nvidia. Nvidia is a fables company. They don’t make their own chips. In fact, when Intel’s Foundry Service takes off in the coming years, it’s possible that some of Nvidia’s product could even be made by Intel. To say that Nvidia has a culture of innovation thus implying that Intel does not is not only wrong, but, quite frankly, rude to your readership. Intel has been the leader in the VLSI/CPU space for decades. They’re in a bit of a slump now but that’s bound to happen here and there with a leaner competition. However, their architectures are still industry leading, as are their engineers and support structure.
This reply is gold medal C-level, tone deaf, corporate BS as 10s of thousands lose their jobs. In fact, it is so air filled, I might just throw it in my attic for some extra insulation. Was it written by ChatGPT, tech bro edition? It has all the honesty of a politician explaining the gold bars under under his mattress.
Here’s an idea, every exec should have their pay cut by the same percentage as the workforce reduction. You know, in these uncertain times…
No worries, Intel India is licking their chops, trained and queued up to handle the backlog.
Good times. As aways. Thanks for the article Dirk. It was well written.
Have YOU ever tried to run a company in INDIA?
Reminds me of when Seattle turned a blind eye to it’s dependency on Boeing and when Boeing went down, there was a billboard along the freeway that said, The last person who leaves, turn out the lights. They had to learn the hard way about diversifying, hopefully that won’t be Hillsboro.
I have worked with Intel and Microsoft on technology marketing and sales partnerships for decades. One could see backs in the 8Os, 90s, and 00s the train wreck that was approaching.
It took Microsoft to get a new CEO, not Balmer, to right their ship Intel was so entrenched with its culture that they are up against the wall so Intel Must think like and act hungry with hustle and less memos and meetings and painting fingers and Gavin yet another meeting about decisions.
For years now the saying was “don’t hire anyone from Intel if they have spent more that five years there.” The place gives managers and senior executives a corporate labotomy.
Thesexare good people but it’s not a government job where careers die from culture reinforcement.
Intel layoffs are good thing. But just like Google there are too many people tying to pretend they are doing meaningful work.
Everyone left requires only a few decision makers Then with passion do your job. From the top down at Intel people need to work as if their jobs depend on it.
Intel will get it’s act together. They have to when they do the place will be a leaner, meaner, competitor and great partner to have in the Fab and Chop businesses.
Thank you all for the open discussion, “times, they are a’changing” again. Intel is a great company that has provided jobs and spurred ancillary companies in the area. 2008 was a jarring wake up call with recovery and growth following, however this time the world wide speed of technological & geopolitical advancements challenges company & government leaders alike – diversify and prepare.
If Intel wants taxpayer money, they should be forced to complete products in the USA.
Completed wafers are shipped to Asia to be cut up and turned into individual chips.
This allows Intel tax advantages where the final “value” of their completed products isn’t recognized in the USA for tax purposes.
As an example from Fab5 in the Pentium days, the “per die” value asserted by Intel was around $20. But once shipped to Taiwan, China or Malaysia, where the least expensive production steps were completed, suddenly the finished Pentiums were valued at $900+.
Yet huge tax incentives were handed out to Intel by Hillsboro, Washington County, Oregon and the federal government.
Their power deal with BPA is about 3 cents per kWh, while PGE residential rates are 19.66 cents per kWh….(the same applies to the massive data centers along the Columbia River from the Gorge to Hermiston)
Even in their prime, Intel has always been more “show” than actual deliverer of benefit to the region.
They would deliver (with media coverage) a bunch of computers to a school. Most of these were leftover, older models they assembled for various OEMs at the Hawthorne Farm location on Cornell, but were overproduced and refused by those vendors. And, of course, the schools accepted them, but because they all used Apple products, the donated machines ended up stuffed in closets, or went home with teachers.
Let’s not forget SOLV…the “beach cleanup” program where FAB Managers (several conveniently owning beach homes) extorted employees into “participating” in the event…at their own expense for travel, food, and lodging. Funny how the leadership required a couple extra days prior and after the cleanups to do “SOLV Business”.
Oregon is, by far, the biggest Intel footprint in the world, reaping huge benefits, (but willing to go to Chandler, Rio Rancho or Ohio if the bribes are high enough) yet where does the corporate leadership and their families actually reside? Mostly in billionaire enclaves outside of Oregon.
Intel, (just like the massive data centers), needs Oregon for cheap electricity unmatched anywhere else in the nation. This is worth billions on it’s own.
If we’re going to bend over for Intel, handing out tax benefits while Oregon citizens are some of the highest taxed individually in the nation, we should be putting rules on them.
Not only should a minimum number of their executive suite be required to reside with their families in Washington County, but a proportional number of Intel Board of Directors should be from Oregon.
(Data centers should likewise have similar requirements)
Short of this, Hillsboro and Washington County will continue to be exploited by Intel.
I’m not saying Intel is bad for the region, but a little financial research would show that the deal is MUCH better for Intel…and would still be if we quit giving them tax incentives.
There is nowhere else in the USA that has the combination of objective and subjective factors where Intel could build more mass and spend less doing so than right here.
Quit kissing their asses to invest here…they will do it anyway. But make them do it by our rules for a change.
Mic Has Been Dropped! I knew if I kept at it someone from the inside would break the silence and cut through the crap! This is one of my key points. If we use the Value Added axiom- and make everyone who we allow to come here – add net value to the community of a decent scale…well then we all win. I am tired of my hoe of 60 years being trounced on. Tired of it. And it is time for full dislcosure, some honest town halls, and no more white washing of what is really happening here. And this commentor used a rela name and email – my kid of citizen!
Can I ask you to write an Opinion piece and lay this all out? Thank you for posting- I am very grateful at the end of a very long and hot day!
Best regards;
Dirk
Flash 8-2-24 5:30am PDT Unemployment rate UP to 4.3% Jobs added 114K Stock Market selling off again today.
Fed is asleep. Intel stock being hammered! BUT, City of Hillsboro spending like crazy. Is there anybody at COH awake?
Dirk, Nov 5th changes everything ECONOMICALLY for better or worse………….
Diverse economy is critical for healthy stable communities. Look at Silicon Valley and Detroit, over concentration of a particular business line sets up cities to fail. Dirk I appreciate your balanced reporting and tieless work to highlight the issues at hand. Hillsboro government officials need to do more to support economic diversity, protect finite resources and make investments that benefit the whole community.
Thank you, Stef. I know many local people like you care as deeply as I do. Us finding a way to have a voice here is the trick.
Whole-hearted agreement from me.
This news will cast a chill on the real estate market in the Beaverton-Hillsboro area. If Intel Oregon headcount shares equally in the 15% cut the company is making, about 3,000 Intel Oregon employees will be laid off. Most of these employees will have to leave the area to find equivalent jobs. So, expect a lot more houses for sale, and lower prices.
I don’t think so. Having been a broker for many decades these things generally have a soft blow. And, many of those homes would have 2.5 to 3.5% mortgages and will just get rented. Anyway I think we will be ok.
In the coming years, both Intel and AMD are poised to gain ground on NVIDIA in the semiconductor market(AI GPU), with promising projects in development. Intel may have a cost advantage due to its in-house chip production capabilities, allowing them to prioritize their own designs. It’s worth noting Intel’s long-standing dominance in the semiconductor industry, which has shaped much of the sector’s ecosystem.
While TSMC excels at producing chips for companies without chip manufacturing facilities, like NVIDIA, their focus is more on cost-effective production using established technologies rather than cutting-edge research and development. As the AI industry is still in its early stages, we can expect new chip manufacturers to emerge. However, the foundry landscape will likely be dominated by just two major players: Intel and TSMC. Between these two, Intel has a stronger tradition of significant R&D investment and eventually dominate Semiconductor market.
I don’t think the U.S government will let intel fail.. if china attacks tiawan intel is the only US company left that can produce chips.. deemed to big to fail.
“China attacks Taiwan”? where did you get that? Oh, you must read mainstream media or watch the TV “news.” When was the last time China attacked anyplace? It’s in Taiwan’s constitution that there is only one China. Unfortunately for Taiwan, those who decided that figured that Taiwan was the owner of all of China. It’s just an island that they took over as so-called Nationalist China had to leave the mainland and in the process they murdered over 20,000 indigenous Taiwanese. Taiwan is getting less bellicose but the US wants to use it to pester and aggravate The People’s Republic of China. China and Chinese people are not our enemy. The arms industry and the war mongers always need an enemy and most of the time they have been successful in convincing the general US public of their lies.
https://www.nakedcapitalism.com/2024/08/hoisted-from-comments-is-intel-going-down-the-boeing-path.html
Dirk, Re: Editors note: “The Herald continues to be blocked from Executive Session meetings at the City by the City Atrorney and City Manager Hammond on thr basis we are not MAJOR MEDIA………”
Sorry toI remind you of your support for this crew at city hall. Saying they are “good people”. Your “Yard sign” support of Callaway. Don’t you think he has stabbed you in the back? I do–would have never trusted him. You are too good a person to have allowed these miscreants to have treated a native son the way they have you!!!
The “Chips Act” is a JOKE! Callaway, Sollman, and Kotek celebrated it while some of us, especially those of us from Silicon Valley who knew all about Intel since Andy Grove days and how they have been savage in ruining communities. They manufacture nothing in their birthplace but corporate BS!
And now we have to deal with Data Centers who manufacture nothing and horde (Ruin) our resources! Land, water, power, etc…..Point Set….Match