This evening I read the third article in a row where Intel is mentioned as not financially out of the woods. The company has struggled in recent years, and around here, people say so goes Intel, so goes Hillsboro. The State’s largest employer has such a vital role in the economic successes of both Oregon and Hillsboro that it is inconceivable that we could have a world without them. Few people reading the local news promoting Intel’s recent $20-$30 Billion dollar expansions here are focused on what the company is really going through. The article on my screen tonight was Intel’s Recent Financial Performance Has Put The Company’s Future In Doubt; Analysts Expect No Good Until 2030.
Intel Ronler Acres Fab- Courtesy of Google
“A spokesperson confirmed to CRN that the firm has indeed implemented a new wave of layoffs affecting the company’s marketing division, but further details or the extent of terminations haven’t been disclosed yet.”
Author Muhammad Zuhair wrote the article, which goes into great detail about how Intel has separated its Foundry division away from products labeled and made by Intel. The Foundries Intel is building are not here in Oregon and, by all reports, will not be.
The company’s moves were announced in 2021, and the action plan laid out by CEO Pat Gelsinger has progressed over the last two years.
During the company’s global “Intel Unleashed: Engineering the Future” webcast, Gelsinger shared his vision for “IDM 2.0,” a major evolution of Intel’s integrated device manufacturing (IDM) model. Gelsinger announced significant manufacturing expansion plans, starting with an estimated $20 billion investment to build two new factories (or “fabs”) in Arizona. He also announced Intel’s plans to become a major provider of foundry capacity in the U.S. and Europe to serve customers globally. https://www.intel.com/content/www/us/en/newsroom/news/idm-manufacturing-innovation-product-leadership.html#gs.7myrzm
What is a Semiconductor Foundry?
A semiconductor foundry, also sometimes called a fab (short for fabrication plant), is a specialized facility that manufactures chips designed by other companies. Here’s a breakdown of what they do and why Intel is steering its ship into this fast-moving water.
Focus on Manufacturing: Unlike companies like Intel, which build, design, and manufacture their own chips (called IDMs—Integrated Device Manufacturers), foundries only handle the production process.
Customer Designs: Chip design firms or fabless semiconductor companies provide their designs to the foundry, which then builds the chips based on those specifications. Take Ampere Computing. It is an ARM architecture licensee and develops its own server microprocessors. Ampere fabricates its products at TSMC. Renee James, a former Intel President, founded Ampere. Her team designs some of the fastest chips in the world and needs someone else to build them. This allows AMPERE to attract the world’s best talent to design super-fast chips. Intel can compete for Ampere’s business by getting into the Foundry game. This is one example on a small scale.
Manufacturing Expertise: Foundries possess the advanced equipment and technical expertise required for the complex chip-making process. This allows fabless companies to avoid the huge cost and effort of building and maintaining their own fabs.
What are the largest Fabless semiconductor companies in the world, and why don’t they build their own chips?
Fabless Semiconductor Companies: A Design-Centric Approach
Companies like Qualcomm, NVIDIA, Apple, MediaTek, and Broadcom are known as fabless semiconductor companies. They focus their resources entirely on designing cutting-edge chips. Instead of building and maintaining expensive manufacturing facilities, they outsource production to specialized foundries. This approach allows them to:
Focus on Innovation: By avoiding the complexities of chip fabrication, fabless companies can dedicate their resources to research, development, and innovative chip design.
Cost-Effectiveness: Outsourcing chip manufacturing eliminates the massive upfront costs of building and running a fabrication plant. This allows fabless companies to be more nimble and adaptable.
Reliance on Foundries: While fabless companies enjoy the benefits of a streamlined operation, they rely on foundries for chip production. This can introduce some dependence on foundry capacity and scheduling.
Other companies build many of their own chips at their facilities and use Tawain Semiconductor as well. Intel will certainly look to get a share of that business as its foundry business takes off.
Intel’s Foundry Locations in the USA (Built and Under Construction)
Arizona: This existing foundry is a leader in chip production, utilizing cutting-edge processes.
Ohio: This location is currently under construction as part of Intel’s IDM 2.0 strategy. It will focus on both manufacturing and Intel Foundry Services, expanding its role in the chip market.
The company is also making major moves in Asia and will have a much stronger foundry presence there from here on out.
Could Oregon, specifically Hillsboro, be competing for a Foundry? Most insiders say no, but there are some reasons to believe that could be possible. I will cover that in an article to follow.
Here’s a breakdown of how Intel’s IDM 2.0 strategy impacts its position in the chip industry:
Regaining a Competitive Edge:
Hybrid Approach: IDM 2.0 combines internal chip production with external foundry services. This allows Intel to leverage its manufacturing strengths while catching up to rivals like TSMC in the most advanced processes by utilizing their foundries for some products.
Increased Flexibility: The ability to produce chips both internally and externally gives Intel more flexibility to adapt to market demands and potential chip shortages.
Foundry Revenue Stream: By opening its fabs to other companies (becoming a foundry), Intel creates a new revenue stream and positions itself as a major player in the overall chip ecosystem, not just as a chip designer and manufacturer (IDM).
Challenges and Considerations:
Financial Investment: The IDM 2.0 strategy requires significant investment in building new fabs and expanding foundry services. This can strain finances in the short term.
Execution Complexity: Managing both internal production and external foundry operations adds complexity to Intel’s business model.
Analyst Concerns:
While IDM 2.0 can potentially strengthen Intel’s position, some market analysts are concerned about the high costs involved. They’ll be watching closely to see if Intel can execute the strategy effectively and achieve its long-term goals of regaining leadership in chip technology innovation.
If the foundry side of the business takes off, as many analysts predict, what will happen to the fabs that build Intel’s landmark and legacy name-brand products? Will they and the places that build them, like Hillsboro, still compete and be viable? We certainly hope so. Nothing is moving faster in this world than the explosion of AI. The chips and technologies that drive it and feed it have to be available now, and as a result, Intel is in the ultimate race against time. Here is to hoping they make all the right moves!
Closing thoughts:
Do you remember Tektronix?Tektronix, historically widely known as Tek, is an American company best known for manufacturing test and measurement devices such as oscilloscopes, logic analyzers, and video and mobile test protocol equipment. The company spanned several decades in Beaverton and grew from 12 employees to over 24,000 in 1981, when I graduated from Hillsboro High School. Today, the company is all but non-existent. I want you to read what Wikipedia has to say about the company from that point forward:
Tektronix began to face big challenges to its business structure. In the 1980s, Tektronix found itself distracted with too many divisions in too many markets. This led to decreasing earnings in almost every quarter. A period of layoffs, top management changes and sell-offs followed. In 1994, Tektronix spun off its printed circuit board manufacturing operation as a separate company, Merix Corp., headquartered in Forest Grove, Oregon.[25] Eventually, Tektronix was left with its original test and measurement equipment. Upon his promotion in 2000, the current CEO, Richard H. “Rick” Wills, carefully limited corporate spending in the face of the collapsing high-tech bubble. This led the way for Tektronix to emerge as one of the largest companies in its product niche, with a market capitalization of $3 billion as of April 2006. However, this failed to prevent it from becoming an acquisition target, and Tektronix was acquired by Danaher Corporation in 2007.”
The company opened its Tektronix Industrial Park on 313 acres in Beaverton in 1959. It spent about 30 years at the top before beginning its decline. Today, the company has 3,000 employees worldwide, only a percentage of whom work here in Oregon.
The Ronler Acres Intel Fab opened in 1994. It has been 30 years.
Dirk Knudsen is a lifetime Hillsboro resident. He and his wife, children, grandchildren, and the extended family have served the Community for over 55 years. Read More About Dirk right here - https://hillsboroherald.com/about-us/about-dirk-knudsen/
Oh Dirk, sometimes I want to give you a lance to tilt . . I gotta give a guy chops for persistence and passion though . .
While I can understand that the jaundiced view of technology based companies as a whole, are vulnerable to quixotic market conditions, reducing those observations to any one company risks getting lost in the weeds of their company management or technology; well beyond a healthy anxiety about basing a healthy community economy on any 1 company industry or technology . . . FWW: my wife was one of the third wave of layoffs from Tek . . .
I am betting, with a LOT more faith than you Dirk, that Intel WILL continue growing their footprint and economic impact on the area, and given the world we now find ourselves in, what star/stars would you RATHER hitch your wagon to?????
Food is on the cusp of an AI intervention that could easily destroy our “local” boutique foodie/agricultural engine; Ag, banking and retail in general, are being reduced to lowest common denominator banality; community is being taken over by screens and keyboards of many sizes, demagogic rants of isolated individuals give equal time and ruinous publicity to mindless blithering of every stripe . . . .
I fear chiding Intel is just missing the bigger picture, the degradation inherent in embracing a “culture” or world, larger than we humans can connect to, cope with, have coffee with, watch our kids grow up together with, etc . . etc. At least Intel will give us in the short (??) term, the money to improve infrastructure, education opportunity, not to mention all the ancillary support jobs, while giving us the potential to consider what have we wrought, as a culture.
Might time be better spent as you so often do, focusing on individual culpability, of politicians gone rogue, specific company policies gone predatory, potholes gone amuck, and again, as you often do, person to person conversation . .
I’m hoping the weather holds till I gracefully slip from chiding you, to “slouching towards Bethlehem” “off this mortal coil”. Meanwhile, I don’t know how much he realized what he said, but Rodney King had it down when he observed: “Can’t we all [find a way to] just get along?”
The article stands on its own. Facts, not some analyst’s guesswork. It’s healthy to think about what’s coming, but some folks just want to stare at screens, oblivious. That’s their call.
Me? I got a voice. Maybe a lonely one, but I doubt it. Every day, there’s people. Faces. I work with them, help where I can. You, you can write. A gift, that. Why not use it? This platform, it’s an open field. You can yell from the rooftops, and some will take aim, sure. But they can’t touch what you write, or why you write it.
Speaking of windmills, and literary bluster, I’ll have you know I sat silently sullen this AM, when my wife announced: “that’s it” and ordered a new pair of my long suffering slippers. I tried mumbling about compassion and fealty, only to be silenced by a glowering stare . . Take note my friend, take note . . .
I couldn’t care less if Intel went out of business. After all the pollution and traffic and growth, growth, growth — and now they want permission (which they will get) to increase the pollution — as far as I can determine, citizens have no say about Intel. Politicians may or may not be bought off, but they sure are all singing in the same Intel choir. You said it best last month: “I believe that the parties involved in what is happening to Hillsboro for the benefit of the people of Oregon (jobs, tax revenues, power) are coordinated and working in concert at high levels with no interest or concern for what the citizens here want. By now, it is damn near impossible for Intel not to get everything it wants from our community. The company already uses almost 50% of our water, a tremendous amount of our power, and has created a traffic and housing nightmare that can not be unwound. But then there is all that money- and who doesn’t love money more than anything? Not that many people anymore. Left in the dust are the environment, the farmers, the locals (like me), millennials who may never own a home here, wildlife, and the other things that have made the Tualatin Valley so great. So, this colossal announcement is not happening by chance. It is happening to us and decisions are not ours to make. The record is clear, and there can be no doubt that this decision was made by the State, our Federal Senators and Reps, our County and City officials, and the company. Citizens had no seat at the table.”
Oh Dirk, sometimes I want to give you a lance to tilt . . I gotta give a guy chops for persistence and passion though . .
While I can understand that the jaundiced view of technology based companies as a whole, are vulnerable to quixotic market conditions, reducing those observations to any one company risks getting lost in the weeds of their company management or technology; well beyond a healthy anxiety about basing a healthy community economy on any 1 company industry or technology . . . FWW: my wife was one of the third wave of layoffs from Tek . . .
I am betting, with a LOT more faith than you Dirk, that Intel WILL continue growing their footprint and economic impact on the area, and given the world we now find ourselves in, what star/stars would you RATHER hitch your wagon to?????
Food is on the cusp of an AI intervention that could easily destroy our “local” boutique foodie/agricultural engine; Ag, banking and retail in general, are being reduced to lowest common denominator banality; community is being taken over by screens and keyboards of many sizes, demagogic rants of isolated individuals give equal time and ruinous publicity to mindless blithering of every stripe . . . .
I fear chiding Intel is just missing the bigger picture, the degradation inherent in embracing a “culture” or world, larger than we humans can connect to, cope with, have coffee with, watch our kids grow up together with, etc . . etc. At least Intel will give us in the short (??) term, the money to improve infrastructure, education opportunity, not to mention all the ancillary support jobs, while giving us the potential to consider what have we wrought, as a culture.
Might time be better spent as you so often do, focusing on individual culpability, of politicians gone rogue, specific company policies gone predatory, potholes gone amuck, and again, as you often do, person to person conversation . .
I’m hoping the weather holds till I gracefully slip from chiding you, to “slouching towards Bethlehem” “off this mortal coil”. Meanwhile, I don’t know how much he realized what he said, but Rodney King had it down when he observed: “Can’t we all [find a way to] just get along?”
The article stands on its own. Facts, not some analyst’s guesswork. It’s healthy to think about what’s coming, but some folks just want to stare at screens, oblivious. That’s their call.
Me? I got a voice. Maybe a lonely one, but I doubt it. Every day, there’s people. Faces. I work with them, help where I can. You, you can write. A gift, that. Why not use it? This platform, it’s an open field. You can yell from the rooftops, and some will take aim, sure. But they can’t touch what you write, or why you write it.
Funny thing. Ten hours after my piece hit, Intel’s back in the news. Layoffs. Seems someone else saw the storm coming too. No pay in this for me, but that’s alright. I like the fight. Even the cheap shots. They can target my house, fill my inbox with junk – makes no difference. Each day’s a new sunrise.
https://www.oregonlive.com/silicon-forest/2024/04/intel-reports-fresh-round-of-layoffs-focused-on-sales-marketing.html
Windmills? Maybe. But I’ll keep chasing them. Thanks for listening again.
Speaking of windmills, and literary bluster, I’ll have you know I sat silently sullen this AM, when my wife announced: “that’s it” and ordered a new pair of my long suffering slippers. I tried mumbling about compassion and fealty, only to be silenced by a glowering stare . . Take note my friend, take note . . .
Nobody wants to work in Oregon.
Since when did AMD build their own chips? Thats news to me.
I correct myself. They stopped manufacturing chips in 2008-09. I beleive TSMC builds all their chipc now.
Dirk,
I think some funding might help to grow the viewership and allow for more reporting on important matters. Apply?
https://www.pressforward.news/funding-opportunities/
Daniel
I couldn’t care less if Intel went out of business. After all the pollution and traffic and growth, growth, growth — and now they want permission (which they will get) to increase the pollution — as far as I can determine, citizens have no say about Intel. Politicians may or may not be bought off, but they sure are all singing in the same Intel choir.
You said it best last month: “I believe that the parties involved in what is happening to Hillsboro for the benefit of the people of Oregon (jobs, tax revenues, power) are coordinated and working in concert at high levels with no interest or concern for what the citizens here want. By now, it is damn near impossible for Intel not to get everything it wants from our community. The company already uses almost 50% of our water, a tremendous amount of our power, and has created a traffic and housing nightmare that can not be unwound. But then there is all that money- and who doesn’t love money more than anything? Not that many people anymore. Left in the dust are the environment, the farmers, the locals (like me), millennials who may never own a home here, wildlife, and the other things that have made the Tualatin Valley so great. So, this colossal announcement is not happening by chance. It is happening to us and decisions are not ours to make. The record is clear, and there can be no doubt that this decision was made by the State, our Federal Senators and Reps, our County and City officials, and the company. Citizens had no seat at the table.”