Getting It Right on Intel

I’ve heard there was an election in the United States. 

You will find an abundance of commentary on the election results elsewhere, but don’t look for any of that prattle here. Almost everybody who provides a post-mortem on election results will attempt an analysis through a prism of reason, and I’m not sure reason, which implies rigorous rationality on the part of all involved, offers the best toolset to come to grips with the Ouija-like esoterica of contemporary electoral politics. 

Many factors lead people to cast ballots one way or another, and those factors are seldom fully appreciated and understood immediately after the deed is done. Some of what happens in the political realm is wildly illogical, driven at least as much by prejudice and passion as by any semblance of cold, hard reasoning. To discern why a political result came about while the bodies are still warm, one might as well consult a psychiatrist as a political pundit. Besides, there is no one reason, no sole explicator of what did or did not transpire in this or any other election; there is only a multitude of factors, and it takes time to thoroughly account for them and to assign each factor its relative significance. 

As for what it all means for the future, again it's too soon. We’ll hear plenty on that front anyway, so I needn’t trouble you with speculative meanderings that will require revision later.

Instead of expounding vapidly on election results, I’m going to pat myself on the back, at the considerable risk of shoulder separation, for the prescience of a previous post on Intel. Indulge me in the obnoxious vanity of quoting my own words from that earlier post:

The U.S. government and U.S.-based technology companies are deeply concerned about China’s strategic advances in technology and about the fate of Taiwan. Specifically, U.S. interests don’t wish to rely on China and Chinese companies for key parts of the technology-industry’s supply chain, particularly foundational components such as semiconductors. Taiwan has grown into a crucial manufacturer of chips, components, and systems, but Taiwan’s status, specifically in relation to China, is very much in doubt.

Consequently, the U.S. needs its own domestic supply chain for critical technological components and for the manufacture of information-technology infrastructure. This is why the survival and future prosperity of Intel are crucial to U.S. strategic concerns in information technology. Intel must endure and ultimately succeed as a U.S.-based chip foundry.

Intel: Too Important to Fail?

As a digression, though a relevant one, I’d like to briefly deconstruct a hackneyed phrase that you might be tempted to invoke in relation to Intel: too big to fail. 

Is Intel “too big to fail,” like the largest banks during the financial crisis in the first decade of this millennium? No, I don’t think so. That phrase, “too big to fail,” might have been applicable to the travails of the financial crisis, but it doesn’t fit the geopolitical and technological chess match that are witnessing today between the U.S. and China. 

From the U.S. perspective, Intel, as an aspiring U.S.-based chip foundry, potentially growing into a powerhouse that can propel a broad cross-section of the U.S. technology ecosystem, is not really too big to fail. Not too big, no, but it is too important to fail.

Intel seems predestined to become integral, fundamentally essential, to U.S. strategy and tactics in what is rapidly devolving into an Information Age Cold War. So, no, Intel is not too big to fail, but it is being cast as an indispensable link in a domestic supply chain, enabling a continuous flow of IT infrastructure from sellers to buyers. 

I think I put that rather well, if I do say so myself. In saying so myself, I realize it’s gauche and unseemly, even boastful. I’m not comfortable throwing myself hosannas and plaudits, but nobody else bothers to take the shaded path of humility these days. Humility and modesty are lost arts, like landscape painting and extended guitar solos. I might as well take one quick turn in the winner’s circle before heading off to my humble barn. 

Others, you see, are coming around to my way of thinking about Intel’s geopolitical significance to the U.S. technology industry, which doubtless will be heightened now that Donald Trump is heading back to the White House to turn up the trade war with China to 11, in true Spinal Tap fashion. 

From an article published a few days ago by Semafor:

Policymakers in Washington have grown worried enough about chipmaker Intel to begin quietly discussing scenarios should it need further assistance, beyond the billions in government funds the company is already slated to receive, people familiar with the matter said.

A strong quarterly earnings outlook yesterday bought the company breathing room with investors, but abstract concerns in Washington have turned into potential backup options, should Intel’s finances continue to deteriorate.

Top officials at the Commerce Department, which oversees implementation of the CHIPS Act funding to reinvigorate American chip production, and members of Congress including Sen. Mark Warner, one of the law’s leading champions, have discussed whether the company needs more help, the people said.

The talks, which the people described as purely precautionary, show that Intel is seen as too strategically important to be allowed to fall into serious trouble. The US is seeking a national champion in the semiconductor space to ensure its own supply chain and as a counterweight to China, where manufacturing for global chips has moved.

Gimme Some Money

So, there you have it.

Go long (and I don’t mean a quarter or two) on Intel. When you’re “too strategically important to be allowed to fall into serious trouble,” you’re playing with house money, always an enviable circumstance. To switch risk-related metaphors, I might offer that Intel is not only working above a highly secure net, but that it’s also equipped with a parachute and a bungee cord. As a company, Intel would have to plumb new depths of masochism to do serious harm to itself. True, Intel might compromise itself in countless ways, but as long as it has its geopolitical chips (I beg of you, please pardon the pun), it will remain a firmly rooted fixture amid ceaseless flux. 

Since I’ve invoked Spinal Tap once, perhaps I’ll call on them again for “Gimme Some Money,” a tune that aptly describes Intel’s relationship with the U.S. government.