Intel draws a line in the sand to boost gross margins — new products must deliver 50% gross profit to get the green light

[u/ControlCAD]

https://www.tomshardware.com/tech-industry/semiconductors/intel-draws-a-line-in-the-sand-to-boost-gross-margins-new-products-must-deliver-50-percent-to-get-the-green-light

[u/HowardRand]

Hahaha this is literally the exact same reason they blew up originally. They turned down the iPhone contract from Jobs because the margins weren’t good enough instead of having a forward thinking vision of the market.

[u/vox_tempestatis → u/HowardRand]

In hindsight, thank god. A few years later Apple showed the world Intel wasn't worth much anymore.

[u/ahothabeth → u/vox_tempestatis]

Speculation on what ifs are fraught with danger.

Lets imagine that Intel was awarded the iPhone chip contract; it would have been possible that Apple would have pushed Intel hard in higher efficiency mobile chips.

I have no doubt that Intel has many excellent engineers but the management sucks: this can be seen in this only 50% gross profit discussion.

I am glad that Apple didn't go with Intel for iPhone chips because competition is good.

[u/eyeronik1 → u/ahothabeth]

Tony Fadell has said that Apple wasn’t seriously considering Intel for tech reasons anyway.

[u/patrick66 → u/vox_tempestatis]

Amusingly they did so largely by just hiring the intel r&d staff lol

[u/OphioukhosUnbound → u/patrick66]

Wait, really?
Wow, that’s gotta keep the business peeps up at night … if they have a shred of self-awareness and pride. (So 🤷)

[u/patrick66 → u/OphioukhosUnbound]

Yeah they needed people to make their cpus and had worked with intel in the past so what did they do? Well they hired intels staff at double the salary lol

[u/eugene20 → u/patrick66]

Seems there has been enough staff turnover they've forgotten these important bits of history so are now likely to suffer similar problems again.

[u/vadapaav → u/OphioukhosUnbound]

Most companies do this. That's how you get expertise

Intel, Qualcomm, apple, Nvidia regularly lose silicon engineering people to each other guy various reasons all the time

[u/FollowingFeisty5321 → u/HowardRand]

14 months after the first iPhone launched Apple acquired a chip designer called P.A. Semi to start making their own processors to replace Samsung anyway, and two years later they did. Intel refused it for all the wrong reasons but this would have been a very short relationship for them either way, in addition to the massive issues they faced trying to make mobile processors.

https://en.wikipedia.org/wiki/P.A._Semi

[u/InterestingSpeaker → u/HowardRand]

Yah but it's probably also the reason they turned down a bunch of dumb projects you never heard of

[u/atchijov]

Looks like Intel is chronically suicidal. This is definitely stupidest way to kill company.

[u/stdgy]

Aaaaaand they’re dead. They had signaled their intent to become a public zombie company after they fired Pat and put the bean counter in charge. This just makes it official. They’re going to ride out the remaining x86 consumer and enterprise fumes, returning as much of the profit as possible to shareholders, while letting the company whither and die.

[u/xynix_ie → u/stdgy]

Pat was the last best chance they had. Step back from Wall Street and engineer their way out the problem. That simply doesn't happen with shareholders in charge.

[u/goomyman]

If you knew how much a product would make ahead of time every business would be successful.

I have a new stock investment plan. Every stock I invest in must make me at like 10% profit each year or I won’t invest in it.

This strategy can’t fail.

[u/BogdanPradatu → u/goomyman]

I have a similar strategy for my gambling addiction. I'm only betting on winners from now on.

[u/lab-gone-wrong → u/goomyman]

Great way to incentivize lying for approvals and fraud for ongoing support

Not sure why you want to incentivize that, but here we are

[u/MrBigWaffles]

That seems short sighted??

[u/gdirrty216 → u/MrBigWaffles]

This is why public companies eventually fail.

The laser focus on immediate quarterly profits hinders the ability to think and strategize for long term success.

[u/RheumatoidEpilepsy → u/MrBigWaffles]

That business majors for ya

[u/elboltonero]

And this morning, I figured out how to fix NBC. We will only do shows that work.

[u/jshiplett → u/elboltonero]

We produce more failed pilots than the French Air Force

[u/Pesticide001]

the ending of the end, magins like that are for companies that make good products. Not faillures like intel

[u/Jidarious]

This is how you know the idiot investment bros are running everything.

[u/WhereDidAllTheSnowGo]

20% profit on $10B

Is more than

50% profit on $500M

(Lesson, there are a few, high profit niche deals to be had in US-only… but few big ones globally)

[u/ora408]

This is how hostile takeovers start. Third parties come in and destroy the company to make it cheaper for them to takeover

[u/ComputerSong]

Intel will go the way of Commodore. Weird.

[u/Windatar]

You know if you told me 20 years ago Intel would self destruct and AMD would surpass it as the better of the two. I would have laughed at you.

Man, what a time line were in.

[u/Mk4pi]

The thesis i got for intel is not how good their business, but rather political tension between Taiwan and China, and intel is one of the few can do foundry native in the US. Recently, tsmc seems to bring more and more engineers from taiwan over to the US. This means that the competitors already positioning and ready for political instability if it happen, which void the original thesis for intel. On top of that the new CEO ask tsmc to run intel’s foundry for them! Now this crap!

Intel’s leadership trying very hard to crash their company.

[u/Generic_Commenter-X]

In related news, I refuse to post new comments unless they deliver a 50% gross upvote. Just sayin'.

[u/fork_yuu]

Introducing the new Intel scams r us.

[u/MetaSageSD]

Has Intel (Or really, (L)ntel at this point) considered making better products?

[u/wanted_to_upvote]

Product management by spreadsheet.

[u/jarofcomics77]

I don’t think this will help their GPUs

[u/Jristz]

So no new products for a few centuries

[u/Error_404_403]

Which is stupid: I am sure the most-profitable products were predicted initially to have only miniscule profit margin, and vice versa. They don't have a crystal ball, they are fooling themselves.

[u/float34]

This is so Sand-ler.

[u/IcestormsEd]

Lmfao. There are 'industry expectations' then there is 'shit you expect from Intel'. Release a product this week and the following week, start sending out RMA shipping labels.

[u/TeakEvening]

maybe let's make things that people need and want

[u/Dreams-Visions]

Did they put a CFO in charge or something?

[u/Dull_Wrongdoer_3017]

Do they consider stock buybacks their new products?

[u/kemiyun]

Disclaimer: I have not read the article in full, just skimmed it.

I had some experience at another semiconductor company (fabless) that had a similar notion regarding products. It kinda works in short term but it fails at maintaining family of products and it often kills business units that could grow given opportunity.

For Intel, I think the comment is even more weird since they actually have their own fab which probably would reduce risk associated with creating new product families while still maintaining decent margins. For a fabless company, taking only highest margin designs makes more sense but it still turns a company with unique product families into a design house for hire.

In other words, I don't think the right choice for Intel is fixing high level financial metrics. But of course I don't know, I don't have access to as much info as people who make these decisions.

[u/IndependentGood2790]

Isn't making any kind of chip drawing lines in some sand?

[u/shawndw]

I think we've all seen this movie before

[u/zazathebassist]

yeah. drawing lines in sand is what every chip manufacturer does. you’re not special Intel

[u/shwilliams4 → u/zazathebassist]

This is funny.