Comms chips

Intel on the Couch

12:40 PM -- With the recent Infineon Technologies AG (NYSE/Frankfurt: IFX) deal, readers submitted some perceptive comments about Intel Corp. (Nasdaq: INTC) and its track record with acquisitions. Let me suggest another spin on why Intel hasn't been able to make mergers work. (See How Intel Can Avoid Botching Infineon.)

I wonder if the reason comes from Intel's heritage in semiconductor manufacturing.

That's where Intel really got its start, after all. Will Strauss of Forward Concepts Co. points out that you can see it in the founders' resumes. They were chemists. Chemical engineers. Physicists.

"At the time, it was the process that was the differentiator. That's what made you the king of the block: Our NMOS is better than your NMOS," Strauss says.

One of Intel's key achievements was its practice of building carbon-copy fabs, so that the facility building Pentiums here would be just like the facility there. The chips were complex, and so were the fabs, and Intel did well to reduce the number of variables involved.

But what happens when you integrate a new design team into the plan? They have to fit that mold, too. And sometimes, the changes can't be made to work.

That's just off the top of my head. It seems a little convoluted and psychoanalytical now that I've typed it out. But I keep coming back to the lesson that got drummed into my head way back when: Intel is a manufacturing company. There's a reason why they haven't gone fabless like the rest of the world. Maybe that affects the way they relate to the rest of the world.

— Craig Matsumoto, West Coast Editor, Light Reading

paolo.franzoi 12/5/2012 | 4:24:43 PM
re: Intel on the Couch

I guess I have said it before, but will repeat.

The behavior that I have seen out of Intel for the past 25 years revolves around the oscillation in business cycle:

Up....Intel decides that there are new markets that it should address outside of the PC business.  They decide to acquire 1 or more firms in an area and become the big channel involved.

Down....Up to this point, none of the businesses have reached the scale and profit of the PC chip business.  So, Intel trims these lesser businesses.

I don't view as Intel as screwing up the acquisition per se.  What I have seen as instability inside Intel in choosing to be in a business or not.

So, let's analyze Infineon on this basis.  Intel will now be a big 3G vendor.  The question is can they carry this forward to LTE.  If they don't, they will spin back out Infineon at a loss. 

So, the real question will be can Intel come forward with an effective LTE offering based around the Infineon technology.



nextinning 12/5/2012 | 4:24:42 PM
re: Intel on the Couch <div>

Prior to Otellini taking over as CEO, Intel was operationally deficient - to say the model had no leverage would be an understatement.&nbsp; However, during his first conference calls, Otellini stated fixing that would be a priority and he provided some level of detail about the plan.&nbsp; We were told it would temporarily raise operating costs, but then lower them with improved efficiency.&nbsp; That is exactly what Intel has done.


When it comes to criticizing what Intel did between Grove and Otellini, I'll lead the pack.&nbsp; However, what Otellini has accomplished so far does not merit the criticism Intel has received - where are all the writers who pounded the table proclaiming the Netbook would be a failure - I remember some very harsh words from Morningstar.


I'm as confused as anyone about McAfee and I'll admit that.&nbsp; However, as I've noted in the past and Lightreading has covered, mobile threats are here.&nbsp; The problem is until we find an effective way to deal with them there are some very high value applications that won't be able to enter the market.&nbsp; If Intel can fix that it would be worth a lot of money.&nbsp; Personally, I think the world is in too much of a hurry to write Intel off at this point - oh well, won't be the first time nor the last...

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