Throughout the 59-year history of Moore’s Law, the only consistent truth in the semiconductor industry has been that performance wins. Competitors come and go and new technologies such as PCs, smartphones and artificial intelligence are rapidly changing the landscape. But in the end, the company with the best technology and the ability to produce in large quantities wins.
That was the case for decades Intel. The company’s mantra was to pursue technology leadership at all costs and push Moore’s Law to the limit. Intel became the most successful semiconductor company in the world, whose manufacturing technology was always a generation (about two years) ahead of all others.
In the last decade, all that has changed. Intel stumbled and lost its leadership position – and now some see it as just another company struggling to survive.
Some experts believe there is a simple solution: split the company into two parts. In this way, they argue, the Intel design company can compete with other chip designers (AMD, QualcommNVIDIA, etc.), while the foundry part of the company can be free to serve all chip designers. This simplistic solution ignores the existence of Moore’s Law – and would be bad for Intel and the United States.
Every design company wants to leverage the best manufacturing technology available to maximize the performance of their chips. This applies to both companies that sell chips on the open market and those that develop something similar for internal use Apple And Amazon. Whichever foundry has the latest and greatest technology will win the lion’s share of all the chip designer’s business. Today this position is held by TSMC. Much of the industry relies on the same manufacturer to make their products – their only manufacturing advantage is TSMC’s technology leadership.
Intel can attract the same chip customers by reestablishing its leadership in foundry technology. Even if you’re competing with Intel designs, why put yourself at a disadvantage? As long as Intel has the best technology and is price competitive, competition problems can be solved.
This all comes at a time when the world needs a more globally diverse and resilient semiconductor supply chain. Geopolitical tensions around the world are escalating, making the urgent need for strong U.S. manufacturing capacity on our own shores even more pressing.
Splitting Intel into two separate companies would do the US no good if the Intel design business is successful and the foundry business is not. In that case, the U.S. would still be dependent on a foreign supplier for cutting-edge technology—and the $50 billion in the CHIPS ACT would have been wasted.
We’ve seen this movie before. Years ago, the troubled AMD company split its production capacity into Global Foundries. At the time, experts welcomed the split. A decade later, AMD is doing well with TSMC, while Global Foundries has little to no differentiated technology. Global Foundries simply did not have enough research and development (R&D) budget and struggled to compete with market leaders due to limited production and sales.
The economic reality is that massive investment is required to advance Moore’s Law. In today’s semiconductor industry, only three companies (Intel, Samsungand TSMC) have sufficient revenue to compete for technology leadership. If you break up Intel, the foundry division will likely fail because research and development spending has fallen and because the reality of breaking up a massive multinational company in the midst of a multiyear turnaround effort is complex.
Instead of wasting time and effort trying to split Intel into two separate companies, why not focus on the real problem? The Intel of tomorrow must be like the Intel of 15 years ago – the driver and leader of Moore’s Law. This way you get a win-win scenario with US-based design and manufacturing technology.
This begins with rebuilding Intel’s technology leadership. The current CEO, Pat Gelsinger, has exactly the right strategy and attributes, and he is already driving the right changes.
Intel is on the verge of achieving an unprecedented pace of node development to catch up with TSMC. It has taken the lead in next-generation technologies that will shape the semiconductor industry in the coming years, such as high-NA EUV lithography and backside power delivery. Yes, more work needs to be done – but this is a good start and they need to keep going.
The US government must also do its part. This includes increased funding for pre-competitive basic research in semiconductor technology at our research universities and national laboratories. The US has taken a small step in this direction with the creation of the National Semiconductor Technology Center, but there is still much work to be done, especially considering that the NSTC’s five-year budget is less than what Intel spends annually on research and development issues.
There are enormous challenges as leading manufacturers race to develop technologies that pack 100 billion transistors into a piece of silicon the size of a fingernail. These are the most complicated things humanity has ever built, and leading semiconductor companies will spend tens of billions of dollars to make it possible.
Let’s face it: If the US wants to be the leader in this game again, simply cutting Intel in half is not the answer. We must be willing to invest and do the hard work to take Moore’s Law into the future, not waste time rearranging the deck chairs.
I remember a similar time in Intel’s history – the bursting of the dot-com bubble in the early 2000s. Customer demand evaporated. Wall Street said we should do layoffs, close factories, and cut spending on research and development. Intel’s board struggled with the situation, but followed management’s plan to continue investing in research and development and building new factories. The stock price plunged, but when demand returned, Intel was in a stronger position than before. It wasn’t pretty, but it was the right thing to do. Pat Gelsinger is doing the right thing now.
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