Since we first published our deep dive, Building An American TSMC, on August 5th, the broader world of interested parties has clearly demonstrated that they agree with our conclusions about Intel and its critical role in the pursuit of domestic chip capability. Since then, the US government announced it would take a ~$9 billion stake in the company. Meanwhile, SoftBank has announced a $2 billion investment in the company. Government involvement, in particular, has been framed as a necessary step in protecting American industrial capacity.
The wake-up call is a necessary starting point. Losing the only cutting-edge American chip fab is unacceptable. In pursuit of protecting that capability, we’re optimistic about the signs of conviction in supporting Intel. That being said, there are some critical elements if we’re to have any hope of Intel becoming the flagship in domestic chip fabrication. And it’s not just throwing money at the problem.
In the piece, we articulate a specific playbook for making Intel successful. We believe some crucial elements of that playbook need to be executed in order for Intel Foundry to be successful:
Install visionary, engineering-first leadership dedicated solely to Intel Foundry.
Treat the foundry as a growth business, not a cost center, with investors and government backing willing to absorb short-term losses for long-term capacity.
Ease regulatory bottlenecks (e.g., reform NEPA permitting) to accelerate fab construction.
Use policy tools like tax incentives for customers that commit to buying from Intel Foundry.
Support semiconductor R&D as a national priority, especially beyond silicon toward new materials and computing paradigms.
Build a loyal customer base of US tech companies (hyperscalers, defense contractors) that commit to American-made chips.
The optimistic case is that three of these six things could be directly impacted by government regulatory reform. Whether the political will exists to make them happen is another story. Two of the other requirements are a function of investor and customer appetite. Will investors (whether financial or government) be willing to focus on Intel as a growth business rather than a cost center in need of optimization? And will US tech companies be willing to commit to becoming primary customers of American-made chips?
Candidly, the only way that most of these things fall into line will likely rest on the success of the very first point: Install visionary, engineering-first leadership dedicated solely to Intel Foundry.
Until Intel Foundry has a crystallized articulate view of the path forward, it will struggle to shore up the regulatory support and investor buy-in required for this kind of transformation.
As much as Intel is focusing on bringing in capital and generating broad support for what its doing, the long-term success is much less likely to get built up unless the business unit is led by a visionary leader focused on helping Intel Foundry achieve what its capable of: becoming America’s Foundry.
Important Disclosures
This material has been distributed solely for informational and educational purposes only and is not a solicitation or an offer to buy any security or to participate in any trading strategy. All material presented is compiled from sources believed to be reliable, but accuracy, adequacy, or completeness cannot be guaranteed, and Contrary LLC (Contrary LLC, together with its affiliates, “Contrary”) makes no representation as to its accuracy, adequacy, or completeness.
The information herein is based on Contrary beliefs, as well as certain assumptions regarding future events based on information available to Contrary on a formal and informal basis as of the date of this publication. The material may include projections or other forward-looking statements regarding future events, targets or expectations. Past performance of a company is no guarantee of future results. There is no guarantee that any opinions, forecasts, projections, risk assumptions, or commentary discussed herein will be realized. Actual experience may not reflect all of these opinions, forecasts, projections, risk assumptions, or commentary.
Contrary shall have no responsibility for: (i) determining that any opinions, forecasts, projections, risk assumptions, or commentary discussed herein is suitable for any particular reader; (ii) monitoring whether any opinions, forecasts, projections, risk assumptions, or commentary discussed herein continues to be suitable for any reader; or (iii) tailoring any opinions, forecasts, projections, risk assumptions, or commentary discussed herein to any particular reader’s objectives, guidelines, or restrictions. Receipt of this material does not, by itself, imply that Contrary has an advisory agreement, oral or otherwise, with any reader.
Contrary is registered with the Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940. The registration of Contrary in no way implies a certain level of skill or expertise or that the SEC has endorsed Contrary. Investment decisions for Contrary clients are made by Contrary. Please note that, although Contrary manages assets on behalf of Contrary clients, Contrary clients may take any position (whether positive or negative) with respect to the company described in this material. The information provided in this material does not represent any investment strategy that Contrary manages on behalf of, or recommends to, its clients.
Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, company or product made reference to directly or indirectly in this material, will be profitable, equal any corresponding indicated performance level(s), or be suitable for your portfolio. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Investors should seek financial advice regarding the appropriateness of investing in any security of the company discussed in this presentation.
Please see www.contrary.com/legal for additional important information.
