Stake and chips: will America take 10% of Intel?

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1:05The Economist

1:12Hello and welcome to The Intelligence from The Economist. I'm your host, Rosie Blore. Every weekday we provide a fresh perspective on the events shaping your world.

1:26Political violence used to be a staple of life in Colombia Recent years have been more tranquil But after a politician was shot at a rally and subsequently died There are fears about the future And here's a real piece of slow news Every summer in rural England, a village holds a snail race Our correspondent went on the trail rented a snail, and, well, did he win or fail? You'd better listen to find out.

2:04First up, though.

2:12Chipmaking is the bedrock of modern technology, and for decades, Intel led the industry. But in recent years, it has fallen behind, and now it's in turmoil. Earlier this month, Donald Trump demanded that Intel's boss, Lit Bu Tan, resign, apparently because of Tan's alleged investments in firms with links to China's armed forces. Then Trump did an about-turn. After the two men met, the president praised his success and rise. This week, things got even more complicated. SoftBank, a Japanese tech firm, bought 2 % of Intel for$2 billion. And yesterday, the Trump administration confirmed that it's in talks to convert its subsidies to Intel into a 10 % stake in the company.

2:59I know Secretary Lutnick is working on it and ironing out the details, but the president wants to put America's needs first, both from a national security and economic perspective. That would make the U.S. government Intel's largest shareholder. at a time when there are serious questions about the global supply of cutting-edge chips. Intel once defined the future of technology, but today if you think about it, the company makes news more for its turmoil than the actual technology. Charles Chitnis is The Economist's global business writer. The irony is that despite all this, the chip giant still matters.

3:39And it has a future, but perhaps in a very different form from what it is today. I feel like we're always hearing about how important chips are. So where does Intel actually stand in relation to its competitors? So at one point in time, at the turn of the century, Intel was among the most valuable companies in the world and the most valuable semiconductor firm. Since then, I think the fall has been quite dramatic. And today, I would say it doesn't even make the top 15 chip companies in the world. If you look at the revenues itself, since 2021, its revenues have dropped by almost a third. So today, I think its revenues are something around$53 billion.

4:17And the company has gone from making a profit during that time of around$20 billion to a loss that is nearly the same. And so there's been a pretty dramatic change in terms of Intel's fortunes. And its market cap is now around$100 billion, which seems a lot. But when you compare it to NVIDIA, which is$4 trillion, TSMC, which is$1 trillion, or even its traditionally smaller rival AMD, which is around$280 billion. So that's quite a lot. and things are not looking that great for the company right now. So Shalash, where did Intel go wrong? How long do you have? But I think in the past two decades, Intel has missed a lot of major shifts in the industry.

4:57And if you think about it in the tech industry, if you miss one shift, it's hard to come back. If you miss two or three shifts, it's basically impossible. And so Intel famously didn't capitalize on the smartphone boom. Those proceeds actually went to Arm, which is a British chip design company and TSMC. it blundered when it came to chip manufacturing by delaying the use of the latest lithography tools. And then right now, in the past two to three years, Intel is nowhere to be seen when it comes to making of AI chips. It's all around NVIDIA. The hyperscalers are making their own chips and perhaps AMD.

5:28But Intel is nowhere in the picture. So it's been a series of misses. And all of those have accrued over time to get us to the point where we are today. So why did it miss all these advances? That's a really good question. And in my conversations with a lot of people, both within the company and outside, I think one thing that comes out pretty clearly is essentially the hubris of the company as it was at a particular point in time and not as it is today. And I don't mean that in a bad way, but essentially not being in touch with what was happening in the market outside. And so the market moved pretty rapidly.

5:58Intel has still clung on in many ways to what it used to be. And that, I think, is a very important part of it. Then you get into all the kind of other technical reasons, which is the fact that it was very wedded to its own chip design, which is based on the x86 architecture, did not kind of really see the changes coming, particularly what ARM brought to bear when you got to GPUs. So there are all these different variety of reasons. But I think fundamentally, it goes down to the fact that Intel did things a certain way. It always thought that was the right way to do things, and it really didn't adapt to as the industry changed.

6:29You've painted quite an apocalyptic picture. Can it survive? That is, I think, something that both its management as well as now governments are grappling with, right? But I do think Intel has a lot of things that are pretty valuable. Intel is one of the few companies that can actually offer a viable alternative to TSMC, which is the Taiwanese chip manufacturer, when it comes to making chips at the leading edge. TSMC has almost like a 90 to 95 % market share when it comes to making chips that are used in AI and smartphones. And so it's basically a monopoly when it comes to that. The entire AI economy today rests on a single company, and that company has a majority of its production based in Taiwan, which is not a really great place to be for a variety of reasons, primarily geopolitics.

7:15So Intel does have the capability to make chips at the leading edge. Samsung is another company, but it's essentially just three companies. So Intel is well positioned if it can actually work through some of the issues on the foundry side, which, to be fair, are not trivial. but it does have some pretty good assets as well as pretty good technology. And what's your assessment of whether it's really likely to be able to be one of those actual competitors to TSMC? I think it's quite hard but for that to happen Intel also needs to focus. So for example Intel today does both chip design as well as foundry and Pat Gelsinger who was the previous boss of Intel had a vision that Intel would do that as well as open up its chip design business to outsiders.

7:55And I think what's becoming really clear is it just cannot do all these things at the scale at which it is today. And so it really needs to be very critical in terms of what it focuses on. Now, the current CEO, Libbutan, he has made some pretty drastic cuts. He's going to cut the workforce by almost a fourth by the end of this year, pulling back on new factory builds in Poland, Germany, as well as delaying plants in Ohio. And all those things are the right things. But I still think that Intel doing both chip design, where it is competing in a very crowded field, and at the same time trying to catch up with TSMC in a very capital intensive game, those two things are not possible.

8:31And it needs to actually focus on one. And I would argue Foundry is really the more valuable piece in the longer term. But with the US government in talks about a 10 % stake in Intel, someone's clearly got confidence in it. I think one of the reasons the government is very interested in Intel is not for the chip design business, it's precisely for the foundry, for the fact that Intel can actually make those leading-edge chips in America. And that is the reason. I think if Intel was just a fabulous company like Broadcom or AMD, there would not be this level of interest. It's a pretty competitive field.

9:03But the fact that Intel has the ability and those fabs that it is actually building out, that is what makes it very interesting, both to the US government, but a lot of the other big tech firms as well. Fascinating stuff. Shalesh, thank you very much for talking to me. Thank you for having me.

9:46analytics to really help them with their risk management and portfolio management. And often the biggest barrier to entry is integrating with their own technology. Learn more about DataVantage at SIBO.com slash DataVantage. Review important risk disclosures and disclaimers at SIBO.com slash US underscore disclaimers. This Monday.com ad was created by a team of people and AI agents. Reese, our content agent, wrote the copy based on our best practices, like mentioning Monday.com three times. That was the second. Johnny, our coordination agent, built the timeline, and kept everyone aligned. Olivia, our human creative director, stayed in the loop.

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10:39In Colombia, few figures are as contentious as former president Álvaro Uribe. He's one of the most influential politicians in the country, despite his legal battles.

10:57Earlier in August, he was sentenced to 12 years for bribery and witness tampering. He's challenging that conviction. And this week, an appeal court ruled that he doesn't even need to remain under house arrest until the judges make their decision.

11:16That legal battle is only adding to a sense of chaos in Colombian politics after the recent murder of a rising star, Miguel Uribe. The death of Miguel, who's no relation to the former president, raises the fear that political violence that gripped Colombia during the 1990s is now on the rise once again. In a terrible example of history repeating itself, Uribe was shot while campaigning in Bogota. Claire McHugh writes about Latin America That was at the beginning of June and after reckoning with death for 10 weeks in a clinic he finally succumbed to his injuries Miguel Uribe was a contender for Colombia's presidency and though his candidacy was not yet official when he launched his campaign in October of last year he dedicated it to his mother's memory

12:14Uribe devoted his political career to ending the violence that he said had robbed Colombians of their lives, hopes and dreams. Claire, tell me a bit more about Miguel Uribe. Uribe was a 39-year-old senator of Colombia's Democratic Center Party. That's the country's largest right-wing party. He did a master's at Harvard University and he was really a rising star in a party that's still ultimately controlled by the former president, Álvaro Uribe. And the former president supported Miguel as the future candidate for the Centro Democrático. The two men are not related, but many saw Miguel as the favourite for next year's election.

12:57How has Colombia reacted to his assassination? Colombians are in shock. His shooting was the worst act of political violence in the country for more than 30 years. This was a really brazen attempt, a senator being shot in the capital. Flags in Bogota were flown at half mast. There was a day of national mourning. And Colombians are grieving Miguel's loss, but they're also scared of a return to the violent past. And that's a past that they truly believed was behind them. And who was behind his murder? At the moment, it's unclear who ultimately ordered his killing. A teenager was arrested, a teenage gunman who pulled the trigger, and so have a handful of other people.

13:42But the prosecutor's office are being quite cautious not to name a suspect yet, and it is unlikely that they're going to finish their investigation before the presidential election in May. Now, the government of Gustavo Petro has pointed the finger at armed groups. experts that I spoke to in security are sceptical of this connection, but that still gives Petro's opponents enough ammunition to say that security has deteriorated so dramatically on your watch that the political violence from the past has returned. And are those criticisms of Petro's government valid? It is true that security has rapidly deteriorated on his watch.

14:22Lawlessness has increased around the country, kidnappings are up. There's a huge jump in the number of victims of violence this year. So this is a result of Petro's kind of flagship policy, which is called Total Peace. And that's the idea that he would negotiate simultaneously with all armed groups and gangs at the same time. And it hasn't worked. So instead, the government have pivoted to a slightly harder line approach security. So including killing prominent commanders and very publicised military campaigns, but it still hasn't produced the desired effects. It's no surprise that Colombians cite security concerns as one of the major issues in the country right now.

15:05And I spoke to former Colombian President Juan Manuel Santos. He negotiated a peace deal with the FARC in 2016. These were Marxist revolutionaries who kidnapped Colombians for decades. And this peace deal was landmark for Colombia in terms of moving the country on from this violent past. We have been a country that has suffered a lot of violence since our independence. And even the death of Miguel Uribe has, in a way, encouraged many people to say, please, we need some moderation. We need to control the violent language, because if you have a violent language, that will eventually end in violence in general.

15:50Santos felt that Uribe's killing is partly a result of a failure to enforce that peace deal. And both the previous government and this government are to blame for that. The agreement was negotiated to avoid what happened to Miguel Uribe, to separate forever politics and violence. This assassination is a big blow to the peace agreement because that is exactly what the peace agreement wanted not to happen. So, Claire, what happens now? How will this shape the next election? First and foremost, the Centro Democrático need to unite behind a strong, obvious candidate ahead of next year's election. And the second is that political polarisation in Colombia has grown increasingly worse.

16:44The left-wing government weren't present at the funeral last week. They claimed that they were not welcome. And it kind of adds to a sense that the Colombian right is in disarray. This is off the back of the conviction and sentencing at the end of July of former President Alvaro Uribe, who was the founder of the Central Democratic Party and the lifelong leader. So the right doesn't really have a game plan at the moment for how they're going to handle this election in the future. And for Colombians, this whole episode is an unwelcome reminder of a particularly brutal chapter in the country's history of armed conflict.

17:21and that's a past that they truly believed was behind them. But seeing the murder of Miguel Uribe reminds people of the brutal murder of his mother and Colombia in the past decade has been transformed by that peace deal and Colombians are worried that the past is coming back to haunt the present. Claire, thank you so much for talking to me. Thank you, Rosie.

17:51The End The End The End The End The End

18:05Arriving at Kongham's big summer bash, about 30 miles east of Norwich, you can't help but notice the peculiar containers carried by the day's many visitors. Sunny Lochren writes about Britain for The Economist. Oddly shaped tupperwares and terrariums Often stuffed with foliage Are born onto the field Inside are small, slimy athletes This is the Snail Racing World Championships For those that are interested The registration for the snail racing Will be opening in 25 minutes time 25 minutes time Registration opens for the snail racing Hi Nicholas, how are you doing? Tell me how the races work then How many snails are in a race?

18:4815. Maximum 15. Maximum 15. But we've got the South Korean champions turned up this morning. Oh, wow. The French champions arrived yesterday. So I think we're going to have a lot of snails this year. Yeah, we are. We're from The Economist newspaper. Would you wait for a chat on our podcast? Nice to meet you. Nice to meet you. I'm Sonny. So these are your snails? Yeah, French snails. You brought them from France? Yeah. Amazing. I didn't know you could bring them across the border like that. Oh. Yeah. No, you can. It's allowed to bring five snails if they are your best. If they are wild, you can't.

19:20What's the obsession with snail racing in France then? Where's this come from? What's the attraction to it? I don't know. I think first you have a lot of snails even in French that are not only about race. There's a stereotype that French people eat snails. But it's not a stereotype, it's true. What's his name? Roxy Snail. Do you think he's going to go fast or slow? Fast. Yeah, and where did we find him? On the ladder. Look at the snail, Daddy. He's actually moving. Yeah. If only it was a video.

19:58Until recently, the competition took place as part of Conghams Church Fate. Now, the fate is an English summertime tradition where people pay a few pennies to throw coconuts at other coconuts to raise money for the local parish. The pandemic was the end of many village fates, however, including Conghams. Organising the licences, volunteers and produce needed for a village fate became too daunting a task, particularly for committee members growing somewhat long in the tooth. That could have signalled the end of the summer fate entirely, adding to the doom and gloom that has surrounded village life in recent years.

20:32Rural populations are ageing, and many of the schools, pubs and shops that serve them have closed. But summer fates are enjoying an unexpected revival. Organizers around the country report record fundraising totals and one reason is the increasing presence of middle-class urbanites. Such people are often blamed for the decline of village life, pricing out locals without ever really integrating into the local community. Yet in many places they have shown themselves to have the resources, skills, energy and time to organize a village fate with the requisite enthusiasm.

21:12Ready, steady, slow. And it looks like number 12 is the first one out of the blocks. Yes. Slow 12. OK, number 12 has now decided to kiss number seven. And number seven is now going to climb on the back of number 12. Snail racing is a pretty unique event, but it's not the only quirky British tradition. Village Fates have all sorts of weird and wonderful events that people like to come out for. Recently there's been the World Pea Shooting Championships in Cambridgeshire. You can find bog snorkelling, worm charming. There's all sorts and people love it. Can I rent a snail please? Yes you can. I'll give you the sticker.

21:51Thank you. And my colleague will sort you out with a snail in a moment. Amazing, there you go. Have I got a name for the snail? Can we go Michael Shellmacker? Yes. OK, so this is us. This is what it all comes down to. And they're off! Heat number 11! 1.63 is Michael. He's not quite sure yet. Look at the acceleration! Look at the speed! Look at that! Come on! He's us! 2 minutes 14!

22:32There you go. It wasn't Michael Shelmack's day. What was it? Bilbo Sluggins. Bilbo Sluggins takes it.