"The next step is for the government to arrange for Intel to go private. Without the pressure of delivering quarterly earnings for the stockholders of today, a private Intel could divide itself into parts that no longer make sense to be conjoined. One new company should focus on manufacturing chips for all global firms with the goal of matching or exceeding performance levels that only TSMC can provide today."
"It is well understood that most conglomerates suffer from the so-called conglomerate discount. General Electric, once an icon of American industry, recognized that breaking itself up would make its constituent pieces more valuable and competitive in one of the most salient recent examples that demonstrates the sum of the parts can be greater than the whole. Intel's business model of vertical integration between design and manufacturing gave Intel tremendous market power when it was the world leader in both markets."
The US government and Nvidia now hold roughly 10% and 5% stakes in Intel respectively. The government should arrange for Intel to go private to remove quarterly earnings pressure. A private Intel should split into at least two companies: a dedicated foundry focused on manufacturing chips for all firms to match or exceed TSMC, and a separate design-focused firm. Intel should divest Mobileye and its venture-capital arm. Vertical integration between design and manufacturing no longer delivers market advantage. Breaking up the conglomerate can reduce the conglomerate discount and increase competitiveness and shareholder value.
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