How the Number One U.S. Semiconductor Company Stumbled

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:18)

So Tracy, we haven't talked about it in a while, but one recurring topic on the podcast over the years has been China's efforts to really sort of leap into the lead technologically. We've talked about it with a few different guests, invest it aggressively in airlines, semiconductors, and so forth.

Setting aside all the current noise, that's still like one of the bigger long-term storylines that attempt to sort of supplant the US in the lead of technological manufacturing and development.

Tracy Alloway (0:55)

Yeah, that's right. And I think that's where a big portion of the trade war or the Trump administration's trade war with China actually came from. And that's why we see so much of it centered around technology, things like ByteDance, TikTok, and of course, 5G and Huawei.

And of course, we're seeing Beijing rolling out its new plans for, I think it's for the next 20 years or something like that. And of course, tech dominance features quite highly once again.

Joe Weisenthal (1:25)

Absolutely. But it also like, it takes two to tango because in addition to China's own endeavors to leapfrog or surpass the US in terms of technological development, there's also another element, which is that a lot of the US companies that we sort of associate with the great heritage of US manufacturing, whether it's Boeing, GE or Intel with chips, all of them seem to be not doing so great. So literally going in the other direction.

Tracy Alloway (1:59)

Yeah, so this is something that I wasn't that aware of just because I've been outside of the US for a while, but Intel seems to be struggling. So I think in the summer, they said they were something like 12 months behind schedule when it comes to developing like their new next generation of chips. And the share price has come down quite a bit since then. And it's sort of the polar opposite to what you see happening at some other chip companies, like TSMC over in Taiwan, for instance, they seem to be doing quite well during the pandemic.

Well, relatively well.

Joe Weisenthal (2:33)

Yeah, I mean, you have it exactly right. There seems to be going in the exact opposite direction, falling further and further behind. And their stock has really been, got hammered this summer. So like what happened is sort of an interesting question because we could talk about China's research efforts, but how this company that basically invented the industry, one of the, you know, that put the Silicon in Silicon Valley, so to speak, how it lost its lead and ability to be one of the world preeminent manufacturers is itself a pretty interesting storyline here.

Tracy Alloway (3:08)

Yeah, absolutely. And I mean, I remember during the early 2000s, Intel was this massive, massive company and it had the branding and the advertising around it and just a huge deal. So it's interesting to see it sort of turning around this year.

Joe Weisenthal (3:25)

So we're going to talk more about Intel and what happened. And I'm very excited about our guest. We're going to be speaking with Stacy Rasgon.

He is a managing director, senior analyst, US. Semiconductors at Bernstein Research and notably at a recent Intel conference call after one of their quarters, the company didn't call on him, leading him to a subtweet the company on Twitter, which is always fun and doesn't happen that often with analysts. So Stacy, thank you very much for joining us.

Stacy Rasgon (3:58)

Oh, my pleasure. I'm glad to be here. And by the way, nobody knows what that tweet was about.

Joe Weisenthal (4:04)

Okay, fair enough.

Stacy Rasgon (4:05)

There's no guarantee that it was a subtweet of anything.

Joe Weisenthal (4:08)

Okay, so just on the day that you didn't get called on by Intel during their quarterly conference call, you tweeted cowards, dot, dot, dot, but we'll all pretend that we have no idea what that was about. Maybe it was something completely unrelated to your professional career.

Stacy Rasgon (4:25)

This is one of the mysteries of the universe. So we'll leave it at that.

Joe Weisenthal (4:29)

It'll be a mystery forever. We'll just leave that tweet.

But it is true that you didn't get called on. This is true. So that part, that is true. So let's, forgetting the subtweet aside or whether it was a subtweet, what were you gonna ask? Like, you know, here's your chance, Stacy Rasgon at Bernstein Research, you're up. What would you have asked?

Stacy Rasgon (4:51)

Oh boy, I don't even remember what I was gonna ask at this point. I have to go back and look at my question list.