Today's current thing: Aug 25
Also: our crazy conversation with Kimball Musk on the future of drone-based content
Happy Monday, we are live. The current thing is debating the wisdom of the US government taking a 10% stake in Intel.
Also, we had a fascinating, sci-fi conversation with Kimball Musk and Jeffrey Katzenberg about drone-based ‘movies’ on Friday — check it out.
Here’s John’s run of show. 👇
Intel Closes $9B Series A from 1600 Pennsylvania Ventures
Intel never did a Series A. They raised $2.5M in convertible debt back in 1968 (basically a seed round), then raised $6.8M in their 1970 IPO. Now, half a century later, it’s finally raised a megaround Series A: $9B from the U.S. government. Is Trump just trying to get on the Midas List?
It’s a strange deal. Intel isn’t bankrupt, but it’s struggling. Last year it did ~$50B in revenue and lost $18.8B. It swapped CEOs and stumbled on the foundry side (making chips for other companies). For decades, Intel had thrived by marrying design and manufacturing to build the most performant CPUs, and the company dominated. Now, most analysts agree Intel needs to focus on fitting into the more modern market structure that’s emerged with fabless designers (Nvidia) partnering with pure-play manufacturers (TSMC). But Intel has dabbled in making chips for others for years — back in 2010 they started manufacturing FPGAs for Achronix Semiconductor on the Intel 22nm process — but they never really hit scale with the business.
The misses piled up. Intel whiffed on mobile. Apple developed Apple Silicon and started working with TSMC, and then the AI wave was even worse. Nvidia chips, Google’s TPU, AMD, and basically every other approach to training and inference is not reliant on Intel in any way that gives them sightlines to profitability. So a few years ago Intel got sort of a lifeline with the CHIPS Act — ~$11B in grants and another ~$11B in loans for an Ohio manufacturing plant. Great power competition with China was the backdrop, so the checks had to be written quickly. No equity stake was negotiated at the time, despite calls from Bernie Sanders and Elizabeth Warren to do just that.
Intel has already pulled down $2.2B in CHIPS Act grants, but the rest of the money will now come with a non-voting equity grant to the US government. I don’t think it’s fair to think of this as a bailout, because there’s a good chance the US taxpayer makes money on this deal. And the money was basically already in the mail.
The debate now is whether or not the US should have a controlling interest. Bill Gurley argues that “If the government is the ‘lender of last resort’ they should 100% take equity and arguably 100% of the equity. Failed to do this with GM, Goldman Sachs, United (& other airlines). How do you know if they are lender of last resort? The company takes the deal.”
Politics complicate the picture. Trump recently called for Intel’s CEO to resign. The pain of cutting off CHIPS Act funds was clearly a factor. Literal socialists, meanwhile, are angry this is just a financial stake — not true government control of capital. But would Washington actually run Intel better? The company’s board has been stuffed with politicians for years, and that helped create this mess (much more on that in our interview with Doug O’Laughlin here). They need more scientists and engineers on the team. We don’t need a ballot initiative for whether or not Intel should go to war with TSMC, we just need someone who reads SemiAnalysis.
Today’s lineup
cllct Founder Darren Rovell at 12:15 PM
Friends & Family Capital Founding Partner, formerly Palantir CFO Colin Anderson at 1:00 PM
Cubby Founder Truman Sacks at 1:30 PM
In other news…
Meta partners with Midjourney in “technical collaboration between research teams”…
WSJ gets behind-the-scenes details of Trump-Intel deal…
Apple planning “three straight years of major iPhone redesigns,” including foldable version…
Rabois and Casado trade barbs over consensus vs. contrarian investing…
TBPN exclusive: Inside Kimball Musk's "Mind-Melting" Drone Entertainment Company…
ShiftKeys releases “AI that lives in your OS, not your browser”…
USG planning to take stake in more companies, WH advisor says…
Video: McAfee: “AI Is About To Change NFL Football Forever” as NFL signs partnership with Microsoft…
Turmoil erupts over “Gen Z native hardware company”…
Browserbase viral stunt offers equity for tattoos…
Video: “Easily among the top pieces of art from the early AI age” (explicit language)…
Robotics startup founder issues “words of warning on the state of defense tech”…
xAI sues OpenAI and Apple over alleged anti-competitive practices…
a16z, Brockman launch $100M AI super PAC…
Timeline
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