Ben Thompson on tech strategy, Intel's structural failure, and why xAI would be a great acquisition target without X

Yeah. Uh welcome to the stream, Ben. Good to have you on the show. You've been a backbone of many analyses here on the show. Uh, and we're excited to welcome you to the to the show. How are you doing? I'm doing good. I put on a button-up shirt and a jacket just for you guys. So, you should feel honored.

I am wearing shorts underneath. I will admit you didn't have to tell us. People always ask if we wear shorts. I We actually do wear the full suits. We got to stand up to hit the gong. There's a wide shot. Everyone I am I am the poser here. So, I'm I'm happy to admit.

Well, it's a great it's a great sign of respect in our culture to to put on a suit for a TVPN appearance and uh we're just we're so excited to talk to you.

I as you know I've been lucky to read your work my entire career and and uh I think it I think so many of the thoughts that I have are now like your your way of thinking about technology and markets is so embedded in my brain that that ideas that I hold as true or just foundational beliefs are actually your beliefs that have just become so uh so immersed.

So uh it's great to talk. Well, thank you. Um I I will attempt to implant new ones or or maybe show you the error of your ways. One or two. Sounds great. Uh I I I I do have a question on um on the nature of where you sit in the media world before we go into actual questions about tech companies.

Um it's interesting that in some ways you're a journalist, but you don't really do the scoops and and breaking news that much. Uh but you also don't issue just straight up buy and sell recommendations.

Um what was the thesis behind not just actually having a price target and not doing like this is a sellside bank but independent? Well, when I started I mean it's funny to hear you talk about like my quote unquote place in the ecosystem. Sure. Because uh when I started I had like I was 368 followers on Twitter.

I was just some sort of random random person uh on the internet. That's awesome.

in retrospect sort of right place right time I think is is certainly the case but I did perceive there was a a large gap between tech journalism and and I would include a lot of the bloggers there who were writing a lot about products and then there was Wall Street that was very focused on sort of the financial results and to my mind there was a large space in the middle which is tied together the products to the financial results but also the overall companies and and strategies and I'm very interested in culture and how that guy's decision-m one of my sort of precepts is all these companies are filled with smart people and a lot of people when you ask them why they did something wrong they their only answer is that they're stupid and I'm like no they're not stupid it's actually much more interesting to assume they're smart and are doing stupid things and trying to unpack why they are doing that and what goes into that and uh and so that was sort of the thesis was that there is this space to explore these spaces and then there's a business model aspect which is I started Shrekery two years after stripe started uh I think they had just come out with their billing product and the only alternative at the time was was PayPal uh for subscriptions and it was fairly sketchy and there was lots of like horror stories out there about you know stuff and just the Stripe API was so great and the things you could potentially do with it and so on Wall Street you're putting a price on it you're also charging like $100,000 a year or something like that uh and and so you get a small list of high RPO clients and my thought was I could go in the opposite direction and get a large list of low arpoo clients thanks to things like Stripe and the ability to to subscribe and that would and as part of that I wasn't going to go through the rigomearroll of getting registered and doing stock picks and all that sort of thing.

I've always joked if you want a stock pick from me you're going to pay me a whole lot more than $15 a month. Uh it was $10 $10 when I started and it's actually pretty great. Um now there's some one of the critiques I do get particularly from my you know friends on Wall Street is you know no skin in the game XYZ.

Um I think at at this point I'm large enough that my reputation is significant skin in the game and but I do recognize the validity of that that critique. Yeah. And you know if you make a bad call you're going to have to circle back to it in two years and write about it yourself and admit that you got it wrong. Right.

Right. Listen when I No, I I had to write about this week.

Uh like I was very optimistic about Apple's Apple intelligence announcement last year and the theoretical power it would give them over the model makers and now I'm ready actually no they're they're going to have to figure they're going to have to pay up and that's you know that was a bad call by me that you know I think was you know very wellreceived at the time uh and might have gotten that one wrong and and so I I do need to be straightforward about that.

And so I just this morning I was very crystal clear like I got that one wrong. That was that was that was an issue. What is nice is strategy kind of ended up being in this interesting place where I feel like I'm a little bit of like the Switzerland of tech in that no one pays anymore.

If you're a CEO you pay the same amount as you know Joel down the street that that that is paying it. Um I don't invest directly which I think made sense when I started because I didn't have any money. Um has probably hurt me a lot over the years. uh since then.

But uh I don't like and I think this is a different west coast east coast thing where it does feel like on the west coast everyone's talking their book sort of all the time and uh and you know that's why I generally as a rule don't have VCs on to do the trajectory interviews because it's it's kind of hard to get like a real take cuz that that is you know such a motivation.

Sure. Um and so me coming in being like I have no book to talk. I'm just here telling saying what I think I think has been good for the West Coast audience, which is my base audience, even if the East Coasters think that uh I'm being a being a big wimp. So, that's funny. Uh yeah, the talking your book challenge.

We we go through that a lot trying 12 VCs on a Well Well, yeah. And and and we just try to get a bunch of different opinions and triangulate what you know what we think is was real. I'm trying to come up. You have TPN. I'm trying to come with a P so I can get the talking book network in there.

But um talking talking book production network. There we go. It's like ESPN for talking your book. But but yeah, it is a real struggle to find somebody that for example has a deep understanding of every foundation model company but isn't massively conflicted at in some way or another. Extremely. Extremely. Yeah.

And so it's one of those things you just sort of you you end up like there's so much path dependency and all these sorts of things and and like I mentioned like a big advantage I had was I started at a time when sharing good links was very high currency on Twitter and so you know I grew very very quickly much more quickly.

I sort of had a 5-year plan um to go independent. I ended up doing it in less than a year in part because it just sort of spread really really rapidly and it was an ideal time to be someone sharing interesting links regularly and I wasn't sharing them. The the beauty is my readers were sharing them.

They were doing sort of the marketing for me and so I'm very cognizant of of sort of the the luck I had in that regard.

And then just over time and it's been an interesting journey for me to grapple with my different position in in the ecosystem like so when I started the structury interviews that was sort of part of it which was I started out not knowing anyone.

I got to the point where I can talk to anyone that I want to and so how do I square that? I can't be the guy with the chip on his shoulder trying to make a name for himself forever. It sort of gets it's like the the meme with the guy, how are you doing kids?

Like at some point you have to accept your part of the establishment. How can I do that while still staying true to the idea that checkery is about the readers? It's reader funded. My loyalty is to them. I'm very clear. I have no loyalties to anybody else.

And so well I'll just I will talk to people sort of acknowledgement of what I can do but it's going to be fully transcribed and published and and sort of available to to everyone.

Have you ever dealt with or thought about the attack vector of a special interest, you know, buying a thousand plus, you know, thousands of seats to a single, you know, independent publication and saying like, yeah, like, you know, we're happy, you know, we we we got seats for all of our employees actually because we really, you know, love the and then and then suddenly they're sitting over there, you know, representing meaning very meaningful amount of your revenue%.

Um, I mean uh I fortunately uh I think of of a scale that I don't have that problem. Yeah, that's good. There we go. But yeah, uh it's uh but no, I think I think audience capture for subscription sites is a potential issue for sure. And this is another thing I was sort of right place right time.

I got big enough by the time that it doesn't matter. And yeah, if someone's really ups like I give refunds all the time actually if someone really upsets me, I will refund them and every dollar they paid me, I'm just like go Okay, I don't you know I I I don't you're being abusive or whatever it might be.

And that that is a beautiful thing about the relatively low price, high customer base model is no one has power over me. Like I I have the burden of publishing, you know, so as as often as I do, I feel a heavy weight of duty to my customers when I write something I'm not happy with. Like I don't sleep well.

But at the same time, there's no one customer or no no individual that can come in and be mad at me and and yeah, impact my business.

Um I I I'm I'm seeing that there's maybe some sort of parallel between uh legacy media and independent media where uh independent media it it's not by default more pro tech or anything, but there's just no salary cap.

So if you're at a legacy institution and you're writing probably some sort of rough loose salary cap of a few hundred thousand dollars whereas you go independent it's feast or famine. You might fail but you might get really really successful and and have a huge income from that.

And and I'm wondering uh what we're seeing in the AI salary wars where we're seeing more and more talent and that you know Mark Zuckerberg potentially paying $100 million uh bonuses. Um, do you think that Apple will come around to spending more uh money on researchers?

It feels like they kind of have an internal salary cap with uh Tim Cook making 75 million.

There's now people that report two levels down from Mark Zuckerberg that are making more than Tim Cook and you have this weird dynamic where even if there's no actual salary cap at Apple, you kind of have an implicit one from the CEO. Yeah, for sure.

I mean well I think just to go back to to to the media observation you started out with is as you increase transparency in the market as you decrease non-related barriers which in the publishing world previously was really geography and when everyone's on the internet you inevitably in just about all cases you get a power law distribution and a few people make a ton of money because they win most of the market and then some people make some and and there's a long tail that that sort of don't make any at all.

But it's it's very it it's interesting. It's it's fluid in a way, but it can sort of become somewhat static as long as the people at the top sort of, you know, continue to do well.

But what's interesting about AI is for 40 years, you would have periods of time where you'd have tech companies going to head headto-head in a product market.

And I I think one of the reasons part of the software eating the world sort of idea is the way you get an apex predator is that that predator killed everyone else first. And so you had tech companies fighting each other for the first 20 30 years of tech.

The ones that emerged were lean mean killing machines and they and the entire industry were sort of set loose on the rest of the world and everyone was just like was is getting slaughtered sort of left and right.

But what you also had over this past sort of 20 years or so is the big companies in particular sort of slotting into unique slots. So you have you have Facebook is is social, Google is search, Apple is devices, Microsoft is is business or you know business applications, Amazon e-commerce etc. Right.

Obviously, these companies are are very large and do lots of things and there's some overlap in different places, but they've been fairly sort of distinct in their categories and they've been dominant in those categories. And so, they've been in a place where like Hollywood is wanting to get to, right?

What is the dream in Hollywood? You want to have a franchise where the next Marvel movie matters more than who the star is. The reason that's so great is because you now have bargaining power over the stars. So you just sub someone else in.

And and whereas the old style like Tom Cruz makes the most money because Tom Cruz on a movie poster sells the poster. And so in a negotiation, he has massive bargaining power. So he's going to get get paid a lot get paid a lot of money. In tech, it hasn't been that case. The companies themselves have been franchises.

And so the the overall anyone who works in tech or probably works in any any any entity, but you know, there's a few people in each company that are critically important, really make the whole thing go. Everyone else is fairly replaceable.

Those people are have probably always been somewhat underpaid um for years and years and years. Both just by the nature of companies and the cultural issues and your salary cap sort of analogy, but then also just like it's not a transparent market. It's not it's not hard to price sort of what people are worth with AI.

Everyone's trying to do the exact same thing. So you have multiple companies trying to do the same thing. The output is somewhat measurable. I mean all the AI test stuff has issues but by and large everyone kind of knows who has the good models and and who doesn't.

They you know the scalability questions you know like because all these companies are trying to do the same thing. We have a very unique situation where the bargaining power you increase transparency, you increase sort of the liquidity or the ability of people to move around because they're doing the same thing.

The bargaining power shifts to the people that are super valuable because suddenly it's much more clear who's valuable and their skills are much more transferable.

So this is I think a very underrated bare case for tech in terms of AI at least for this time period is they've lost that that murky bargaining power over employees that they enjoyed for decades and currently you're seeing what happens when you don't have that you start paying employees what they're worth and obviously that's great I not saying this this is a business analyst it's not a sort of a moral statement But it is like what Mark Zuckerberg is doing I think is totally rational.

I think it's a classic sort of Clayton Christensen from Facebook's perspective. AI is all upside. So of course they're going to invest what they need to do to win. But it's costing him a lot of money and by extension it's costing everyone else in the ecosystem a lot of money.

Well, isn't it in some way is the right way to think about the last couple weeks uh like more of like an aqua like an unofficial aqua hire in the sense that you're it's it's not just the the people, but it is the the knowhow in terms of hey here's there's these things that we want to do that are important to our business in a lot of different ways.

And we're basically it's it's like the collective is actually more valuable than any one like the collective together getting 10 researchers at the same time is meaning you know is meaningfully more valuable than than than than just each individual researcher added up.

You know there's probably something to that but I I I think again like what is actually different between what Google is trying to do what Anthropic is trying to do what OpenAI is trying to do and what Meta is trying to do. they're all trying to do the same thing.

So I my suspicion I'm not an AI researcher so I don't want to overstate my my knowledge in this space but my suspicion is skills are are fairly highly transferable and when that is the case there is in some situations if lots of people can do those skills that's terrible for the employees because then their bargaining power gets diminished because anyone can slot in but we're in this space where the skills are transparent knowable transferable and there's not very many people that can do them and so it's it's scarce resource that everyone's fighting over and that's why you see this real shift in negotiating leverage as as manifested through these dollar figures to to AI researchers.

Yeah. Do you think um I mean Google seems like the most fragile and the most like paranoid about just disruption. It's not all upside. Uh it could be very bad for them. Um the innovator's dilemma, you know, you had this back and forth where uh Senator Pachchai mentioned that he hadn't read the book.

You said it doesn't matter because it's a structural issue. I think that's a good point.

But if you play back the counterfactual, is it ever possible to disrupt yourself and essentially like if the Gemini app had launched before Chat GPT and they had taken over that mind share and maintain 90% ownership in that like it would be somewhat disruptive to their revenue and their profits as they transition over.

But when I sum the revenues from OpenAI and LLMs and then Google search, I'm not seeing some massive drop off that's actually that actually would destroy Google in the medium short to medium term.

So, but I'm wondering if you think it's like is it entirely impossible to avoid the innovator's dilemma by disrupting yourself? Well, number one, you have to also look at margins, not just revenue. Yeah. Um, but number two, you actually you answered your question. Google didn't launch Gemini as a chatbot.

That's the answer. They were years ahead. They they invented the transformer a decarade ago. And and so in many respects like there's parts of this question that the counterfactual makes the point in that it is a counterfactual and it's not reality.

Now, I do think I think Google's done better than I expected over the last two years. Uh I I like what they're doing in search generally. I I think they it does seem to be the one part of the company that still functions like they they can actually iterate and build products.

What we're seeing is reminiscent of what they did a decade 15 or 12 years ago when everyone's like vertical search Google's done all the everyone's going to search in apps and Google completely transformed the SER the the search uh engine response page uh whatever it is uh the search engine results page to be local or to be shopping or whatever and Yelp's been throwing a hissy fit sort of ever since and and so that's what they're doing with search right and and with search overviews and they have this new search labs or or AI mode.

They can sort of test stuff out once it scalable. Once they they're confident about the monetization issues, they can sort of shift it over. I call it the search funnel, search AI funnel. I think it makes a lot of sense.

And I think and I this has always actually kind of puzzled me where I think they're responding fairly well even though this is seems to be a textbook case of disruption. And I went back to an article I wrote years ago uh called Microsoft's Monopoly Hangover.

And I was I I I went through Lou Gersonner's autobiography and about how he turned around IBM and his real insight with IBM was everyone wanted him to break it up in into sort of different pieces.

And what he realized was IBM was so big and and large from having downstream of Monopoly that actually the only thing they were good at was being big. And so breaking them up would actually just create a bunch of subscale low-performing companies that would all get wiped out.

But as this behemoth, they could go to other big companies and solve all their problems at a very mediocre level, but still it's sort of an attractor proposition. And under Gersonner, they really rode the internet wave. They went to all these big companies, said, "This internet thing's happening. You need help.

We'll solve your problems for you.

" and had a very sort of successful run, you know, kind of until cloud came along and which Gersonner, by the way, was was was a proponent of, but you know, by that time the IBM people were back in charge and I was thinking about the the context of Microsoft where m you business models are hard to change and disruption is ultimately about business models and culture is hard to ch even harder to change.

But what can't really be changed is the nature of who you are. And a and I think there is, you know, in Microsoft they were in a similar situation.

They were a big monopoly and they weren't a product company and the attempts to become a product company with Windows 8 and all the things that went on around that time inevitably inevitably failed and senadella to his great credit and you know sort of diminished Windows importance in the company broke it literally broke it into pieces spread it around and this was a multi-step process and got Microsoft back to a place of we're big and we'll will do everything.

We're we're not a Windows company. We'll go in there and we'll go solve all your problems. Very sort of reminiscent of of the the second version of IBM.

And I go back to Google and I've always been intrigued by the I'm feeling lucky button, which doesn't exist anymore, but I always enjoyed that that button continued to exist long after you it was impossible to click because the moment you started typing in the search box, it would start auto searching immediately and jump jump right to a search page.

But it was it was there in a it's just so core to Google to give you the answer to to know everything like the to to know everything about the world and to there's a bit where even though the core of their business model is 10 blue links and it's not just the the users choosing the search link which gives them a data feedback loop so they know which results better but also the users choose the winner of an auction Google puts on for ads and it's an incredible business model.

And there's something about that that's always been intention and counter to what Google was founded to be. And I feel like that germ of what Google was founded and meant to be is an AI answer engine.

and and it almost feels like even though Google is old and large and fat and slowm moving that core aspect of their nature and is is still in the culture and that's why they're finding it in themselves I think to do better in AI than you would expect. Was it enough to launch a chat GPT before open AI? No.

Uh was it uh was it enough to have any sort of cogent response for the first 6 to9 months? No.

But it was enough that I think they've done better than I expected over the past year in particular and gives me I think more optimism than I expected I would have for the company when you know I when chat GPT first launched AI overview from Google if you search Google's mission Google's mission is to organize the world's information and make it universally accessible and useful which is exactly what language models do really really well like the thing that's just undeniable, right?

It's you can you can debate whether uh this is going to be the year of agents. It doesn't feel that way to me yet, but this is the year that most people have realized that wow LLMs are very good at organizing, surfacing, and and making data valuable. Yeah. You you mentioned uh just the the debate over breaking up IBM.

Uh I'm interested if you could take us through some I bet you didn't realize you're gonna be talking about IBM today, did you? No, no, no.

Uh, but I want to I want to talk about Intel and and kind of your the the history of some of your takeaways and what you think you've gotten right in the past, your perception of, you know, should they break up the the foundry business uh and what you think might be in the works with Lip Bhutan coming in there.

Um because it I was listening to Dylan Patel talk about his conversation with uh the new CEO Lip Bhutan and it seems like they're doing lots of tightening up, lots of layoffs, but uh it's kind of I I don't even know what framework to apply to analyze like is a breakup the correct thing.

It feels like something people just say. Yeah. Um so Intel, it's funny.

I one of my very first articles was about Intel and what I said at the time was and this was 2013 and this was an art like you know when you start a site like Sery you're like a new band and why does everyone think a new band's first album is the best cuz they've been working on these songs for years right and then the next album they had a year to do it and they all suck right so I mean I'll let people decide if that applies to checkery or not um I won't be offended sophomore slump but Yeah, but I had been on, you know, Intel had been a thing I've been wandering about for a long time, which was by 2013 when I started, they had clearly missed mobile.

Now, it wasn't clear to them, they were still trying to do the Atom processor and and just they're going to figure it out tomorrow. And the the problem with missing mobile is the problem with Intel in general is Intel is always very biased towards high performance.

And this goes back to uh actually Pat Pat Gellzinger his first time through at Intel. Intel, you know, had the CISK uh uh the the way they're there's CISK versus risk.

It's like uh it's different ways of organizing bits or whatever, risk is generally more efficient and actually even Intel processors today even though x86 is CISK, the internal it's re-ransated internally to a risk type language.

Um, none of that is really important other than to say in the 80s there was a real push in Intel to switch away from x86 and to to a risk type um uh of uh I don't use but like um for for the processors and Ginger was a leading proponent that this is a terrible idea and the reason it's a terrible idea is because there was already a huge ecosystem of software built around x86 and all this low-level code and capabilities that No one ever that was written once and no one ever wants to touch again because it's miserable work.

And he's like to rewrite all that stuff would take at least two years. And in that time, our ability to manufacture chips will improve so much that had we just stuck with CISK, our processors would be faster. And that was the right bet.

And that's one of those foundational bets that I why I like to think about companies and their history and what goes into that which is Intel from the 80s on has solved its problems by having superior manufacturing and by moving faster.

And yeah, our chips may be theoretically less efficient, but if our manufacturing is better and our transistors are smaller, it doesn't matter because that will swamp whatever theoretical sort of efficiency you might have. And this drove the entire computer industry.

You you you you would write to write a program to every second you spent optimizing your software in the 80s or 90s was a waste of time because whatever improvements you could get would be swamped by the next version of uh if you went from 286 to 386 or 386 to 486. That jump was so large.

You were better off focusing on features even if it made your software sort of slow to use on the current hardware because the next generation of hardware would be so much faster. it would solve your your speed problems for you. Now, this has generated a lot of bad habits amongst tech developers.

That's why you get bloat and why you have like poor performing things and all those sort of things. But this was sort of super critical. And so, Intel at its core has always been focused, they've always been manufacturing first and focused on better and better performance.

What happened with mobile is in that calculation did not come efficiency. They were never focused on efficiency and in mobile efficiency was everything. So what happened with mobile is app Apple went with an ARM processor made by made by made by Samsung and they basically rewrote everything.

All that stuff Intel didn't want to rewrite in the 80s or if they rewrote would just give other process processor companies a chance to catch up with them had to be rewritten for mobile because efficiency was so much more important than performance. When that happened, Intel was screwed.

Now, it took them a long, long time to realize they were screwed, but they they were just fundamentally unsuited to be competitive. It was the whole Paul Adelini turning down the iPhone contract is not true. Tony Fidel, I I I said that once and I got a call from Tony Fidel actually.

This is when I had him on it for an interview and he's like, "This drives me up the wall. Intel was not remotely competitive even though they had ARM chips then. Even their ARM chips then were focused on performance, not on efficiency.

" And and so the the problem for the problem for Intel is once you missed mobile, you were going to lose your manufacturing lead at some point because volume matters so much. And every time you move down the curve, your transistors get smaller, the costs increase massively.

So you need volume to spread out the cost of building these fabs. Like back then when I wrote this article, fabs cost 500 million. Now they cost like 20 billion. And this is over a course of like 12 years. Mhm. So, so it was clear Intel was going to be in big trouble back then.

And so I wrote they need to build a foundry business. They need to figure out a way to build chips for other people because in the long run the cost of keeping up in manufacturing is not going to be tenable if you're not making mobile chips. And what obviously they didn't. TSMC made all the mobile chips for everyone.

And guess what happened? TSMC took over the manufacturing. Now, there's lots of other things that went into this, why Intel stumbled and sort of things, but at a structural level, what happened was actually inevitable once Intel missed mobile, unless they figured out a way to make mobile chips some other way.

They didn't do that. What's interesting is what has the problem with that it took so long to manifest. part of mobile was you had an explosion in the cloud because cloud and mobile actually go hand in hand. Intel made all those cloud chips.

Intel stock had an incredible run from the time I wrote that article for the next 8 to nine years. And I felt like kind of a [ __ ] cuz I'm like saying this company is screwed if they don't do what I say. They didn't do what I say and their stock went to the moon.

But what the the way it actually caught up to them has been in the past two to three years where there's astronomical demand for AI chips. Only TSMC can meet it. Intel's not in the game. They're they're trying to shift to a foundry model, but they're they're so far behind it.

Being a foundry is being a customer service business. It's not being an Intel we tell you what to do or we we tell our design teams how to change their chips to accommodate our manufacturing needs. It's just it's totally different. And they needed a decade to learn how to do that.

Had they changed in 2013, they would be ready today to capitalize on AI. And and the counter example here is Microsoft. Microsoft building Azure.

Yes, it got them somewhat in the game with mobile and things like that, but AWS dominates uh in that space, but by virtue of building up Azure, they were prepared when the AI opportunity came along. And now Azure is is sort of a big AI player.

And you know, I wrote about these these two examples a few weeks ago in the context of Apple. I think the concern for Apple isn't the short term. We're going to be using AI apps on our iPhones for quite a while.

It's are they going to be prepared for what's next if they don't do some sort of sort of reset and pivot here? Oh, sorry to answer your question about Intel. any Yeah.

I mean, it's like a managed decline basically like just like, you know, just get as much cash flow out of this thing as you can while you wind down the business for Intel. Yeah, that's what I'm hearing. It doesn't feel like, oh yeah, there's a silver bullet. Just split the business and they're good.

Like, no, it's like it's it's the reason not to split the business is Intel needs volume and they get volume from Intel. Sure.

Uh and uh the and AMD split their business a decade ago and it was really They had a very hard time for many years and they had very tense and difficult negotiations between the global foundry side and the AMD side. Global Foundaries was AMD's uh uh manufacturing arm.

Um and it wasn't until really they got out of that and went to TSMC and then also completely rehauled their chip design business uh and all those you know um that they they got in the position they were and then also that Intel stubbled uh that that certainly really helped them Intel today.

So if you split it up like who's buy like Intel's Intel itself is fabbing some of its stuff with TSMC. Yeah. Who who wants to buy Intel's foundry services? The the problem here is uh TSMC is located in a country called Taiwan. Um which you know what it is today but 5 years ago it' been like what Thailand?

Um which by the way was probably much better for Taiwan security when the American thought it was Thailand.

Um, but so there's a real national security element here and it's just it's a really tough situation cuz Intel is a failed company at this point and they're and the the reason the failure is so total is because the aspects that drive their failure are the same things that drove their success. It was their arrogance.

It was there a sense that we're the best that we will just win through manufacturing might and performance and all those things work against becoming a good foundry work against being a customer service organization work against recognizing the fact that you're not going to make up for missing mobile through manufacturing which was their bet for years and years.

You you had to accept that you lost and and that's a tough place for companies. It's not like someone made a mistake. It's that what they did what they did too well for too long. Who they were they continued being who they were. Right. That's right. But who else are you going to get if you want an alternative to TSMC?

It's it's it's a very situation. Last question and I think we'll be forced to to have you make a slightly shorter answer. Unfortunately, I wish I wish we had hours to keep talking. I wanted to get your updated thinking on X AI X the combined entity. The last 24 hours have been very chaotic.

When the initial merger was announced, it made sense for financial reasons for some of the different stakeholders, but I wasn't fully sold on this idea. Uh how you're going to force me to go with takes that I I generally just avoid writing about Elon Musk companies um for uh self-sanity reasons.

I think I mean I remember I wrote an article years ago about like uh when the Model Y was announced and I was talking about you know it's a Tesla and this aspect what Elon Musk is very incredible at is sort of creating reality out of thin air.

Um he's like the ultimate memer and to create like um like it's the way things used to work backwards.

Uh I remember I analogized it to like protests like a critique of of of modern protests is they spin up very quickly cuz social media makes it very possible but there's no infrastructure under them so they don't amount to anything.

Whereas you go back to like the civil rights era there was years of groundwork that went into like the million man march uh you know on Washington DC and there was a structure in place that ultimately manifested in large crowds. But modern protests are the opposite.

The largess comes at the beginning and then it all falls apart because there's nothing in place. And um there there's something the that makes a challenge to write about anything Elon Musk related is the you have all the social aspects is you have this bit about Tesla of creating reality.

It's the stock was buttressed for years by these true believers even though the financial parts didn't make sense. You famously had these wars with the short sellers and all that sort of thing. And it worked. It basically manifested a market for this Model Y and then the and then the Model X. Uh, not the Model X.

What's the other one? Um, the Model 3. Yeah, it was Model 3. Sorry. When I wrote that article, Model 3 and Model Y had this massively successful and all all the people that were true believers got very rich. Uh, and congratul congratulations to them. I It's great.

But it makes it almost impossible for someone for what I do who I want to look at structure and fundamentals. I can observe this effect happening, but you can't really say what's going to happen or the effects of it other than to say this is interesting.

And so I wrote about that article and then the Solar City thing came out and he's like bailing out like his brother-in-law or something and I'm like I can't write about this. Like what am I going to say? Like like there's it just doesn't make sense. And so I think there's fast forward to X XAI.

Um yeah, there's a theoretical piece here. I think actually XAI would be an incredible acquisition target for a lot of companies if it wasn't saddled with X. Uh so interesting.

feels like the end state is like Twitter getting spun out again like that that that's my I I that's kind of like my my it just ends up going back to Twitter and and and it becomes the blueber no one actually wants to like Twitter Twitter there's never been a company in the history of the world probably where the impact of a company is completely and utterly divorced from its financial realities like I think when Elon Musk bought it and I assume that's continued through now they'd had like one profitable quarter in their history.

Like it it's an unbelievably terrible business. Uh and so I think it's probably weighing XAI down. There's a Yes, I get the theory that Twitter data helps XAI. Well, it helped yesterday contract for that data. You don't need to pay 43 million for Twitter to to to or 43 billion I should say to to get it.

So yeah, that that was always my position too. I don't think it helped yesterday when when Mecca Hitler emerged on the timeline on the timeline yesterday, but uh good luck. Hopefully they sort it out. I wish I wish we had a lot more time here, but hopefully we can do it again. This is fun.

Thank you so much for stopping by. Yeah, no worries. Uh I love what you guys are doing. I actually had the idea of doing a daily podcast ages ago. Um classic example of ideas don't count, execution does, and you guys you guys did it. I think it's great. Well, you're always welcome here. You're always welcome.

Thanks so much. Thank you. We'll talk to you soon, man. Bye. Uh we will jump straight into our next guest, Scott B. Hopefully uh we haven't kept him waiting too long and he is still in the waiting