Happy April Fools’ Day! It’s analogy time. This will be reductive in some places, but I think it works.

Who is Intel?

Intel makes oranges.

In fact, Intel invented the orange.

Come to think of it, Intel invented fruit as you know it.

Intel is vertically integrated - that means they have teams of scientists designing new and improved breeds of oranges, and they also own orchards where they grow their oranges.

Throughout most of their history, Intel’s “orchard” and “scientist” divisions have been very tightly coupled. Intel’s orchards only grew Intel oranges. In turn, Intel’s scientists designed their new orange breeds specifically to be grown in their own orchards.

Who is AMD?

AMD also makes oranges, but they aren’t vertically integrated like Intel. AMD still has teams of scientists who develop new breeds of oranges, but they don’t have their own orchards. Instead, AMD pays a company called TSMC to grow the oranges.

As a historical tidbit, AMD actually used to be vertically integrated like Intel. However, they spun off their orchards into a new company back in 2009. The company that owns AMD’s old orchards is called Global Foundries, and they don’t grow oranges there anymore.

Why did AMD spin off their orchards? AMD’s orchards had started falling behind Intel’s orchards. The limitations of their orchards made it hard for AMD to make oranges that could compete with Intel’s oranges. Setting up new, improved orchards is really, really expensive - many billions of dollars.

Who is TSMC?

TSMC is a Taiwanese company that has a bunch of really big, super high-tech orchards. They grow various kinds of fruit for AMD, Nvidia, Apple, and even Intel occasionally.

Who is Apple?

Apple makes pies.

From 2006 to 2020, all of Apple’s products could be grouped into two categories: orange pies, and apple pies.

Apple never developed their own breeds of orange. Instead, they bought their oranges from Intel. Intel did give Apple some leeway to customize their oranges, but Intel was ultimately the one making the oranges.

However, unlike oranges, Apple does design their own apple breeds in-house. TSMC grows Apple’s apples - it’s basically the same relationship AMD has with TSMC.*

*Okay, the relationship is actually a bit different and Apple is involved with some other third-party scientists called ARM, but we’ll gloss over that mess for now.

Macs and MacBooks were orange pies. Meanwhile, nearly all of Apple’s other core products (iPhone, iPad, iPod, Apple TV, etc) are apple pies. As these newer products supplanted the Mac as Apple’s top sellers, the orange pies became sort of an odd man out.

Things changed when “Apple Silicon” Macs came out. In 2020, Apple released a new generation of Macs and MacBooks that were apple pies, not orange pies. This meant that Apple didn’t have to buy fruit from Intel anymore. Today, all of Apple’s pies are apple pies; all of their apples are developed internally, then they’re grown in TSMC’s orchards.

Apple has always been incredibly picky about the exact flavor and texture of their pies, so it makes sense that they would want more control over the fruit. It makes the pie engineers’ lives easier, too - it’s easier to make all the pies taste good together when they’re all made with the same type of fruit.

What’s going on with Intel?

Intel is playing catch-up. Losing the deal with Apple really stung. Apple bought a LOT of oranges from Intel.

Making matters worse, Intel’s orchards have been struggling lately. Just as AMD’s orchards fell behind Intel’s orchards 15-20 years ago, Intel’s orchards gradually fell behind TSMC’s orchards in the 2010s. This has made it really difficult for Intel’s oranges to compete with AMD’s oranges.

Pat Gelsinger, Intel’s former CEO and notable orange scientist, set things in motion for Intel to decouple its scientists from its orchards. In theory, that will allow Intel to dip into the same “third-party orchard” business that’s been working so well for TSMC.

As for Intel’s orange scientists? The decoupling process means that they can go to TSMC to grow a few of the oranges while Intel’s orchards get straightened out.

Although Intel’s orchards have been struggling over the last few years, they’re still the most advanced orchards on American soil. Intel received a considerable chunk of change from the US government through the FRUITS Act to continue improving their orchards as they work through this restructuring process. For the sake of technological sovereignty and supply-chain resilience, I’m rooting for Intel.

Intel has also diversified a bit. Rhubarb is a massive business nowadays, and Intel started making rhubarb a few years ago. There’s stiff competition in rhubarb - AMD and Nvidia have both been in the Rhubarb business for a long time now, and nobody has been able to compete with Nvidia’s finest rhubarb for quite some time. That being said, Intel’s first few offerings have left me optimistic about their future in that space.

Wrapping this all up…

Read again, but:

1. Replace “fruit” with “computer processor chip.”
2. Replace “orchards” with “fabs.”
3. Replace “scientists” with “core IP.”
4. Replace “oranges” with “X86 CPUs.”
5. Replace “apples” with “ARM CPUs.”
6. Replace “pies” with “computers.”
7. Replace “FRUITS Act” with “CHIPS Act.”
8. Replace “rhubarb” with “discrete GPUs.”