When the Chickens Come Home to Roost: Intel's Spectacular Fall from Grace
Bloody hell, what a mess Intel has become. Reading about their CEO basically throwing in the towel and admitting they’re “too late” to catch up with AI competition while laying off thousands of workers has got me properly wound up this morning. It’s like watching a slow-motion car crash, except this particular wreck has been decades in the making.
The whole thing reads like a textbook case of what happens when you prioritise quarterly profits over long-term vision. Someone in the discussion thread hit the nail on the head – all those billions spent on stock buybacks could have been invested in R&D to keep them competitive. Instead, they chose to juice their share price while TSMC, NVIDIA, and AMD ate their lunch.
What really gets my goat is how predictable this was. Back in the 1980s, Reagan’s mob legalised stock buybacks, and it’s been a cancer on American industry ever since. Companies became obsessed with pumping up their stock prices rather than building better products or investing in their future. It’s the same story with Boeing – once a genuine engineering powerhouse, now a shadow of its former self after years of financial engineering taking precedence over actual engineering.
The irony is delicious in the most bitter way possible. All these corporate tax cuts we’ve been told would stimulate innovation and job creation have done the exact opposite. When you cut corporate taxes, you actually discourage reinvestment because companies no longer need to spend money on R&D to reduce their tax burden. Instead, they can just pocket the profits and distribute them to shareholders. It’s economics 101, but apparently that’s too complex for the average politician to grasp.
Here in Australia, we’ve watched this playbook unfold with our own companies. How many once-great Australian businesses have been hollowed out by the same short-term thinking? The mining boom masked a lot of this for a while, but the chickens always come home to roost eventually.
What strikes me most about Intel’s situation is how it mirrors broader trends in the tech industry. We’re seeing massive layoffs across the board, often targeting senior staff with decades of institutional knowledge. Companies are betting they can replace experienced workers with AI and fresh graduates, but that’s a recipe for disaster. You can’t train AI on 20 years of company-specific knowledge, and junior developers can’t mentor themselves.
The human cost of all this financial engineering is staggering. Thousands of Intel workers are losing their jobs not because the company isn’t profitable, but because they failed to invest in the future. Meanwhile, the executives who made these decisions will walk away with golden parachutes while the workers bear the consequences.
This whole debacle should be a wake-up call about the dangers of letting Wall Street drive industrial policy. When companies become more focused on managing their stock price than managing their business, everyone loses in the long run. Even the shareholders, ironically – Intel’s stock has been in the toilet for years because, surprise surprise, nobody wants to invest in a company that’s clearly lost its way.
The comparison to China’s approach is particularly galling. Say what you will about their political system, but they understand that building real economic strength requires long-term thinking and strategic investment. While American companies have been playing financial games, Chinese firms have been building actual capabilities.
Perhaps there’s still hope for Intel under new leadership, but it’s going to take a fundamental shift in thinking. They need to stop worrying about quarterly earnings calls and start thinking like the engineering company they once were. The talent is still there, but they need leadership that understands technology isn’t just another commodity to be financialised.
The broader lesson here is that markets, left to their own devices, often optimise for the wrong things. We need policy frameworks that incentivise long-term investment over short-term speculation. Maybe it’s time to seriously consider making stock buybacks illegal again, or restructuring corporate taxation to favour companies that actually invest in their future rather than just enriching their shareholders.
Intel’s fall from grace didn’t happen overnight, and neither will its recovery. But if we’re serious about maintaining technological leadership, we need to learn from this mess and stop letting the financial tail wag the industrial dog. The future belongs to companies that build things, not just balance sheets.