These should be salad days for chipmakers, but once-dominant Intel is wilting faster than unrefrigerated lettuce.

On Wednesday, Reuters reported that the beleaguered tech giant’s contract chipmaking business suffered a major setback. It’s just the latest crisis facing Intel, whose ongoing struggles threaten not only itself, but also the Biden administration’s ambitious agenda to build a domestic chipmaking industry from the ground up. 

Chip It and Rip It

Intel’s share price has plummeted nearly 60% through the first nine months of 2024, making it one of the worst-performing stocks on the S&P 500. Lip-Bu Tan, a high-profile semiconductor industry veteran, left Intel’s board recently over disagreements with CEO Pat Gelsinger and what Tan considered to be a bloated US workforce, weak AI strategy, and overall risk-averse culture, sources told Reuters in a separate report published last week. And SoftBank walked away from talks with Intel to develop an AI chip to rival Nvidia after growing disappointed with Intel’s capabilities, sources told the Financial Times in August. 

On Wednesday, Reuters revealed another unhappy customer: chipmaker Broadcom, whose plan to outsource manufacturing to Intel is in jeopardy after Intel failed some major initial tests, sources said. The disappointment puts a spotlight on Intel’s new 18A manufacturing process, which was supposed to serve as the high-powered bedrock to the company’s contract chipmaking unit.

After posting a $1.6 billion net loss in its most recent quarter, Intel announced a $10 billion cost-cutting initiative that included layoffs of up to 15% of staff, or some 19,000 employees. And all this is taking place amid what could be a historic windfall courtesy of the Biden administration: 

• Intel is set to be the recipient of up to $8.5 billion in government grants and another $11 billion in loans, making it the biggest beneficiary of the 2022 Chips and Science Act — though it has to clear key benchmarks and tests first. 
• According to a Bloomberg report Wednesday, however, the firm has struggled to satisfy the government’s due diligence process, and has even resisted sharing requested pieces of information. Go ahead and count Joe Biden as yet another disappointed Intel partner.

Split Wise: Layoffs may be just the beginning of Intel’s make-good efforts. According to another Bloomberg report on Wednesday, the firm has engaged investment bankers for advice on various restructuring plans — including discussions to potentially spin off the very same contract foundry business that failed Broadcom. The idea has at least one fan: influential tech analyst Ben Thompson, who made the case for the spinoff in a lengthy edition of popular newsletter Stratechery on Tuesday.

America’s nascent green hydrogen is getting a boost from an unlikely source. 

On Wednesday the Abu Dhabi National Oil Company (ADNOC) signed a deal with Exxon to buy a 35% share of a new hydrogen plant just outside Houston, Texas. The United Arab Emirates is more famous for its fossil fuel industry than its interest in green energies, but a stalled US hydrogen industry has created an investment vacuum where foreign investment can rush in.

We’re No. 1

Hydrogen generation is a relatively small, but growing, part of the green transition. Hydrogen can be produced during both fossil fuel and renewable energy production, and helps to decarbonize particularly dirty sectors like transport and steel production, per the International Energy Agency. The Biden administration tried to give the industry a jumpstart in 2022 with incentives under the Inflation Reduction Act, but according to a Bloomberg report last month, exactly who benefits from those incentives has been a battle of the bureaucrats. With a potential change in administration looming over next year, that’s put a lot of US hydrogen projects into hypersleep.

Abu Dhabi has Exxon’s Houston project up and at ‘em, but uncertainty hasn’t fully left the equation:

• In a statement to the Financial Times, Exxon said the cash injection from ADNOC was “contingent on supportive government policy and necessary regulatory permits.” The investment won’t be set in stone until next year.
• An ADNOC executive told the FT the company was pushing ahead on the assumption that the political climate in America will remain clement toward clean energy collaborations with the UAE.

Winds of Change: Across the Atlantic, the UK has managed to turn the tide on renewable investment. Whereas last year the UK attracted exactly zero bids for renewable energy state subsidies, this year it managed to nab 131 contracts, making it the biggest-ever round of contracts awarded. It’s a nice bit of PR for Prime Minister Keir Starmer’s Labour Party, although the Financial Times noted it wasn’t quite enough to put the country on track for its 2030 offshore wind targets. 

The name may suggest a mom-and-pop operation, but family offices are anything but.

A new report from Deloitte estimates that such private wealth management advisory firms will control $9.5 trillion by 2030, up 73% from the current $5.5 trillion. Family office expansions are expected to “explode,” with over 10,700 operating by 2030 compared to roughly 6,100 in 2019, and with more and more pushing into competing realms with hedge funds and other investment firms.

With an outlook like that, family offices can probably expect to hear from a bunch of second and third cousins they’ve not aware of.

Bred Winners

The rapid growth in family offices has put the investment vehicles of the world’s richest clans on par with the global hedge fund industry, which data provider HFR said had $4.3 trillion in assets as of the first quarter of 2024. 

This maturation in the wealth management sector means growth in “the pool of talent family offices can hire from, partner with, and utilize to outsource their service provision,” Deloitte said, adding that “family offices are increasingly looking to diversify their portfolios across different asset classes and geographies.” They are also speaking up more and taking stands:

• Mithaq Capital, the family office of the Saudi Al Rajhi banking family, took a majority activist stake in US kids retailer The Children’s Place earlier this year and cleaned house at the executive level. This came months after US hotelier Tushar Patel’s family office took a stake in COVID-19 test-maker Cue Health to push for cost-cutting, and after the Yamauchi family office, for the late Nintendo founder’s heirs, failed a hostile takeover of shipping terminal builder Toyo.
• Family offices have also jumped in on private equity buyouts. The German Viessmann family’s office joined a KKR-led consortium in a multibillion-dollar buyout of renewable energy firm Encavis that was approved in June, while Michael Dell’s family office teamed up with buyout shop Silver Lake in April to take the Ari Emanuel-led talent agency Endeavor Group private.

Breaking the Compact: The 2021 implosion of Archegos Capital, which managed $36 billion at its peak, called attention to the industry’s newfound girth. The meltdown led to the criminal conviction of founder Bill Hwang and contributed to the collapse of Credit Suisse. The family fund’s default on margin calls set off alarm bells about family offices, which are less regulated than other investment vehicles — the SEC tightened private fund rules in August 2023, notably requiring more to be subject to annual audits.