Intel’s Foundry Ambitions & Global Chip Race | TSG Ep. 935

Have you been approached by Intel about investing? You're watching the Textron Gang? My, my, my, how the mighty have fallen intel go door to door, hand hat in hand?

Well, not quite, but we've got a lot to talk about besides Intel as well. Today we've got a great gang to talk about it with. Let me introduce you to them.

We have Guy Courier from Futurum vi. We have Kate Scarcella, Mitch Ashley, and sporting his Yankee shirt after their opening playoff game. Mike Ard.

Hey gang, how are you today? Perfect. Good, Good.

So, Mike, I, I started it off. Intel is out raising funds. Why the money from, from the government?

Well, the, the government really didn't give more money than they were giving them, but the Nvidia money and everything, was it not enough? I guess it's not enough because I, I think I heard somewhere in the tune and they need like $40 billion, which is quite a large sum of money. And I'm not quite clear whether Apple's gonna cough this up or not, since there are just reports.

But Kate, I'd love to get your opinion on this. And also from your perspective, is there anybody who's off the list of possible sources of revenue for Intel? I mean, would they not go to Qualcomm or would they not go to Broadcom?

Or do you think that all these companies are gonna get a piece of intel at the end of the day? That's a great point, Mike. I think at the end of the day, actually, I think everybody is all in.

I think, um, what strikes me is less about the money and more about the symbolism. Intel just doesn't need cash. They need, um, they need the weight of the name like Apple.

So, you know, from Apple's side, it's not just about the technology because their chips are, you know, world class, but the incentive is supply chain, especially in this, in this new political market that we all playing in. So they have to start thinking about supply chain, uh, resilience, and, you know, since their chips are, you know, this over-reliance on Taiwan. So, you know, but I do see this from the Intel side is a very desperate move, um, personally, um, the Apple involvement, and I think, you know, everybody really will be all in, like, this is more of a sim it would be more symbolic from an app Apple standpoint.

Uh, but Apple and their lens, I mean, they have always had a thing on, on speed, right? So it's one of the reasons why they went to their own chip making and, you know, but at the end of the day, I think it shows that Apple is willing to play more from the, more from the stakes game of, you know, Hey, you know, we're gonna do something in the us but at the end of the day, I, I don't think it will. And, and I don't, I don't think it's gonna help until either.

I mean, sometimes I think it's just more important to, if a company's making it or not making it. If it's not making it, you know, just put it out, let it die. So, so positive this morning.

So, no, no, Tate, I appreciate the, the sentiment, but you know, look, Mitch knows this. I, I spent 20 years as a biz dev, corp dev kinda guy, and that's really my love when it comes to, when I'm working in a, that kind of, you know, bigger company, this is what we call in the business a strategic investment. It's not about how much money it was, even if it was a dollar.

It's about a strategic investment. Because what Intel is really looking to do, you know what Mike, Qualcomm, all the other ones you mentioned, they're all candidates. Because what we want here is Intel wants to be the American Foundry.

Maybe that's what they should read, spin off the Foundry business and call it Foundry America or American Foundry. All of these companies in this, not going to get drawn into it, but in the present state of government that we're in, all of these companies are looking to have domestic sovereign sources of their chips so that they don't have to rely on foreign countries that may be susceptible to, to tariffs and, and blackmail and everything else. So it makes sense for Apple to say, you know what, maybe Apple still designs their chips.

It'll be an Apple designed chip designed in California, but made in the us Qualcomm is the same thing. Broadcom, Broadcom quite frankly, has shown zero near zero interest in, in making chips here in the us. I don't know if they're going to get a crisp Christmas card from Donnie this year, but you know, I, so I don't know if Broadcom will do it, but everyone else will.

And so that's what I think you're looking at. Intel becomes America's Foundry. It's partially owned by the government anyway, and anyone who wants chips and doesn't want to face the uncertainty of dealing with a chaotic administration will, will.

It's a wise investment. You know, Hannah, I think There's many ways to look at this, and I'm not sure which one is the, if there's a right one or it's just there are multiple. One is yes, it's strategically lining up Intel to make sure their supply chain they've got an American manufacturer is, that starts to develop.

They don't wanna be cut out of that and find themselves. Now what do we do if, if suddenly Intels filled up with orders from everybody else that invested in them? Uh, the other is, um, there's a term I came, came to know called embedded financing.

Uh, and I learned this in the nineties when Lucid invested in one of the high flyer startups that we had. And essentially it's investing in companies so they buy your products or investing in companies to get favorable terms like what Microsoft and OpenAI have done, you know, in some of those kind of investments. So it isn't strictly just an investment to get a return ROI on the stock or something like that.

You're, you're getting favorable terms for future business in some form way, You know, it's strategic. It is, it is. And you know, you don't know what part of that might be the discussions that they're having, or some of it's explicit some's not, but I suspect that's a big part of this as well, because yeah, you wanna secure the supply chain, but you wanna make sure you're at the front of the line for what you want to get from Intel.

And you're got, you've got it on favorable terms. So how far will this go before it kind of spins outta control and somebody in Europe says, you know what? We gotta have Macs that are based on Intel processors that are made here in Europe, and then we'll all be arguing about which type of Mac did you get?

Did you get the one made in France, or did you get the one made in the Us? But, but I heard the one in the US maybe not as good as the one in France, But this is the whole sovereign it in a nutshell. You are just taking it strictly to chips.

How long is it until they say in Europe, I need a cloud provider that's not a US based company because Uncle Sam has a really long arm for US based companies. When Is the AWS So European Sovereign Cloud not good enough, right? If, if you hold that thought to the Sea Block Wolf, that's right.

Until Black Sea not. That is, that's the sovereign issue. It's the entire supply chain.

It's your hardware, it's your software, it's your bandwidth, it's the balkanization of the internet. I'm a little confused if, um, maybe there's something I've missed. It sounds like, uh, Mitch, at least Mitch and Alan, I don't know, you're thinking that this is a chip manufacturing, uh, play of some kind for Apple, get a new supplier, uh, from, from Intel.

Is that, is that right? Not designed, but, but Fab or both, Right. And, and, and to augment their, whatever cast they dropped off in Mar-a-Lago already to make sure that the United States doesn't decide to get in the Way.

They don't drop off cash. They give him 24 karat gold, uh, trophies or something. Yeah, That's what the, well, It was Kate, I didn't mean to jump on something you had to say, but I I, um, I think it's highly unlikely that Apple's expecting anything from an Intel foundry fab anytime soon.

Certainly not for a mere, what is it, a bill two bill, whatever. I think it was a bill, right? A a mere billion or $2 billion foundry is de-leveraging out of mainland China, I think.

I don't think they manufacture there anymore. And they, they, they, in the Pat Gelsinger days, Intel got a significant, um, uh, from, from the build back better or whatever came after it. I don't remember the Infrastructure Act.

They got significant money to, to start building, um, fabs, uh, here in the us but their processes are way behind. And the, the one that would halfway get them there called 14 a, um, they don't even want to implement. So there's no way for M five or M six or m whatever that Apple has to be manufactured by Intel under that sort of a contract.

No, I, so and so Guy, I gotta disagree. I think what you've got Nvidia and all these people, and what the Trump administration is pushing is that Intel is going to be able to manufacture cutting edge chips in their foundry for the Qualcomms and the apples and, and you know, the, the, uh, board comes of the world. If Intel's not, then this whole thing is just, you might as well just pour the money on guests, pour guests, and lean on the money and burn it.

I think, I think you've got a good point though, guy, which is, you know, you don't take your, your Ford Mustang in the, in the garage and go run an F1 race with it, right? You've gotta build up to get to that level of producing something as, as a lead, as a two nanometer, four nanometer kind of chip. I don't, my guess is I don't think an Apple, whoever's looking at Intel to be the M1, M five or M six replacement manufacturer, I mean, Intel does a lot of other chips, right?

There's a lot of other chips that go into computers, uh, and, and mobile devices and cell phones and iPads and all that kind of thing. So I, it may be just as much other kinds of chips that don't require the highest sophistication. No, That's what I was getting.

Yeah. Is that where you were going? In fact, that would not be Apple's design.

That would be, um, you know, using, uh, having a, a, a, if anything, a Qualcomm competitor to turn to for networking. 'cause Intel Network No, I give you, for example, I, I believe the new iPhone has apple silicon for the wifi. For the wifi, yep.

There's specific ones they're designing now. And maybe Intel's not ready to do that yet. I would just put a point on what guy is trying to say here is that, so if they actually did something meaningful for a core system, it would be 20 31, 20 32.

By that time I actually saw that roll off of manufacturing line somewhere, right? Into a store at least. And, and then if I add that on top of that, well, who knows who's gonna be president in 2032?

So maybe I'm just putting this out there now as like, you know, a little, a little drop of cash just to buy some peace of mind. Well, That's pretty smart to use opium, other people's money in terms, So I, So I a theory, but I, I want, I want, I'd like Kate to, uh, sorry, Alan, you, you're running a shall go. No, no, you go.

Let's hear you a theory. Well, I think that this is part of this entire current, uh, quasi oligarchic interlocking directorate type culture that we are in right now led by, um, the current US administration. I'm also not gonna go there, Alan, but it sort of seems a whole lot like it, you, you know, a bill drops outta Tim, cook's a billion dollars drops outta Tim Cook's pocket when, you know, he bends over to pick up a hundred dollars bill.

So it's, it's largely symbolic. I think Kate's right? And that's my theory is that this is just a way of saying, Hey, we're playing ball also.

When, when next time I visit, I'll bring you another gold statue at, for now. It's a billion dollars to this company that you co-own. And, and I agree with you, guy.

I think it's like smoke and mirrors. I, I don't think it's real. I think it's meaning, you know, they have their blueprint on, in their designs on what they're gonna do, you know, to change that up.

You know, it's not gonna be like, okay, yeah, we'll go do this. And, you know, yeah. So, well, We're, we're about outta time for this segment, but I'm gonna end, I'm gonna take the last word.

'cause Guy says I run it. Um, if Intel can't manufacture state-of-the-art chips, get the hell out of the business. That's it.

It can't, sorry. You, you have the last, it can't, it will not be able, I don't, I'm not gonna say never. That is a huge hill for Intel to climb at this point.

It's, it's really difficult. And the, the investment we've seen so far, not gonna do it. SoftBank's interest, not gonna do it.

It's, uh, this's. It's, this is a serious problem, especially since there's really only one good supplier in the world of the kind of manufacturing equipment you need. So, Yeah, I enjoyed that George Bush Sr.

Imitation you were doing there. That was great. Now I got a blur it That was points of light, that Point.

Read my lips. Okay. Hey, we're gonna take a break.

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Contact us today and tell your story to the world in the most powerful way with Techron Group. Hey folks, we're back and our friends, the Futurum group have a report out this week talking about, well, who is top of the heap for software development platforms. And, um, it's, uh, as far as I know, I'm gonna let Mitch explain the details, but it's based on a hundred point system, and at the top of the heap right now are Microsoft, AWS and Google.

But Mitch, walk us through, this is the first of these reports. What went into it and what are you guys trying to do here? Yeah, it's actually one that, uh, that I helped guide the development of is actually created by ai.

I didn't write the report, um, but it did create the kind of classification, the analysis system of how it evaluated the vendors. And the purpose of software development platforms is really kind of think about, rethink it, think of more holistically for the full software development lifecycle. I didn't wanna call it that because that has its own connotation.

So, but vendors have strengths, right? And they have strengths in different parts of the software development lifecycle. And that's what this report reflects is who's best position or being positioned to, to be a platform provider for software development throughout the whole process.

Now, of course, no one company is there fully. Um, but there are a lot of things that go into the, into the analysis of this. Again, it's driven by ai, it's looking at public avail, publicly available information.

It's looking at, um, data sets that we have that we've provided, that we purchased, um, user reviews from G two. It's our own, my analysis and other analyst analysis are input into that. And then it comes out with a report, and it's looking not just where they were six months ago and what the data looks like between now and then.

It's looking up the next 12 to 18 months of what is their strategy, what have they done so far, what are they doing to position them to execute on that strategy, and how does that kinda rate, if you're thinking about investing in a tech technology, it's not just what you're buying today, what are you buying into for tomorrow? That's really the intent of the signal report. So, behind the scenes or behind the scenes, the, the reason for it is, you know, Alan and I, and probably others here have gone through the, let me spend months filling out your spreadsheets of data that I have to give the analyst to go write a report for.

By the time it comes out, it's six months old, if not older. And it's all backward looking, reflecting. And this is, this is attempt for us to, uh, really disrupt the analyst industry and do something different and lean into ai.

So maybe this is a vibrant board. I'm not sure if we call it that yet or not, but that's the idea. So I, I feel like I need to do some foundational work here.

So we've covered the Futurum signal reports from their first launch, I think it was maybe a month ago, maybe a little less since then. There's been, I think three different signal reports on three areas. This Mitch being the third, and, and it happens to be in your area.

And, you know, the, the, the signal reports are written by AI and they do give you a kind of a unique view. It's not a wave, it's not quadrants, it's not all that, but there's a radar and there's individual company coverages. And, um, if you go back and look on the text drunk sites, I think specifically text drunk it, at least you can actually see examples of a full signal report, I think on the data intelligence or something space market.

This new one, as I said, Mitchell did and, and Mitch, I know how much work you put into it and everything else, but part of me just wants to say, wait a second, wait a second. You spent all this time, did all this work to tell me Microsoft AWS and Google sit at top the development, software development platform. I didn't need to fill out all the spreadsheets for that either, right?

But the problem is they did. I would just, I would disagree with that assessment. I think Microsoft up there is, doesn't surprise much people, but the fact that Google and AWS ranked as high as they did suggests that, you know, they're gaining some ground here over the years when Microsoft has always been the house that developers built.

So I looked at that a little bit differently than just saying, you know, AWS and Google, by default be I, you know, you're looking at it wrong. Where's stuff getting done today in the cloud? And if it's getting done in the cloud, AWS dwarfs Microsoft's cloud presence.

So, so Lemme take a different view of it, Alan. Right. You know, I always thought of AWS kind of starting my cloud journey in AWS as the infrastructure, the the IPAs, right?

Or ias, and it's not, it's not that same company anymore, right? It's very much a development platform services, you could say the same thing for Google. Yep.

Because they do the same thing for Oracle where they're headed. Well, That's what I was gonna ask you, Mitch. Where is Oracle in this Oracle?

The, the elite are the top three, uh, the three that we mentioned, Oracle and IBM are in the next tier, the leaders tier. And to be honest with you, they're pretty highly rated in those as well. So it isn't like, you know, miles of difference between the first three and everybody else.

It's, it is a very competitive race, and you can argue whether folks can catch up to Microsoft. That's a huge task. Right?

Um, but I think to, to your point, Mike, the, the, the other two hypervisors have gained ground. I mean, we didn't think of AWS as a development platform. Maybe developers liked it, but now we have a lot of things.

They're coming out with their own IDE they've invested heavily necessarily in models, but in, in things like Bedrock and Bedrock agent, um, to help you create a software and also build application softwares. But you have to also look at the second tier and, and the third and the fourth one, it's, I think it's significant to even be in this report, not 'cause it's a future and report, but because of the fact that it's looking at all parts of the development lifecycle and analyzing where are the strengths that this vendor plays. It may be more ops heavy, maybe more development heavy, maybe more infrastructure heavy.

Um, but the fact that they play in more than that one area, and they do have some strengths in those. That's why you see, you know, a GitLab and a, a GitHub and, uh, and others that are, that are in the report. It's pretty, pretty interesting.

The other is, when you read it, it's not telling you what you already know. Yes, I know. They're, they're, I, I wouldn't have expected somebody else.

That's makes sense. It's AWS and Microsoft though, wasn't in Google. It wasn't predetermined, but why, you know, okay, so what now?

Why, what are they gonna be doing over the next year, year and a half? And what will continue or lead to their success? And for everybody else that's in the report, that's what's different about this.

So that's why you should care. Mm-hmm. So, I, I would ask you about this though.

There's two things in the report that struck me a little bit was, so GitHub is rated separately from Microsoft, and Red Hat is rated separately from IBM, but are those two together with, you know, a more representative of what that platform really is these days? Or are they still separate platforms in your mind? It's a good, really good question.

And that was something we debated and I thought a lot about, um, because you could say, well, what about, um, the HashiCorp, should that be, should have been listed there separately. And I think it's a reflection of how much are those companies integrated into the core parent company? Or are they still largely, have they been operating more in an independent fashion?

One, one indication is do the report financials on them separately, or are they all rolled into the company financials? It's not the only determination. Um, IBM's clearly making headway in putting effort into integrating HashiCorp into IBM's offering and becoming really strong in the operations and infrastructure with software.

Same thing I think will happen with Red Hat that's starting to change over time, how fast it will happen. Um, you, you can, you can also look at GitHub up to this point, it's been pretty, pretty independent from Microsoft and until Microsoft build this year, there were a few announcements. And yes, GitHub kind of crosses over with, with, uh, Microsoft co-pilot and, and, uh, the VS.

Code capabilities, but they aren't largely integrated. I think that's gonna change too over time. But today they're, from the market standpoint, yes, they're owned by them, but the people that work with them largely see them as independent companies or, or standalone entities of part of a larger company.

I, I got a question. Mm-hmm. What about Nvidia?

What about OpenAI? Uh, good questions. Uh, there is a section of the report we call the folks that are in the, in the top, in included in the main analysis are the spotlight.

Uh, but there's a whole list of vendors who, who we also identified as these are potential players or maybe they're, they're close to, or even at that point that we could include 'em in a next report. You could ask that of, uh, very much a easily of, uh, anthropic of open ai. You could also ask it about, you know, any sphere for, for cursor.

And, um, and, and, uh, for, for, uh, uh, for windsurf, you know, these things are starting to evolve in more than just a development tool, doing more, uh, in more engagement with the infrastructure and automation. Someday, maybe they're playing in this field. We'll see, I could EI could definitely see, depending on where Nvidia takes their software stack, which huge, that's a huge advantage for them in the age of agents and ai, that's could be the next software development platform beyond traditional software.

I agree. Mitch, I, I know the first signal report they made readily, like the whole thing available. I'm not sure if this whole one's available, but certainly the ex summary, it's the whole, yeah, the whole signal is available.

Yep. The, the full signal is available. There's an executive summary.

Just a quick, you know, here's the kind of charts and things that came out. Um, but the full, uh, full report is available to everybody. There's also a nice heat map that shows kind of, of the areas that we evaluated, the five different categories that AI looked at.

Where were they, where they were the strongest, where did they not play as much in strength? So maybe you performed super well in the finances financial area, product innovation might have been kind of more medium and wasn't quite as high performing. Um, one thing to note is you mentioned the under point grading system.

Microsoft was the only company that was in the nineties on all five categories. Uh, AWS and Google didn't receive a 90 score or above in all five, though they had a lot of 90 scores of course, to appear in that elite category. That heap map is one of the more interesting ways to read these signal reports.

And, and I want to commend my colleague, uh, Mitch on, on, you know, leading and driving the production of this report and writing a lot of it. Um, but at the same time, remember that the, the data sources here in the analysis have a lot to do with, um, users, user judgments, mar uh, user judgments of, of the platforms aggregated, um, you know, uh, market information, all, all crunched together. Um, so that what, what I think, you know, we're producing in future and with these signal reports is a good sense of, uh, the market and the user and the practitioner's take on these categories, um, as much as, uh, the analyst in this case, Mitch's, you know, expert judgment and experience.

Um, and looking at those five factors, uh, the factors are, um, uh, business value, uh, overall ecosystem, um, go to market, which is, uh, an interesting judgment point. How well are they enabling users, uh, to understand, buy what they need, use what they need? Well, um, and then of course the usual, you know, product capabilities and the overall vision.

Did I get those right, Mitch? Yeah, You nailed it. Yeah.

Yeah. Good books first. Um, so one of the more interesting things that you can do with a signal report, um, if you are considering wanna see how the company stack up, is to just look at the factors that are, that are most interesting to you.

Um, I, I thought it was really significant, uh, that AWS um, doesn't score in the nineties, doesn't score top tier on their product, uh, vision, their, their roadmap, like that sort of thing, um, while Google and Microsoft did. And also the fact that very few of that's the heat map that Mitch was referring to. Very few of the vendors, uh, scored super high, um, outside of those top three in, in, you know, many areas.

So you can look, uh, for example, at, uh, a GitHub or, or a Red Hat, um, and, uh, see that they are strong in areas that are important to you, um, and or maybe not so strong in areas that are important to you. So it's not a one dimensional, here's the number one, here's number two, here's number, whatever. In fact, no one but the big three scored well for ecosystem.

Um, and or scored in the top tier for ecosystem, which is a big part of how, I mean, that's how Amazon sort of led everybody into this model of, of, uh, you know, buying into a quote unquote platform overall and taking advantage of lots of different capabilities around the market, not just from those companies alone. Yeah. Tha thanks Guy.

I think you're very, very intelligent analysis of kind of what this is about and some good insights about how to use it. I I also wanna call out sort of the folks that are in the aspiring the, the bottom tier, if you wanna think of it that way. Uh, first of all, I think it's, it's important just to be in this report 'cause it's a recognition that you're not, uh, sort of as focused in one area.

And that's where your strengths are. And a good example is suse. Uh, BMC is another, they're both in transition.

You know, they've got new management teams, at least within the last couple of years, relatively new, uh, BMC software split up into two companies. They're, they're under change. They're experiencing some change.

Um, but two years ago, you wouldn't necessarily say suse probably wouldn't have been into this report. 'cause they didn't, they didn't have observability, they didn't have, uh, blueprints for developers. They didn't have curated images, uh, for the development process for better software security.

So these companies are making strides in expanding to bigger parts of what maybe their core strengths initially were. And the fact that they're in the aspiring doesn't mean that they're bad. It means that this is a big growth area for them.

And they, they of course, need to execute to continue to deliver that. Um, but it actually shows you that analysis and why. So I have a question.

Can, um, if I'm an IT leader, can I download the report and then change the weights to suit what I think are the more important attributes and play with it a little bit to customize it for my own particular biases? Today, you can download the report where this will end up, uh, I would say in the relatively near future, I don't know the date, but this will be not only available within the future of intelligence platform, but you'll be able to do some slicing and dicing and some analysis based on the data, which I think would be super helpful. Like, let me dig more into ecosystem.

And, you know, what do we mean by for developers? 'cause that's one of the things that was different about this report than the first two, is it put greater emphasis on not just ISVs and vendors and resellers. It also put a big emphasis on what about the developer and the community and the pe the user groups that are all part of this ecosystem.

Because that's where somebody like an AWS and a Microsoft and GitHub for that matter, really stand out. They have, those are things that are hard to build and take a lot of, a lot of years and momentum for other vendors to catch up on. Can I enhance your answer a little bit, Mitch, please.

Um, Mike, there's nothing inherent in the tool and the slicing and dicing, you can't, or in the, there's nothing inherent in the report itself and you can't, the slicing and dicing, uh, uh, you can't do yet. But the components of each score by each of those five factors are right there in a table that you can probably copy paste or at worse, spend a little time copy over. And so then, you know, a little math and, uh, you can definitely use your own weighting or even eliminate one of them if you choose to, to come up with your own scoring system.

Mm-hmm. All right. Cool.

'cause open weighting is gonna be a thing, man. It's being an issue. All right.

Hey, let's take a break. We're running a little over. We'll come back for C Block Cloud Control.

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Hey folks, we're back and we're gonna have a little chat about, well, we've talked about it briefly earlier, but there's this whole notion of cloud sovereignty, which I guess used to be just, I wanna put stuff in my data center and control it. There's a, a story up on the text drawing AI this week, or text drawing it, actually talking about how SAP and open AI and folks are building out their own sovereign cloud for the German public sector market. And it seems like this is gonna be a generic trend across the board, but to Alan's point earlier, guy, are we just looking at the balkanization of it?

And everybody's gonna be behind their own borders and their own things, and this whole notion of these, you know, clouds that were highly distributed and were highly extensible, who cares? Uh, well, so oddly enough, I don't think that's where we're headed. I think that, um, this is a nice corrective.

I mean, I don't know if you were with me on this, Mike, when we were working way back when, um, together. Uh, but um, it seemed that part of the message behind the clouds and the growth of cloud computing and all that sort of stuff was, Hey, everybody gets to share everything everywhere all the time. Yay.

Um, it wasn't all that long ago when I think Google Drive changed, uh, its default share. When you click on a file to share, it changed its default from share with everybody, everybody in the world who has the link to, you know, share with specific people. Um, just to give an example, that was something that always annoyed me was that I had to manually go in every single time I shared a file.

Well, anyway, we don't need to go into that. The point here is definitely sovereign clouds, which had, were defined easily 10 years ago, um, but have been proved very difficult to implement, um, are now becoming, um, a thing. Um, and, uh, certainly Oracle, um, has been just by the nature of the Oracle business, has been building sovereign clouds, uh, around the world.

They might have 14 of them by now or something, um, just to deliver, uh, specific applications. 'cause that's Oracle's that's a heart and soul of Oracle's business. Um, so it's not even really a surprise that SAP in particular is jumping into this, it being a main Oracle competitor.

The other thing though, is Germany, um, they established some kind of nationalization, so to speak, or sovereign, uh, services and sovereign data, uh, uh, coalition and fund. And it's like sort of a whole combination of things. There's hundreds of billions of, of euros behind it.

Uh, SAP is obviously a core participant in this. Um, but then the last thing I will say is, uh, the, the way this particular sovereign cloud is being implemented is on the Delos Cloud. The SAP Delos Cloud, which more or less is a managed Microsoft Azure Cloud and Microsoft, and I'm, so I'm trying to segue, trying so hard to segue to you, Alan.

Microsoft is an American company. So does it matter if your data centers air gapped and three of the clusters inside are air gapped and there are German troops standing all around it and all that other sort of stuff. That data inside is running on Microsoft Azure at under Microsoft Azure licensing, even if it's being managed by SAP.

And so there's a real question right now as to how international law works for this sort of thing, because, uh, in some ways it feels like the US' posture by law is that, uh, that is data that can be extradited and brought back to the United States on command because it is a, an American company that is running at least the base of that stack. So, and I did write this article on there about the long arm. The, the head of Microsoft France testified to the French legislature that international law be damned as a US company.

They are obligated to obey the orders of the US government. And that anything on their infrastructure anywhere in the world is subject to US jurisdiction. And to bring, you know, back in your jurisdiction.

But I think this sovereign issue has outgrown sovereign clouds, clouds only one part of it. It is sovereign it. Where are your chips made?

Are there back doors and chips? Where is your network infrastructure made? Where is it housed?

How is it powered? Right? These are all things where everybody, all of a sudden the nationalistic walls are coming up saying, I can't afford to, I can't afford to, to relay on Canadian and electricity.

I need American electricity for my American data center. And next it goes, when you talking about, I I I need a New York data center. I can't trust Indiana.

What? Are you kidding Me? I don't blame you.

Who knows what goes on in Indiana? Hey, I got your data center right here. Yeah, Exactly.

I give you a data center. But, but you know, and so this is the balkanization. It, it doesn't stop at that cloud data center.

It, it goes up and down the hardware and software stack. How long, now I've spoken to Seuss on this. Seuss is building data centers in Germany with Seuss Cloud, right?

There are no American companies or American software in there so that it cannot be subject to as, as Microsoft said, the long arm of Uncle Sam. Um, this is, I unfortunately, this is where we're going. And, and let me just say that, you know, China, China comes out here saying, oh, this is so wrong.

We wanna bring it to the world. Those are crocodile tears. They're crocodile tears.

They're doing the same thing. They're, they, they, you know, they're pretty good at building walls in China. They've been doing it for thousands of years, but they didn't learn their lesson.

'cause when we build walls like this, we all lose, we all lose. The internet is one internet for the world. It works best when we all partake in it.

When we put up walls, we all lose. And this is the retraction of globalization, right? Yeah.

That's what we're seeing here. Yeah. Is the, these pendulum is now swinging back the other way.

How hard and how fast, how far it goes. We'll, see, I did a report on this, uh, a few, about a month ago. So looking at, actually, you mentioned suse, also Red Hat, their strategies around, uh, around how to address sort of a European approach or a national international approach to sovereignty.

And the differences were pretty interesting. Red Hat took the, we're the, we're open source. So we're just naturally, you know, neutral.

Now that has addressed the long arm of the US government issue. Suse on the other hand, quickly, was one of the first companies to announce we also are offering a support model that only involves European employees. No, no other countries are involved in delivering this service from a support standpoint.

So you mentioned it's more than the, the cloud. com. Uh, there is a, a letter, there's an organization that's part of the EU designed around creating a completely e EU or as much as possible, evolving over time stack.

And this is everything from collaboration software to API gateways to networking, you name it. Um, and SUSE is one of the, one of the kind of named players there as an early adopter on that. But there's other companies like Airbus, you know mm-hmm.

Companies that are based in, in Europe. And much like we were talking about earlier, as you know, is the Apple investment in, uh, in Intel a supply chain move? Or what is it?

That's essentially what we're seeing here is another form of that protecting my own interests. If the world goes to hell and I lose control of, I gotta have, well, you are the EU here, here's here the EU stuck prove, you know, between the proverbial rock and a hard place. You got the US on this side saying if it, it, if it somehow breathes my air, it's mine.

And you got China on this side, who, you know, the poster child for freedom and, and information. What's the, And not mention back doors that which they're really good at. Right?

So what, what is the EU to do? What's the EU to do? And, and let's not just say the eu, I think you're gonna start seeing like the tigers in Asia, the Singapores and, and the Saudi Arabia, and, right.

So, Kate, let me, let me ask know of their own, Kate, as you look at all of this, are we in danger of devolving into what, you know, amount to a series of city states where all these different little localities will have their own IT policies and nationalistic tendencies. And Milan will tell Rome that, you know, we're gonna do this and, uh, we don't care what you said to the eu, or vice versa. It could be, you know, somebody sitting in, uh, have one part of France is likely to tell Paris to take a walk.

I mean, how crazy can this get? I, I think once we start to go down this road, I really, you know, you made the joke about, you know, Indiana, and I don't think you're, it's far off. I think localized cloud is coming whether we like it or not, but it's gonna hurt us.

It's gonna hurt us from the global scale. It's gonna hurt the portability issue. Um, innovation, um, interopability is something that we have worked decades on, and I think we are close to, you know, shutting that down.

And it's really unfortunate. Yeah, It is. Look, you know what Mitchell, you said the death of globalization, or at least the beginning of the end, globalization.

Let us not forget that since the end of World War ii, about 75 years ago, a little more 80 years ago, we have seen the greatest expansion of human wellbeing, humanity's wellbeing, rising, lifting people out of poverty, raising, uh, the average age, right? Expectancy, life expectancy, raising our pace of innovation. Guys, you are willing to throw that all away.

Yeah. The democratization that technology has brought has been so important. And it just, it, it, it's crushing, crushing to see what's happening.

I mean, and take history as a guide, I said it jokingly before China was a very advanced society a thousand years ago, 1200 years ago, they built this wall to keep the barbarians out, and instead they locked themselves in. That's not the way, it's not the way, I'm sorry. It's just not the way, it's not, I don't think it's good for humanity.

I don't think it's good for technology. I hate to bring in a, uh, dungeons and dragons reference, but when, oh, why not? When the, uh, us kind of evolves or moves from a, let's say a, uh, a neutral good to a chaotic neutral, maybe chaotic evil, and, and depending on where you sit, that that unsettles things.

I mean, that's how, you know, we hear all about in the US about how Europeans view us now and our view, our government, or our president, or our, uh, our, our folks at the Ryder Cup, uh, misbehaving. It, it, it, it causes, it has an effect. And people have to respond to that, uh, saying, well, my, I can't depend on other folks to have my self-interest or enough of my self-interest to, to be able to do what we need to do as a nation or nation state.

How do we take more control over that? Mitch, I think there's real danger around open source, what you say, open source could fall apart, right? Just think about that.

Absolutely. You're, see, you're seeing the balkanization of open source. But Mitch, what you're really saying is, I can't trust them to lead the world.

Mm-hmm. I can't trust them to lead the new world order that they put in place 80 years ago. We need a new world order.

And that's scary in itself. And, and I'll just wanna say one, one thing, and that is what really, really bothers me here, is that encryption is real. If you're trying to get, um, control over your, you know, local entities and things like that, why not like, deal with encryption?

Why not deal with key control? And, and that plays more of a leverage, which I think, you know, helps from a, you Know, can I, can I play Tom Clancy? Because the NSA has quantum computing or something that breaks the encryption.

It's cute there. All right. I don't think they trust that.

I, I understand that that Encryption can't be done, but mm-hmm. You know, it is what it is. Anyway, we're over time and I've gotta go do a webinar.

So, um, we're gonna have to call an end. Otherwise, I'd love to talk about this all day. Guy, Kate, Mitch, Mike is always it.

Great, great discussion. I hope you all have enjoyed it. Of course, we'll have text drunk TV following, so stay tuned on that and be back tomorrow hopefully with even more Textron gang.

But for now, Alan, I'm Alan Hummel. We're out.