Intel Betting the Farm(semianalysis.com)
semianalysis.com
Intel Betting the Farm
https://semianalysis.com/intel-betting-the-farm-shrinking-business-margins-down-for-few-years-but-aggressively-investing-40b-43b-a-year-and-more-with-subsidies/
111 comments
I get positive impressions that they might pull off their vision whenever I watch new CEO Pat Gelsinger, like here https://www.youtube.com/watch?v=MtYEmR9F8OM
He's also targeting getting Apple back https://www.youtube.com/watch?v=QsrCOkIth_U
He's also targeting getting Apple back https://www.youtube.com/watch?v=QsrCOkIth_U
> He's also targeting getting Apple back
Very unlikely to happen. Maybe Intel could end up manufacturing Apple's M* chips, but it seems very unlikely at this point that Apple would ever go back to the Intel architecture - Apple would be ceding control if they went back and they're not going to do that.
Very unlikely to happen. Maybe Intel could end up manufacturing Apple's M* chips, but it seems very unlikely at this point that Apple would ever go back to the Intel architecture - Apple would be ceding control if they went back and they're not going to do that.
I would be so surprised to even see that. For a second I pondered the idea of Apple perhaps using Intel as a fab for older chips in less demanding devices like the Homepod or the Apple TV, but that can never be better than simply using older iPhone chips. Just keep the old fabs pumping out old chips.
I have to come to the conclusion that this statement just a rallying cry. Woo the uninformed that Intel will get Apple back, and try and rally the informed using this crazy claim as a North Star: Intel will become so good in the future, Apple wished they could come crawling back, if not for their pride.
I have to come to the conclusion that this statement just a rallying cry. Woo the uninformed that Intel will get Apple back, and try and rally the informed using this crazy claim as a North Star: Intel will become so good in the future, Apple wished they could come crawling back, if not for their pride.
> Apple would be ceding control if they went back and they're not going to do that.
Case in point: 2x ProRes accelerators in the M1 Max.
These are critical to a significant percentage of Apple's core base and yet there is zero chance that we would see them in the Intel offerings.
Case in point: 2x ProRes accelerators in the M1 Max.
These are critical to a significant percentage of Apple's core base and yet there is zero chance that we would see them in the Intel offerings.
Not to mention they'd need Rosetta 3, which would be the opposite of Rosetta 2.
Things would have to be desperate to do that.
Things would have to be desperate to do that.
Just about the only backflip I could imagine is for Apple to declare that the highest end variants of Mac Pro would remain Intel indefinitely, making the Mac a permanently multi-architecture platform. But I’d put the odds of that happening at far less than 1%.
Unless Intel comes up with some completely new architecture with a new ISA I don't see how they could catch up with what Apple has done with the M* CPUs.
there is no firm evidence that apples chips are better because of isa, they perform about like a ryzen would at 5nm
I think there is evidence—the number of execution decoders can be much higher than x86 because fixed width instructions make that less speculative. That improves out of order and speculative execution prospects.
Decoders are less than 1% of the chip, that's not a substantive difference. Both Intel and Arm decode their instructions into micro ops, so there is no difference to out of order and speculative execution prospects because of the instruction code.
The only substantive difference is that Intel provides a stronger memory ordering guarantee. This is theoretically an advantage for Arm, but there are disadvantages too, so I'd call that a wash.
The only substantive difference is that Intel provides a stronger memory ordering guarantee. This is theoretically an advantage for Arm, but there are disadvantages too, so I'd call that a wash.
This. ARM instructions are much more regular and easier to decode (meaning a smaller decoder) than x86 instructions, allowing for more instruction decoders in the M1.
A few hundred thousand extra transistors aren't a big deal on a 20 billion transistor chip.
Does this mean the chip is more "secure" like against those attack vectors (Sepcetre?) that affect some x86?
No. As long as you're preforming speculative execution Spectre vulnerabilities will persist. (Meltdown was different and solved.)
The good news is Spectre style vulnerabilities are extremely hard to use and indeed have never been observed in the wild. Also, good security practices (only run trusted code on your own dedicated machine) provide full protection against theoretical Spectre attacks.
The good news is Spectre style vulnerabilities are extremely hard to use and indeed have never been observed in the wild. Also, good security practices (only run trusted code on your own dedicated machine) provide full protection against theoretical Spectre attacks.
I just bought a brand-new laptop with an "1th Gen Intel(R) Core(TM) i7-11370H @ 3.30GHz" and I'm 100% happy with it.
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Can people please stop inventing the performance of a chip that doesn’t yet exist.
You can look up SPECint2017 for AMD and Apple chips. Sure, AMD has to clock higher to do it but the end result is they are still ahead with their year old 7nm chips in both 1T and MT.
Please mention a low power chip that AMD makes that's competitive with an apple chip at similar power levels.
Apple hasn't released it's high power chips yet at 5nm. They've only released chips in the very low power laptop range (honestly lower than most any laptop uses today) and the power laptop range (not even high power laptop range). Comparisons will be interesting once we see the Mac Pro heat range M* chip.
Apple hasn't released it's high power chips yet at 5nm. They've only released chips in the very low power laptop range (honestly lower than most any laptop uses today) and the power laptop range (not even high power laptop range). Comparisons will be interesting once we see the Mac Pro heat range M* chip.
> Please mention a low power chip that AMD makes that's competitive with an apple chip at similar power levels.
It doesn't exist.
That's why people keep inventing hypothetical AMD 5nm parts to compete with the M1 as if it somehow scores points for AMD to win with an imaginary chip against a real one.
The irony of this is that the same AMD fanboys were (legitimately) dismissive of similar arguments from Intel fanboys for years prior to this. "If Intel was on 7nm Zen wouldn't be able to compete!" Maybe, but it isn't, and the only reasonable comparisons are with silicon that actually exists.
It doesn't exist.
That's why people keep inventing hypothetical AMD 5nm parts to compete with the M1 as if it somehow scores points for AMD to win with an imaginary chip against a real one.
The irony of this is that the same AMD fanboys were (legitimately) dismissive of similar arguments from Intel fanboys for years prior to this. "If Intel was on 7nm Zen wouldn't be able to compete!" Maybe, but it isn't, and the only reasonable comparisons are with silicon that actually exists.
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That wasn't the point as I read it. They were talking about performance. Zen 3 is a small, simple design compared to the braniac Fire Storm. There is little savings from ARM, Apple is simply using far more transistors to build a massive core.
If Itanium is any indication, even inventing a new ISA is something Intel will likely screw the pooch over. With that said, I'm cautiously hopeful that with the move to a big.LITTLE-like configuration in Alder Lake processors, Intel is at least taking notes from it's competitors. If chasing Apple is enough of a carrot to add ECC support to i7's in the near future, I say chase away.
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If Pat's recent performance at VMware is any indicator...I wouldn't put that much faith in his ability to turn things around. He was very good for VMware early on in his tenure, but as competition from IaaS and other players making inroads in on-prem virtualization platforms intensified, his leadership seemed to falter. VMware began to churn and burn through acquisitions without much success, became entangled in a toxic relationship with Dell, and only managed to make marginal gains in terms of home-grown product innovation. The last couple years of his tenure were an especially noticeable period of decline, with massive losses in employee morale and retention, as well as continually degrading release quality. As a former employee (I left just before Pat did), I left the company with the impression that Pat and the rest of the execs were asleep at the wheel while the heads of various business units simply ran amok.
> If Pat's recent performance at VMware is any indicator...I wouldn't put that much faith in his ability to turn things around.
His track record at VMware was also my major concern when deciding whether to invest in INTC stock recently. In the end I decided for myself that VMware was probably unsalvageable. They had a dominant position in the datacenter (and still have), but were unable to compete effectively in the cloud as there is too little overlap between the VMware culture, commercial model, and product with what's needed to run a hyperscale cloud. Gelsinger managed to become CTO at Intel in 2001, which is I think is not something you can do if you don't have any leadership skills. Given that the Intel mission is pretty clear, and given that I don't think Intel needs to total cultural overhaul (just the management), my view is that he has a decent chance.
His track record at VMware was also my major concern when deciding whether to invest in INTC stock recently. In the end I decided for myself that VMware was probably unsalvageable. They had a dominant position in the datacenter (and still have), but were unable to compete effectively in the cloud as there is too little overlap between the VMware culture, commercial model, and product with what's needed to run a hyperscale cloud. Gelsinger managed to become CTO at Intel in 2001, which is I think is not something you can do if you don't have any leadership skills. Given that the Intel mission is pretty clear, and given that I don't think Intel needs to total cultural overhaul (just the management), my view is that he has a decent chance.
They're pretty different scenarios because VMware was facing headwinds with cloud providers making them redundant. Intel is dealing with not having a good mobile offering, being behind on fab tech, and being behind on CPUs. The difference is people still want what Intel is selling, just a better version of it.
Hmm, thanks for the inside perspective from VMWare.
I can still believe things would be different at Intel, because of his long history there, and he seems pretty passionate about it (although maybe he seemed that way at VMWare too?)
I can still believe things would be different at Intel, because of his long history there, and he seems pretty passionate about it (although maybe he seemed that way at VMWare too?)
Passion for technology and compassion for people are probably Pat's greatest strengths as a leader, but I'm not convinced that those alone are enough to shift an enterprise towards success when it's facing an existential crisis.
Intel has a history of big plays, I'll be taking a punt on them, just as soon as this slow growth and missed earnings errode their stock price over the next couple years.
I don't think you'll get a couple of years to buy in. There seems to be a lot of noise in the triangular thought bubble between Chinese fab, Taiwanese independence, and semiconductor shortages. Big developments on any of those fronts may force the US government to step in and do something more substantial than giving tax incentives to buy lithography scanners.
What happened with Dell abs VMware? I noticed recently Michael Dell has been on a publicity interview tour to promote his auto-hagiography and of course says nothing bad about the Dell - VMware merger.
For starters, Dell and VMware didn't merge. Dell merged with EMC and thus took a majority stakeholder position in VMware stock, letting Michael Dell stack the board and generally steer things in Dell's favor.
In my personal opinion, this was generally to the detriment of VMware's products (downward pressure to focus on features that made little or no sense, except to give Dell marketing talking points; bad impact on morale by doing things like decreasing employee benefits quality so DellEMC and VMware could jointly reap discounts), played a role in frivolous acquisitions, and generally (and understandably) caused OEMs other than Dell to disengage and keep VMware at arms-length.
In my personal opinion, this was generally to the detriment of VMware's products (downward pressure to focus on features that made little or no sense, except to give Dell marketing talking points; bad impact on morale by doing things like decreasing employee benefits quality so DellEMC and VMware could jointly reap discounts), played a role in frivolous acquisitions, and generally (and understandably) caused OEMs other than Dell to disengage and keep VMware at arms-length.
> He's also targeting getting Apple back
I doubt he seriously is, I think that’s just rallying the troops by setting an aggressive, aspirational target, acknowledging the humiliation and trying to use it.
Which is what he should be doing so good for him.
It remains to be seen if he’s another Lisa Su. The odds are against it but I’d be excited if he could pull it off.
I doubt he seriously is, I think that’s just rallying the troops by setting an aggressive, aspirational target, acknowledging the humiliation and trying to use it.
Which is what he should be doing so good for him.
It remains to be seen if he’s another Lisa Su. The odds are against it but I’d be excited if he could pull it off.
The Apple ship has sailed since Intel rejected supplying the iPhone chips
The only way they could maybe have a chance is for them to have something better than the equivalent M1 5 years from now.
It's not going to happen. Especially with x86
The only way they could maybe have a chance is for them to have something better than the equivalent M1 5 years from now.
It's not going to happen. Especially with x86
> It's not going to happen. Especially with x86
I share the sentiment that it's unlikely that Apple will go back to x86 any time soon. But if/when Intel has a leading node, it think it is actually /likely/ Apple would manufacture their M processors on it. Intel is saying their nodes will be easy to port from TSMC, having two vendors gives Apple leverage, they reduce geopolitical and other supply chain risks, and and the two companies are literally in each other's back yard.
I share the sentiment that it's unlikely that Apple will go back to x86 any time soon. But if/when Intel has a leading node, it think it is actually /likely/ Apple would manufacture their M processors on it. Intel is saying their nodes will be easy to port from TSMC, having two vendors gives Apple leverage, they reduce geopolitical and other supply chain risks, and and the two companies are literally in each other's back yard.
Unless Apple acquires TSMC, I don't see the M1 as much of a moat; it's TSMC's flagship process that enables most of its competitive advantage.
> it's TSMC's flagship process that enables most of its competitive advantage.
Eh. Right now Apple is matching a (desktop) 5950X at laptop level TDPs - the iGPU is way lower than a desktop 3080 but so is a mobile 3080 at 115W. If you doubt that number, a Pugetbench result just showed up. TBH the specifics of the"which processor is 5% better than the other here" slapfight doesn't actually matter here, compared to the fact that Apple is doing it in what, 60W? And the AMD+NVIDIA system is using a 300-350W GPU and a 142W PPT CPU. Yeah, that's high-clocked kit, but with results like that there's zero reason to doubt Apple's claim of it beating a (mobile) 5800H (probably sustained 62W PPT) with a 115W mobile 3080.
M1 Max: https://www.pugetsystems.com/benchmarks/view.php?id=60176
Desktop 5950X/3080: https://www.pugetsystems.com/benchmarks/view.php?id=60613
pugetbench premiere pro definition: https://www.pugetsystems.com/labs/articles/PugetBench-for-Pr...?
https://i.imgur.com/dpBHGxN.png
Apple has never fibbed or bent the truth on their marketing benchmarks - and they have sandbagged before, the numbers have sometimes been higher than presented. They have nothing to be ashamed of here, this is an extravagant chip, it's twice the transistors of a 3090 to make your desktop 3060 ti / mobile 3080 run at 45W, and a near-fastest-in-market product in 15W for the CPU, enough to saturate the GPU for most things you'll want to do. In order to do that, they put the equivalent of an 8-channel DDR4 bus on it (it's 16-channel on DDR5 and DDR5 is significantly faster) and then used tiny LPDDR5 packages they could stack. Oh, and you can allocate any of the system RAM as VRAM, so you can do large-memory VRAM tasks like machine learning (albeit slowly of course - it's desktop 3060 Ti performance). For a portable workstation it actually pretty well owns.
Also the regular ol M1 had as much cache as a 9900K. For its 4 performance cores + 4 efficiency cores. The whole A15 design is just an extravagant display of transistors, Apple spared no expense, it's just a design exercise in "what if we built it ourselves and ran up the scoreboard and called that our 'external equivalent' expense". Apple will spend $300 to build the meme 5nm (nearly) icelake-SP-sized mobile workstation chip because a 5800H or 12Gwhatever would cost them $200 anyway and this thing dunks on those processors. Vertical integration matters at their scale, just like Google and Amazon and others.
With Zen4 on DDR5 and TSMC 5nm (actually N5P - it's a better node than what Apple is using for A15/M1) next year we'll see how true that actually is about it "all being node advantage".
I bet AMD can catch up to laptop-power-budget A16 (the next-gen Apple core that Zen4 will compete against - also on N5P) in performance with 142W PPT processors ("105W TDP") like their 5950X equivalent, I'm kinda doubtful they can close a factor-of-3 gap in perf/watt at laptop-level PPTs.
Yeah, Apple is clocking a lot lower and that's where some of the efficiency comes from... but look at the IPC difference here. They're matching processors that are running roughly twice as fast, at peak efficiency clocks. It's an insanely wide architecture, and it's hard to scale x86 like that - x86 instruction decoding has bad transistor-order-complexity for higher widths, due to variable instruction lengths and other problems. You can make all the execution units you want in the core, but it's hard to keep them fed if you can't decode enough instructions. x86 has already done a lot of the obvious tricks like instruction caching/etc.
Eh. Right now Apple is matching a (desktop) 5950X at laptop level TDPs - the iGPU is way lower than a desktop 3080 but so is a mobile 3080 at 115W. If you doubt that number, a Pugetbench result just showed up. TBH the specifics of the"which processor is 5% better than the other here" slapfight doesn't actually matter here, compared to the fact that Apple is doing it in what, 60W? And the AMD+NVIDIA system is using a 300-350W GPU and a 142W PPT CPU. Yeah, that's high-clocked kit, but with results like that there's zero reason to doubt Apple's claim of it beating a (mobile) 5800H (probably sustained 62W PPT) with a 115W mobile 3080.
M1 Max: https://www.pugetsystems.com/benchmarks/view.php?id=60176
Desktop 5950X/3080: https://www.pugetsystems.com/benchmarks/view.php?id=60613
pugetbench premiere pro definition: https://www.pugetsystems.com/labs/articles/PugetBench-for-Pr...?
https://i.imgur.com/dpBHGxN.png
Apple has never fibbed or bent the truth on their marketing benchmarks - and they have sandbagged before, the numbers have sometimes been higher than presented. They have nothing to be ashamed of here, this is an extravagant chip, it's twice the transistors of a 3090 to make your desktop 3060 ti / mobile 3080 run at 45W, and a near-fastest-in-market product in 15W for the CPU, enough to saturate the GPU for most things you'll want to do. In order to do that, they put the equivalent of an 8-channel DDR4 bus on it (it's 16-channel on DDR5 and DDR5 is significantly faster) and then used tiny LPDDR5 packages they could stack. Oh, and you can allocate any of the system RAM as VRAM, so you can do large-memory VRAM tasks like machine learning (albeit slowly of course - it's desktop 3060 Ti performance). For a portable workstation it actually pretty well owns.
Also the regular ol M1 had as much cache as a 9900K. For its 4 performance cores + 4 efficiency cores. The whole A15 design is just an extravagant display of transistors, Apple spared no expense, it's just a design exercise in "what if we built it ourselves and ran up the scoreboard and called that our 'external equivalent' expense". Apple will spend $300 to build the meme 5nm (nearly) icelake-SP-sized mobile workstation chip because a 5800H or 12Gwhatever would cost them $200 anyway and this thing dunks on those processors. Vertical integration matters at their scale, just like Google and Amazon and others.
With Zen4 on DDR5 and TSMC 5nm (actually N5P - it's a better node than what Apple is using for A15/M1) next year we'll see how true that actually is about it "all being node advantage".
I bet AMD can catch up to laptop-power-budget A16 (the next-gen Apple core that Zen4 will compete against - also on N5P) in performance with 142W PPT processors ("105W TDP") like their 5950X equivalent, I'm kinda doubtful they can close a factor-of-3 gap in perf/watt at laptop-level PPTs.
Yeah, Apple is clocking a lot lower and that's where some of the efficiency comes from... but look at the IPC difference here. They're matching processors that are running roughly twice as fast, at peak efficiency clocks. It's an insanely wide architecture, and it's hard to scale x86 like that - x86 instruction decoding has bad transistor-order-complexity for higher widths, due to variable instruction lengths and other problems. You can make all the execution units you want in the core, but it's hard to keep them fed if you can't decode enough instructions. x86 has already done a lot of the obvious tricks like instruction caching/etc.
Two reasons I respectfully disagree with you, the first more compelling than the second:
First, Apple has a history of dipping its fingers into several cookie jars simultaneously. They source from different suppliers to introduce supply chain redundancy and establish pricing power. This way, they ensure that a transition from a main supplier company to its competitor is always viable, because they build relationships and allow the competitor to generate enough revenue to stay active in that particular product segment. So even if Apple wants to make its own chips, it has a reason to do so at least in part with Intel as the IDM 2.0 push towards foundry becomes a reality.
Second, there are still some significant drawbacks to Apple's new machines. I want more external monitors, for one.
This is neither here nor there, but personally I think Apple should have spent $500 billion on its own chip fabrication infrastructure rather than doing share buybacks over the past ten years.
First, Apple has a history of dipping its fingers into several cookie jars simultaneously. They source from different suppliers to introduce supply chain redundancy and establish pricing power. This way, they ensure that a transition from a main supplier company to its competitor is always viable, because they build relationships and allow the competitor to generate enough revenue to stay active in that particular product segment. So even if Apple wants to make its own chips, it has a reason to do so at least in part with Intel as the IDM 2.0 push towards foundry becomes a reality.
Second, there are still some significant drawbacks to Apple's new machines. I want more external monitors, for one.
This is neither here nor there, but personally I think Apple should have spent $500 billion on its own chip fabrication infrastructure rather than doing share buybacks over the past ten years.
> Second, there are still some significant drawbacks to Apple's new machines. I want more external monitors, for one.
“ Overall, the new MacBook Pro with the M1 Pro chip supports up to two external displays with up to 6K resolution at 60Hz, while the new MacBook Pro with the M1 Max chip supports up to three external displays with up to 6K resolution and one external display with up to 4K resolution at 60Hz”
More than this?
“ Overall, the new MacBook Pro with the M1 Pro chip supports up to two external displays with up to 6K resolution at 60Hz, while the new MacBook Pro with the M1 Max chip supports up to three external displays with up to 6K resolution and one external display with up to 4K resolution at 60Hz”
More than this?
Curious that external monitors are capped at 60Hz for all M-series processors (i think? the note about the Max is ambiguous). Especially when the internal monitor is 120hz. Or maybe that’s not actually the limit?
They are capped at 60Hz at the resolution stated because the actual limiting value is the available bandwidth, and they are choosing to report the bandwidth in terms of "maximum 60Hz resolution".
If the limit is 6K at 60Hz, you'll be able to run 4K at >60Hz. My M1 MacBook Pro runs a 1440p monitor at 165Hz just fine over Thunderbolt 3.
If the limit is 6K at 60Hz, you'll be able to run 4K at >60Hz. My M1 MacBook Pro runs a 1440p monitor at 165Hz just fine over Thunderbolt 3.
We'll know for sure next week (or already just not me), but thunderbolt compliance means displayport compliance which means there should be no concerns along these lines. I'd be very pissed if I would be limited to 60 on these new machines.
The HDMI port can do 4K 60hz. The Thunderbolt ports should be able to do 6K 60hz or 4k 120hz.
Ah, thank you -- I feel like companies should publish a table of resolutions + refresh rates + number of displays to give you an idea of what's supported, instead of listing maximums that don't really capture the full picture.
Weird edge case, I know, but: using Thunderbolt 4, what is the maximum theoretical refresh rate I can get from a 480p display? 1000hz?
Weird edge case, I know, but: using Thunderbolt 4, what is the maximum theoretical refresh rate I can get from a 480p display? 1000hz?
Why does anyone need more than 60Hz? Isn't the difference imperceptible?
If you haven't experienced 120hz, don't. It spoils you. You can't see much of a difference, but you sure can feel the difference in how things move and react.
Experiencing 120+ Hz spoils you. That said, ask me to tell you which screen is 120hz and which one is 165hz in a blind comparison, coinflip. Versus 60hz, just scroll a web page and you'll know instantly.
Experiencing 120+ Hz spoils you. That said, ask me to tell you which screen is 120hz and which one is 165hz in a blind comparison, coinflip. Versus 60hz, just scroll a web page and you'll know instantly.
Yeah, the person you replied to really seemed to be grasping at straws there. How many laptops for sale now have this level of support for external monitors?
I’m not even sure if most PC laptops can drive a single 6K display at 60Hz.
The key question is whether the two legs should stay together. Even with excellent execution the risk is that x86 with its higher margins gets priority over the third party fab business which as a result remains uncompetitive.
Independent Fabs would be ultimately able to compete with TSMC on equal terms - in fact on better terms for some clients as based in US. The fabs would be a growth business and x86 a cash cow.
Going back in history the move which Grove is remembered for - ditching memories - was partly about improving focus. This strategy is doing the opposite.
Independent Fabs would be ultimately able to compete with TSMC on equal terms - in fact on better terms for some clients as based in US. The fabs would be a growth business and x86 a cash cow.
Going back in history the move which Grove is remembered for - ditching memories - was partly about improving focus. This strategy is doing the opposite.
"Revenue will shrink from $77.7B to ~$74B and gross margins will fall all the way to 51% to 53% for the next few years"
A far cry from betting the farm, really.
A far cry from betting the farm, really.
Gross margin of 52% of 74bln of revenue is 38.5 bln gross profit. You take out 6 bln SG&A expenses (this is about what they have been spending the last couple of years), 26.5 billion of capital expenditures and 15 billion of R&D you end up burning 9 billion dollars of cash for the year. If they actually pay their dividend, that will be another 5.5 billion for a total of about 14.5 billion dollars of cash used up. That is a very risky situation to be in. One hears about startups burning cash but not in the billions.
You have to ask Intel shareholders who have been used to a very reliable cash generating business that buys back a lot of shares, and pays nice dividends to use up 9 billion of their money in an year in the hopes that things turn around some time in the future.
I am not sure what exactly constitutes betting the farm, but they are getting into some very risky territory.
You have to ask Intel shareholders who have been used to a very reliable cash generating business that buys back a lot of shares, and pays nice dividends to use up 9 billion of their money in an year in the hopes that things turn around some time in the future.
I am not sure what exactly constitutes betting the farm, but they are getting into some very risky territory.
It is significantly less risky if you assume, safely I think, that the US will funnel subsidies towards Intel in an effort to redomesticate semiconductor manufacturing. Even more so if you believe, again rightly I think, that the US will deem Intel a national security asset and too important to fail.
I think Intel has some rough times ahead, but there are extra-market forces at work.
I think Intel has some rough times ahead, but there are extra-market forces at work.
There is certainly risk, but what kind of company would Intel be if they couldn't reliably deploy 9 bln in capital improvements over the course of the year to meet a quickly changing competitive landscape? Not a company I'd want to invest in...
How big is their war chest? $9B would literally be pennies on the dollar to a company like Apple (>$1T reserves?). I doubt Intel’s is that big, but it might be big enough not to worry investors too much.
34.5 bln cash 40 bln debt.
Apple has cash and cash equivalents of $40B in their latest quarter, far cry from $1T.
The thing with market cap is, most of it is decided by the last trade price, which can be very volatile. With deep order book on index and household name like Apple, that volatility doesn't show up until a black swan event like it did in March 2020.
The thing with market cap is, most of it is decided by the last trade price, which can be very volatile. With deep order book on index and household name like Apple, that volatility doesn't show up until a black swan event like it did in March 2020.
Sorry for some reason Apple’s market cap number popped into my head.
$9B is still small against Apple’s $200B, but fairly large against Intel’s $34B. So yeah I’d be scared.
$9B is still small against Apple’s $200B, but fairly large against Intel’s $34B. So yeah I’d be scared.
Apple has $200B, not $20B cash on hand.
From the horse's mouth.
https://www.apple.com/newsroom/pdfs/FY21_Q2_Consolidated_Fin...
https://www.apple.com/newsroom/pdfs/FY21_Q2_Consolidated_Fin...
One could count marketable securities as cash equivalents for the purpose of discussion here. They can be readily converted to cash on the time scale that is relevant to this thread.
No you can't, the ones that are considered equivalent are included in the line item for cash/cash equivalents.
marketable securities are volatile and don't hold their value exactly when there is a liquidity crisis. Even including these securities, totals to about $60B quite shy of either $200B or $1T
marketable securities are volatile and don't hold their value exactly when there is a liquidity crisis. Even including these securities, totals to about $60B quite shy of either $200B or $1T
These securities are marked to market, which means you can sell them for roughly that value over a reasonable amount of time. There's also 134B of non-current marketable securities based on the statements you cited, which brings the total to around $200B.
The equivalence standard you used is the accounting standard, which means you can get the exact amount in cash overnight if you so desire. It's too strict when considering what financial resources you have in making long term capital investments.
The equivalence standard you used is the accounting standard, which means you can get the exact amount in cash overnight if you so desire. It's too strict when considering what financial resources you have in making long term capital investments.
Why the focus on dividends? Nvidia doesnt pay jack and their stock and business seems to be doing fine
Paying good dividends is a way to make the stock attractive if you are already dominant in your market and investors do not see much room for growth.
betting the carpet in the house adjacent to the farm
That's actually abysmal considering how much the TAM will be growing in the next few years. Their stock price today reflects how abysmal this news is.
Speaking as a former fab manufacturing engineer (back when AMD had fabs): 5 nodes in 4 years, is extremely optimistic. As in, I don't think it's ever been done in the history of the industry.
On the other hand, several of those nodes have been running in production elsewhere for a while now, so it's not quite as crazy as it sounds. But, highly ambitious.
On the other hand, several of those nodes have been running in production elsewhere for a while now, so it's not quite as crazy as it sounds. But, highly ambitious.
It really comes down to the people, and well, Intel doesn't have the best people today. They had a massive brain drain and those people are not coming back anytime soon considering how well their stock is doing at competing companies.
Here's my worry with Intel - even if they get their fab to be competitive, they're still working against a market that's changing against them. The big players are all working on their own chips now and are pursuing SoC designs, rather than independent processors, and ARM seems to be the future trend.
Amazon has their own chips for their servers, Microsoft announced they're working on their own chips, Google just released their first consumer chip this week, and the M1 is crushing the competition.
I just don't see Intel succeeding with all of these things stacked against them. I hope they prove me wrong as more competition in the space is always good, but as it stands I'm not optimistic for their future.
Amazon has their own chips for their servers, Microsoft announced they're working on their own chips, Google just released their first consumer chip this week, and the M1 is crushing the competition.
I just don't see Intel succeeding with all of these things stacked against them. I hope they prove me wrong as more competition in the space is always good, but as it stands I'm not optimistic for their future.
As long as Intel is taking huge risks, they can also look for a blue ocean market. The common factor among all of these customers is that they are centralizing and privatizing their compute - therefore, rather than playing sycophant to the current market leaders, disrupt them. Go out swinging.
Intel has a long history of selling complete platforms, and they had a major role in disrupting computing in the microcomputer era; unlikely as it may seem right now, they have the power to turn the cloud story upside down and support repairability, client compute and decentralized systems through a radical new platform, with their new process nodes used as a hook. They may need to go lobby their case with governments to get some rule-making in place that drives a wedge in the existing monopolies, but they have the pockets to make a run at that, too, and it's a slam-dunk PR win to be seen protecting end users. Their endgame would be to once again sit at the top of the market, holding most of the customers, but it would be a very different market, and reflective of the kinds of broad transformations that are now happening to industry and supply chains across the global economy.
Intel has a long history of selling complete platforms, and they had a major role in disrupting computing in the microcomputer era; unlikely as it may seem right now, they have the power to turn the cloud story upside down and support repairability, client compute and decentralized systems through a radical new platform, with their new process nodes used as a hook. They may need to go lobby their case with governments to get some rule-making in place that drives a wedge in the existing monopolies, but they have the pockets to make a run at that, too, and it's a slam-dunk PR win to be seen protecting end users. Their endgame would be to once again sit at the top of the market, holding most of the customers, but it would be a very different market, and reflective of the kinds of broad transformations that are now happening to industry and supply chains across the global economy.
It seems like they would have to do a lot of things just right to succeed in that very specific scenario. In other words, highly unlikely that it will work.
Intel is unfortunately another IBM/HP at this point. They will likely continue to exist in some form but their glory days are behind them.
Intel is unfortunately another IBM/HP at this point. They will likely continue to exist in some form but their glory days are behind them.
There is no fab capacity to replace Intel, regardless of the relative performance of in house chip designs. In addition Intel itself is reserving capacity on TSMC's most advanced node.
Yeah, this is a big factor. Everyone and their dog wants to design their own chips and fab them at TSMC, but it's simply not going to happen.
They're all working on their own chips because there isn't a viable server ARM chip. I suspect they'd happily buy something like an M1 off-the-self it if existed. Even if the demand for SoCs goes up, Intel could play that market, too. And they have fabs that could compete with TSMC. The questions are mainly can they ramp up fab tech, ramp up CPU tech, and are they open to more custom hardware.
> They're all working on their own chips because there isn't a viable server ARM chip.
AWS Graviton 2 ARM instances offer better performance/price than their intel instances. Does that qualify as viable? Or do you mean AWS has to make their own because there isn't one "off the shelf"?
AWS Graviton 2 ARM instances offer better performance/price than their intel instances. Does that qualify as viable? Or do you mean AWS has to make their own because there isn't one "off the shelf"?
> Or do you mean AWS has to make their own because there isn't one "off the shelf"?
This was what I meant. In this case, AWS is selling general-purpose compute, so there's minimal iDevice full stack synergy, and they're just looking for performance, power use, and total cost.
This was what I meant. In this case, AWS is selling general-purpose compute, so there's minimal iDevice full stack synergy, and they're just looking for performance, power use, and total cost.
You do know that AWS Graviton is based on Arm Neoverse cores which is absolutely a viable Arm server core.
Intel is an ARM licensee, and has made and can make their own ARM architecture based chips, if that's what the market wants.
They sold XScale to Marvell many years ago.
Intel isn't betting the farm. It's doing the bare minimum to build infrastructure that it will almost certainly need due to the demand created by massive shifts in the ways that we work, learn, and communicate.
These companies care a ton about how long it takes for capital expenditures to bear fruit. Semi fab is one of the longest-term investments in the technology industry. Even a company as large and established as Intel still thinks like a company, not a government.
Why is there a disincentive to spend on long-term investments? Look at INTC stock today and you'll understand.
These companies care a ton about how long it takes for capital expenditures to bear fruit. Semi fab is one of the longest-term investments in the technology industry. Even a company as large and established as Intel still thinks like a company, not a government.
Why is there a disincentive to spend on long-term investments? Look at INTC stock today and you'll understand.
Interesting to compare to an innovator in this space like Nvidia, who is matching their hw expansion investments (arm, mellanox, .. : growing portion of the hw platform) with sw investment (deep learning, rapids etl stack, solution verticals, ...). Instead, Intel seems to be competing with... themselves and AMD?
On the one side, it's heartening to see the investment, but on the other... surprising to not see any aggressive market-making / market-winning moves. $40B buys a lot of PhDs.
On the one side, it's heartening to see the investment, but on the other... surprising to not see any aggressive market-making / market-winning moves. $40B buys a lot of PhDs.
Intel is in manufacturing. Nvidia isn't.
Intel can do whatever it wants... and it chose this.
Ultimately it sells chips and services for running software. Nvidia originally made chips for video games, now it is part of self-driving cars, data centers, and even genomics. They are one of the biggest AI powerhouses now and not by accident. Google and other hyperscalar sw+hw seems to be competing more w Nvidia than Intel at this point.
AMD way underinvested relative to Nvidia and we saw how that played out - I'm surprised Intel is doing the same. This stuff isn't secret.
Ultimately it sells chips and services for running software. Nvidia originally made chips for video games, now it is part of self-driving cars, data centers, and even genomics. They are one of the biggest AI powerhouses now and not by accident. Google and other hyperscalar sw+hw seems to be competing more w Nvidia than Intel at this point.
AMD way underinvested relative to Nvidia and we saw how that played out - I'm surprised Intel is doing the same. This stuff isn't secret.
Intel was the leader in process technology. It was reasonable that they wanted to reserve the leading edge for their own higher maigin products. What happened was that smart phones eventually generated much higher volume than PCs, which gave TSMC the gross margin dollars to leapfrog in process tech. Meanwhile with less volume to amortize capital cost, Intel was conservative with EUV lithography. For a while they were actually hoping to get Nikon to be an ASML competitor in EUV. But to their advantage Moore's law has slowed down. They are still competitive in density, but they need to catch up on power consumption. This whole competitive dynamics is rather dissimilar to Nvidia's.
I'm not saying throw out the business. But when most of it's revenue is selling chips for devices and data centers, and they are losing revenue despite strongly expanding markets, it's crazy to me that the main innovation investments are to double down on more of what isn't growing.
Competing chip makers are showing how to grow on worse process technology by investing in software codesign and vertical codesign -- smarter designs, heavy compilers, heavy ai, heavy solutions, and going hard on the bigger markets within that. Likewise, the Google hw moonshots are more interesting in practice and scale, afaict. Intel knows this, and I'm sure there are clever internal proposals for other orthogonal approaches. But like AMD, even if that stuff is happening, these statements suggest it will be without muscle.
This is like a worse repeat of how they approached the rise of mobile devices. I want them to do well, it's frustrating to see them under leverage so much $ and talent year after year when everyone else is doing so well.
Competing chip makers are showing how to grow on worse process technology by investing in software codesign and vertical codesign -- smarter designs, heavy compilers, heavy ai, heavy solutions, and going hard on the bigger markets within that. Likewise, the Google hw moonshots are more interesting in practice and scale, afaict. Intel knows this, and I'm sure there are clever internal proposals for other orthogonal approaches. But like AMD, even if that stuff is happening, these statements suggest it will be without muscle.
This is like a worse repeat of how they approached the rise of mobile devices. I want them to do well, it's frustrating to see them under leverage so much $ and talent year after year when everyone else is doing so well.
Yes it was a mistake to go after wireless instead of GPGPU, which is an area that they could utilize their existing strength. But it would have taken foresight. Before 2012 Nvidia's gross margin was significantly lower than now. The graphics card business was not attractive. The demand from AI training wasn't apparent. By the time it became apparent Intel was aleady falling behind on process technology, which they must focus on now. Certainly from the architecture side if they can innovate on the integration of NN acceleration with their CPU and enable an open ecosystem of compilers they could regain some lost ground.
I don't think it was a mistake to go after mobile in general as much as in how in how they went after it. Apple, Google, Samsung, etc. approached the market differently so while most people talk about Intel messing up on the hw chip design, my meaning is they messed up the sw + vertical strategy for how to work with the market. I can imagine a world where they made made their own phone, OS, etc... just not with the current culture. If it was OK for a search engine + ads company to make their own phone designs + TPUs + OS + marketplace + apps + ..., why wasn't it for Intel?
Building slightly better chips with light software support is 80s/90s thinking. They missed the wave in mobile, and I don't see the new CEO doing anything about using their position or $ to start competing differently. Jensen is inspiring in that he doesn't fight the last decade's battle: their architectures etc. keep getting better, but just as important, the market approach keeps evolving too.
Building slightly better chips with light software support is 80s/90s thinking. They missed the wave in mobile, and I don't see the new CEO doing anything about using their position or $ to start competing differently. Jensen is inspiring in that he doesn't fight the last decade's battle: their architectures etc. keep getting better, but just as important, the market approach keeps evolving too.
The software stack story is amazing at nvidia for sure
How has Moore's law slowed down? All the data I've seen says it's right on track and projected to continue too. Do you mean a coloquial version of it that's about performance?
Won't happen without attracting the best engineers, many of whom could be making a lot more elsewhere. So far, it looks like Pat has brought a bunch of old timers out of retirement, but I haven't heard of his plan to attract fresh blood. Recent grad compensation is abysmal.
The article is incorrect. The author has likely confused GAAP vs non GAAP revenue when he talks about a decline.
2021 revenue projection is 73.5B, while 2022 is projected to be 74B.
Checkout the official earnings report. https://d1io3yog0oux5.cloudfront.net/_150ab36dee7b2e1e66231d...
2021 revenue projection is 73.5B, while 2022 is projected to be 74B.
Checkout the official earnings report. https://d1io3yog0oux5.cloudfront.net/_150ab36dee7b2e1e66231d...
Only 52% gross margins? Oh, poor Intel. Boohoo.
I guess that's "poor" for the board members. But, since the new CEO is an engineer, I have high hopes for Intel. I've always liked Intel, and I think they finally realize that they need to invest more and push more to compete against AMD.
Gonna be interesting to see what comes out over the next several years.
I guess that's "poor" for the board members. But, since the new CEO is an engineer, I have high hopes for Intel. I've always liked Intel, and I think they finally realize that they need to invest more and push more to compete against AMD.
Gonna be interesting to see what comes out over the next several years.
That same new CEO was at VMware and let's just say the results were beyond underwhelming as they missed the entire move to the cloud.
I think it's a classical case of Christensen's innovators dilemma. Public clouds were/are an existential threat to their core business of selling expensive vsphere licenses for on-prem enterprise computing.
Indeed, that and the fact that they actually attempted to create a public cloud (vCloud air) and failed. Nobody remembers it, and for good reason!
IMHO, Intel has a very safe position for the next few years.
First, it's a seller's market, there's no one who can replace Intel's chip output. They could have stayed on 14nm and still sell all their stock. Second, the US government is clearly not liking where the chip market is, and is going to spend a lot Intel's way. So income is guaranteed for that time.
The real threat is in the longer term. If the company loses technical relevance entirely, and loses marketshare enough the market can replace them. Then the US gov pulls away and Intel becomes Via or GlobalFoundries.
The current strategy is exactly the right one to prevent that: spend their current capital to be more competitive and regain marketshare. Meanwhile open up the foundry - both to be more receptive to external developments, and get easy money in the car sector.
IMHO, there's no reason Intel can't pull this off. Unless management is entirely oblivious, and this one doesn't appear to be. Intel's scale is large enough to innovate, and they've had fat years to build up a cash reserve even before Uncle Sam gives an infusion.
The previous position is unattainable, but Intel can remain a major player in the years ahead.
First, it's a seller's market, there's no one who can replace Intel's chip output. They could have stayed on 14nm and still sell all their stock. Second, the US government is clearly not liking where the chip market is, and is going to spend a lot Intel's way. So income is guaranteed for that time.
The real threat is in the longer term. If the company loses technical relevance entirely, and loses marketshare enough the market can replace them. Then the US gov pulls away and Intel becomes Via or GlobalFoundries.
The current strategy is exactly the right one to prevent that: spend their current capital to be more competitive and regain marketshare. Meanwhile open up the foundry - both to be more receptive to external developments, and get easy money in the car sector.
IMHO, there's no reason Intel can't pull this off. Unless management is entirely oblivious, and this one doesn't appear to be. Intel's scale is large enough to innovate, and they've had fat years to build up a cash reserve even before Uncle Sam gives an infusion.
The previous position is unattainable, but Intel can remain a major player in the years ahead.
Frankly, I don't get why people are still rooting for the literal evil that is Intel. These guys did everything in their power to halt progress and milk everyone for as long as possible. They should've paid 10x in dages for what they did.
I know the Stockholm syndrome is real but try to not fall for this guy's bullshit.
I know the Stockholm syndrome is real but try to not fall for this guy's bullshit.
To be fair they contribute a lot to open source. I think the fact they have fallen behind so much actually shows they were struggling to improve. In comparison Nvidia's GPUs just always seem to be one generation ahead of AMD...
Part of the issue is that they become a literal blue chip company which means paying a dividend and not focusing on growth. It creates a different company culture that can be hard to get out of.
Part of the issue is that they become a literal blue chip company which means paying a dividend and not focusing on growth. It creates a different company culture that can be hard to get out of.
I think you're being too fair and intentionally sugar coating their recent history. Intel spent about a decade extorting money from a captive market after nearly killing AMD due to all sorts of illegal practices.
It's hilarious how releasing the same product for a decade translates to "struggling to improve" all while making more and more money each quarter.
I'll leave this here for you and the people who are downvoting me just in case you're not simply fanbois.
https://jolt.law.harvard.edu/digest/intel-and-the-x86-archit...
It's hilarious how releasing the same product for a decade translates to "struggling to improve" all while making more and more money each quarter.
I'll leave this here for you and the people who are downvoting me just in case you're not simply fanbois.
https://jolt.law.harvard.edu/digest/intel-and-the-x86-archit...
OpenCV is a technology that Intel open sourced, right? that tech would in itself suffice to prove the point - iirc
This is really the only viable long-term strategy for Intel to return to sustainably profitable margins. The key question is whether the support of the board will waver in a few years when the going gets tough but they need to keep pouring capital into risky long-term investments which won't yet have begun to pay off.
Hopefully its not too late.
Didn't Intel sell their farm? To Samsung wasn't it?
Bezos should buy the top say 6 levels of Intel management, and give them a new company whose sole focus is to keep any further advances in space travel from happening. That seems to be a high priority goal for him, and if the Intel folks can make the business pivot that's their jam just in a different market segment.
The only way to extract any of the value still extant inside Intel, that I can imagine, is a deep breakup where the resulting entities are small, focused, single purpose shops... In other words, I don't see a way. Some Liquidation / Firesale move would be better and keep the foreign companies off the first auction.
Bezos should buy the top say 6 levels of Intel management, and give them a new company whose sole focus is to keep any further advances in space travel from happening. That seems to be a high priority goal for him, and if the Intel folks can make the business pivot that's their jam just in a different market segment.
The only way to extract any of the value still extant inside Intel, that I can imagine, is a deep breakup where the resulting entities are small, focused, single purpose shops... In other words, I don't see a way. Some Liquidation / Firesale move would be better and keep the foreign companies off the first auction.
> Didn't Intel sell their farm? To Samsung wasn't it?
no
>The only way to extract any of the value still extant inside Intel
Intel is still a massive company with fabs in a world with chip shortages. If your car chips that aren't available such that they're shutting down car factories, are then made on 14nm+++ no one should be concerned.
Intel has plenty of runway to come back to competitiveness.
no
>The only way to extract any of the value still extant inside Intel
Intel is still a massive company with fabs in a world with chip shortages. If your car chips that aren't available such that they're shutting down car factories, are then made on 14nm+++ no one should be concerned.
Intel has plenty of runway to come back to competitiveness.
Intel has two legs. Intel microarchitecture business competes with fabless AMD, Apple, Nvidia, ARM, Qualcomm. And Samsung. Intel's chip manufacturing competes only with TSMC and Samsung in the high-end.
Intel has always been the first and foremost chip manufacturing process company. Intel was founded by chemists. The competitiveness of x86 didn't come from superior chip architecture. It came from superior manufacturing and volume. There is the more expected value in risking the whole company and betting everything on high-end fabs, process technologies R&D than just competing with fabless. High risk, high reward.