Why Were Investors Surprised at Intel’s Fiscal 4Q15 Earnings?
Longer node life
So far, we’ve seen that Intel (INTC) has posted conservative guidance for fiscal 2016 due to macroeconomic weakness. It has also delayed the launch of the 10-nm (nanometer) due to technical complexities that arise with every shrink in the node. As the tick-tock technology cycle slows, it’s reducing the company’s technology advantage over its competitors.
Intel versus Taiwan Semiconductor Manufacturing
So far, Taiwan Semiconductor Manufacturing (TSM) has been behind Samsung and Intel in introducing smaller nodes. The foundry is ramping up production of 16-nm technology. Looking at the company’s technology roadmap, it’s investing heavily in future nodes. In its fiscal 4Q15 earnings call, TSM president and co-chief executive officer Mark Liu stated that the company’s research is progressing on 10-nm, 7-nm, and 5-nm technology, with volume production planned in 2017, 2018, and 2020, respectively.
Intel versus AMD
Advanced Micro Devices (AMD), Intel’s only competitor in the server and PC (personal computer) processor market, has been struggling to make its mark in the server space with its 20-nm chips. The company has signed a deal with Samsung (SSNLF) and Global Foundries to produce its chips on 14-nm. Intel’s Xeon chips are currently being built on the 14-nm node.
Intel versus Qualcomm
Qualcomm (QCOM), a dominant player in ARM- (Advanced RISC Machines) based mobile chipsets, is looking to diversify into the server space. The company is eyeing China (FXI), which is expected to be the second-largest server market. It has formed a joint venture with the Guizhou Province government for server chip technology licenses.
The conflict between the United States and China over IP (intellectual property) stealing has created a challenge for Intel to tap the Chinese server market. The United States blocked $1 billion worth of Intel’s Xeon orders. Intel has thus started collaborating with Tsinghua University to protect its server market in China.
If Intel doesn’t compete in terms of node, it will compete in terms of architecture-driven metrics such as performance/$ and performance/watt.
Intel versus Apple
Even in terms of architecture, Intel is slowly witnessing an increase in competition. Smartphone giants such as Apple (AAPL), who were once Intel’s customers, are now becoming its competitors. Apple has started developing processors in-house. AnandTech analyzed Apple’s latest A9X chips and stated that its processing power and performance are close to that of Intel’s chips.
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