News Intel 2Q24 Financial Results

[Hitman928]

Quick tidbits from the call:

1. Lunar Lake fabrication was "almost entirely outsourced".
2. On-package memory also will hurt Lunar Lake margins.
3. Biggest CCG margin killer: Meteor Lake was designed to ramp on Oregon fabs. But Intel made a late-breaking switch to Ireland fabs: problematically, Ireland fabs have "a much higher wafer cost" and costs will stay higher in the next quarter.
4. A lot of would-be 18A customers were waiting for the PDK and did not necessarily commit.

Needless speculation: which CPUs are made in Intel's Oregon fabs? ...13th gen CPUs with via oxidation problems?

Now that I've read through the transcript, here's my updated takes on these points:

1. Nothing new to add.
2. CFO said that they are offering the on package memory at cost so that hurts margins. Still seems weird that they can't get accretive margins out of the package as a whole. I really don't understand their play here. They say there is a lot of interest for LNL, so they are going to be going much higher volume than originally planned, but at the same time, saying it's a very expensive part and will hurt margins. I could understand a volume play if it was made in house, but being on TSMC, I don't see the logic? Maybe ARL isn't getting the interest they had hoped for?
3. OK, for this one, it's not that Ireland has much higher wafer costs in general, it's that ramping the production in Ireland sooner than expected is causing a short term increase in wafers costs. Basically, they had planned a transition from production in Oregon to Ireland in a certain time frame, but then the demand for MTL was higher than expected, so they accelerated the time frame and ramped Ireland quicker than expected, which is causing higher wafer costs. Most likely yield issues related to trying to ramp Ireland more quickly than planned.
4. Pat reiterated that their prior $15B in lifetime deals for the fab is still in place, but that most of the money is on the packaging side right now. I know the PDK for 18a (or at least some updates customers were waiting for) was delayed and combine that with the comments from the call about at least a portion of the reduced CapEx being due to installing less equipment than originally planned for customer production, it seems to me that 18a isn't drawing in as many customers as they had initially hoped.

 

[Joe NYC]

The US would destroy Taiwan? That seems unlikely, if that's the plan then Taiwan needs to seriously reconsider our "defense" partnership

US destroying TSMC (on the way out) would destroy Taiwan economy.

It doesn't matter if not even a firecracker fell on TSMC property, the fabs would be useless to China because ASML will not provide support for the equipment. Without that support, they are unusable.

The fabs would be fine for a decade, and ASML would continue to sell to TSMC (under China), or otherwise, the West would lose ASML too (due to bankruptcy).

ASML was just about to rebel and disregard orders from Washington DC, prior to DC softening the latest (proposed) sanctions / restrictions on selling to China.

 

[Hitman928]

That’s consistent with what I wrote. Oregon will run some volume of new nodes shortly after development but the goal is to get it outsourced to another Intel fab as quickly as possible.

I guess the only point of contention is that I didn't see anything about MTL-R (i.e., Intel 3) production being part of the equation at this point. It's a minor point though as the overall picture is the same either way.

 

[jpiniero]

I don't see the logic

I think Lunar is a CEO special because of the obsession with Apple. I know Apple doesn't matter anymore and it's all AI but that wasn't the case when they started.

 

[Abwx]

If needed, HUBRIS on Intel's tombstone will be sufficient. Ruiz at AMD was the same.

Not comparable at all, Ruiz had to face massive briberies from Intel to keep OEMs from using AMD CPUs, btw Gelsinger was at Intel at the time, so rather than building competence they relied on corruption, that s why they are bad managers at Intel, they never faced a truly competitive market.

 

[Joe NYC]

Good? Capex goes back to CPU aka buy piles of Turin-Dense. Next.

Apparently today, Cramer read from research note by Stacy, which said there are people having discussions about Intel as a "going concern".

No, it's bold bets misfiring.
Real men have fabs! turns out fabs are very expensive.

And the possibility that Intel runs out of money before the fab(s) are completed, and there is no way to raise more money.

 

[AdamK47]

Yes "boomers" don't bring anything to a company. What an utterly stupid generalization. I guess you live in your mom's basement.

I would be saving so much money if I lived in my boomer mother's basement.

She would have to evict all of the spiders currently using the basement as their home first by either getting me or hiring a company to do it. She likes to micromanage and tell people how things should be done. Constantly changing plans while others are in the middle of their work. Feeling like she is contributing something meaningful but in actuality dragging productivity down. Kinda like what the leadership at Intel has been doing.

 

[Josh128]

Those "some people" knew most of the engineers and their morale. That's why they said what they said to Keller. You think Keller would send out a survey asking each engineer what they really thought about AMD getting back to top?

No, Im just reading what was written and not speculating or embellishing about what wasnt. Mike Clark was, and still is, the most important engineer when it comes to Zen, not Keller, despite what people like to think. Thats straight from Papermaster and Lisa Su's mouths. And the story goes that he was confident they could do it.

 

[igor_kavinski]

@AdamK47 , get that Maingear delidded 14900KS PC and an Intel ARC A770 16GB LE (this one from eBay probably). These might soon be Collector's Items!

 

[igor_kavinski]

No, Im just reading what was written and not speculating or embellishing about what wasnt. Mike Clark was, and still is, the most important engineer when it comes to Zen, not Keller, despite what people like to think. Thats straight from Papermaster and Lisa Su's mouths. And the story goes that he was confident they could do it.

Keller is more an "engineering teams" manager than a "get down and dirty himself" engineer in all the roles he's been in, at least in the past decade. It was his leadership that mattered more than his engineering skills in these roles and allowed him to gain the recognition of being an absolute rockstar. He could have done the same for Intel if they had let him. Unfortunately, they didn't want some outsider telling them EXACTLY what they should do. That Intel didn't choose him as their CEO and instead went after one of their former employees for the role talks volumes about their obsession with the "Not Invented Here" (NIH) Syndrome.

 

[AdamK47]

@AdamK47 , get that Maingear delidded 14900KS PC and an Intel ARC A770 16GB LE (this one from eBay probably). These might soon be Collector's Items!

Nah

 

[Nothingness]

Not comparable at all, Ruiz had to face massive briberies from Intel to keep OEMs from using AMD CPUs, btw Gelsinger was at Intel at the time, so rather than building competence they relied on corruption, that s why they are bad managers at Intel, they never faced a truly competitive market.

Intel tried similar tricks in the smartphone/tablet markets. But they failed miserably.

That said I'm not sure Gelsinger had anything to do with Intel pushing AMD aside the way they did. But I'm likely naive.

 

[Doug S]

The fabs would be fine for a decade, and ASML would continue to sell to TSMC (under China), or otherwise, the West would lose ASML too (due to bankruptcy).

ASML was just about to rebel and disregard orders from Washington DC, prior to DC softening the latest (proposed) sanctions / restrictions on selling to China.

Fine for a decade? Do you have any idea how much support EUV scanners need? They wouldn't run for more than a few weeks before needing their next service, which would not be forthcoming.

And I think you misunderstand ASML to be a company that's entirely independent of the US. That's not the case at all. EUV scanners are fantastically complex, and ASML has a network of dozens of major and hundreds of minor suppliers. A not insignificant number of those suppliers are based in the US. If the US government cuts those suppliers off from ASML, then ASML can't make any more EUV scanners, and can't keep the ones they have in the field running indefinitely either.

If China is bound and determined to take Taiwan - to the point where they decide they are OK with killing a LOT of people (which I don't believe they are, they think of Taiwan as being sort of "lost brothers" not "the enemy") then the US can't stop them. Or rather won't, because we won't intervene directly which would start WW III. But the US can and will insure that China doesn't realize much in the way of economic gains from such an endeavor. China would probably suffer economically at least as much as the west, because their huge trade surplus would disappear overnight. They'd strengthen Japan, South Korea, and India, three geopolitical rivals they would prefer not be stronger.

 

[Abwx]

Intel tried similar tricks in the smartphone/tablet markets. But they failed miserably.

That said I'm not sure Gelsinger had anything to do with Intel pushing AMD aside the way they did. But I'm likely naive.

No CEO take decisions in isolation and Gelsinger was a main manager, so he was not only aware but also approved this wrongdoing, indeed he wasnt a mature guy, i mean one should really be childish to do things like this :

The second line is Pat Gelsinger's password captured by an Intel rep playing a hacker during a security demo at today's keynote

IDF Fall 2006 - Day 2: Opteron vs. Xeon, SSE4 & Intel's Torrenza competitor Announced

www.anandtech.com

Guess that currently he hate them for good as his worst nightmare, lol.

 

[igor_kavinski]

That said I'm not sure Gelsinger had anything to do with Intel pushing AMD aside the way they did. But I'm likely naive.

I don't think anyone at Intel can survive without having their DNA mutate into being a little bit crooked.

Spoiler: Time for another story, folks!

True story: When I was about 15 or 16, we were visiting my father's friend who's a doctor and has a small hospital. He knew a lot of people from all walks of life because of course people want to be well acquainted with a doc with a hospital. So he comes out and looks at me with a glint in his eye and says to me, "Today's your lucky day! The regional Intel manager is here and I'm sure you would love to meet him!". I got excited too because what an opportunity this was! I eagerly go into the room where he's sitting and it's an old man about 60 or 65 and he seems decent enough in his conversation. He talked a bit about different stuff unrelated to PCs and then the host sensing that I was getting restless and impatient, introduced me as a "computer genius" to him (that's what I get when that's the only topic that gets me to open my mouth in most social situations). The Intel guy seems pleased and talks a bit about the stuff he is responsible for and what not and then boasts that Pentium 4 was the first 64-bit CPU in the world. Of course that was complete crap at that time coz AMD had come out with Athlon 64 earlier. I try to correct him and he tries to shut me down with some "adult" talk on how he knows more than me. And then I go into a tirade telling him about all the PC mags I read and all of them would contradict him on the point he was trying to make. He mutters something and gets up all offended and leaves the room. The doc just looks at me with surprise and says to me, couldn't you have just kept quiet and respected him coz of his age??? I was like, "He was telling a COMPLETE LIE!". The doc looked at me and shook his head like saying to himself, "See how far you get in life by calling people liars to their faces". Anyway, the point is, if an Intel regional manager was a complete buffoon, imagine the other people above and below him!

 

[bigboxes]

 

[inf64]

INTC is down a massive 41% in the last 16 days. Insane drop, although all tech stocks took a hit.

 

[poke01]

INTC is down a massive 41% in the last 16 days. Insane drop, although all tech stocks took a hit.

Not all I think Apple was the only tech stock that was stable or went up a bit.

 

[Joe NYC]

Here is a week wrap up on tech stocks earnings. Covers Intel, Qualcomm and AMD.

https://twitter.com/x/status/1819373742579208625

 

[reaperrr3]

She likes to micromanage and tell people how things should be done. Constantly changing plans while others are in the middle of their work.

Jensen has a tendency to do that too sometimes, so that alone isn't necessarily a negative (if the person doing it has a certain level of competence).

 

[adamge]

I don't think anyone at Intel can survive without having their DNA mutate into being a little bit crooked.

Spoiler: Time for another story, folks!

True story: When I was about 15 or 16, we were visiting my father's friend who's a doctor and has a small hospital. He knew a lot of people from all walks of life because of course people want to be well acquainted with a doc with a hospital. So he comes out and looks at me with a glint in his eye and says to me, "Today's your lucky day! The regional Intel manager is here and I'm sure you would love to meet him!". I got excited too because what an opportunity this was! I eagerly go into the room where he's sitting and it's an old man about 60 or 65 and he seems decent enough in his conversation. He talked a bit about different stuff unrelated to PCs and then the host sensing that I was getting restless and impatient, introduced me as a "computer genius" to him (that's what I get when that's the only topic that gets me to open my mouth in most social situations). The Intel guy seems pleased and talks a bit about the stuff he is responsible for and what not and then boasts that Pentium 4 was the first 64-bit CPU in the world. Of course that was complete crap at that time coz AMD had come out with Athlon 64 earlier. I try to correct him and he tries to shut me down with some "adult" talk on how he knows more than me. And then I go into a tirade telling him about all the PC mags I read and all of them would contradict him on the point he was trying to make. He mutters something and gets up all offended and leaves the room. The doc just looks at me with surprise and says to me, couldn't you have just kept quiet and respected him coz of his age??? I was like, "He was telling a COMPLETE LIE!". The doc looked at me and shook his head like saying to himself, "See how far you get in life by calling people liars to their faces". Anyway, the point is, if an Intel regional manager was a complete buffoon, imagine the other people above and below him!

I will say, the story checks out with your forum persona.

 

[Doug S]

then boasts that Pentium 4 was the first 64-bit CPU in the world. Of course that was complete crap at that time coz AMD had come out with Athlon 64 earlier

That's funny because it was probably not even among the first dozen 64 bit CPUs

 

[Hitman928]

I think Lunar is a CEO special because of the obsession with Apple. I know Apple doesn't matter anymore and it's all AI but that wasn't the case when they started.

Even if that is true, why not charge more for the product that is supposed to be a premium, Apple quality product and supposedly has high demand, so that it can be a positive add to your margins?

 

[adamge]

MLID is going through the ten stages of grief over the demise of Intel. He's at the anger stage right now. He also led off with a product cancellation announcement.

 

[jpiniero]

Even if that is true, why not charge more for the product that is supposed to be a premium, Apple quality product and supposedly has high demand, so that it can be a positive add to your margins?

Market too crowded with expensive laptops that consumers don't want to pay for but OEMs go REDACTED over it because AI?