Intel profit sinks 27% on dreadful PC sales

[Arachnotronic]

The first true answers to the ARM problem, Haswell and Silvermont, don't debut until next year.

Welcome to 2013, my friend! Haswell and Silvermont are confirmed to be this year

 

[Homeles]

Welcome to 2013, my friend! Haswell and Silvermont are confirmed to be this year

Eh, doesn't it take 20 something days to build a habit? I'll blame it on that.

 

[Haserath]

Eh, doesn't it take 20 something days to build a habit? I'll blame it on that.

It's also January 20th in most parts of the world.

 

[NTMBK]

It should. Everyone forget their 22nm announcement presentation back in May of 2011? Where they showed big gains in low voltages but smaller gains in high?

No, you are right, the 35W will have gains, but it'll be smaller than ever. Just like there's almost no reason to use desktop parts rather than mobile extreme parts that perform so close but use 30W less. With 22nm it'll be much easier for them to make ULT parts.

Price difference there is too, but it'll be much less than Ivy Bridge(I'm not talking about list pricing), because greater volume will be there. Also even on a same process, Ivy Bridge is a straight up porting to 22nm, while I assume Haswell will change it up a bit to be better fit for it.

An announcement from 2011 would surely relate to any process developments which have already been implemented by 2013... and we're not seeing miraculous high Ivy Bridge low voltage yields, meaning I don't expect to see miraculous Haswell low voltage yields on the same 22nm process.

 

[nature1ders]

Intel will be fine for now, when AMD perfects their APU lineup in a few generations they will take the lead and pcie graphics cards may be dinosaurs. Intel will fall apart then.

 

[Revolution 11]

Intel will be fine for now, when AMD perfects their APU lineup in a few generations they will take the lead and pcie graphics cards may be dinosaurs. Intel will fall apart then.

And Intel will just stand still and twiddle their thumbs, right?

 

[IntelUser2000]

An announcement from 2011 would surely relate to any process developments which have already been implemented by 2013... and we're not seeing miraculous high Ivy Bridge low voltage yields, meaning I don't expect to see miraculous Haswell low voltage yields on the same 22nm process.

Like I said, don't matter. Because Haswell is a Tock, something that's designed for 22nm, rather than mostly a straight port like Ivy Bridge. They don't tell you nitty gritty details about what kind of circuits they changed until well into the product's lifecycle. Some circuits that are good in certain process may not be the most optimal when the characteristics change.

Intel's 45nm had thick on-die interconnects to enable Power Gating. They did not use it on Penryn, they waited until Nehalem.

If Intel wants to push the ULT chips, they WILL change whatever necessary to get it viable. Like I said, in Broadwell, SV dual core parts completely disappear. And in Haswell, dual core SV parts are the latest to arrive out of all the parts. If that's not de-emphasis, I don't know what it is.

 

[IntelUser2000]

And Intel will just stand still and twiddle their thumbs, right?

That's the logic of a illogical fanboy. They believe their beloved will plow forward while rest of the world has their time frozen.

 

[Borealis7]

going back to the original topic...
decline in profits doesn't stop Intel from giving it's employees a 2.6 monthly salary bonus.
last year (record year) it was 3 salaries, tough times indeed.

 

[pablo87]

In further news:

http://news.yahoo.com/intel-may-little-choice-big-manufacturing-bet-212103968--finance.html



"Intel may have little choice in big manufacturing bet

Intel Corp's decision to spend $13 billion in 2013 to develop and build future manufacturing technology has not gone down well on Wall Street but it may be necessary if it wants to stay on top of rivals in coming years.

The top chipmaker's shares slumped nearly 7 percent on Friday, a day after executives said the company would increase 2013 capital spending from an already dizzying $11 billion.

Some analysts decried the move, saying adding new capacity should be far from Intel's mind in a waning personal computer market. Increased spending may further pressure margins and leave Intel with even more idle capacity if PC sales keep falling.

But others believe that Intel's top priority must be maintaining its technological edge, a costly but necessary endeavor that may even pay off in the long run with market share gains. Moving up the technology ladder can also deliver cost savings, helping safeguarding Intel's margins as it tries to catch up to rivals in smartphones and tablets.

"That's the bet they're making and they're all in," said Sanford Bernstein analyst Stacy Rasgon. "If you stop, TSMC and Samsung close the gap - and you're toast."

Of Intel's $13 billion capex this year, $2 billion will go toward expanding a fabrication plant, or fab, in Oregon where engineers will work on a long-term plan to manufacture microchips on silicon wafers measuring 450 mm - about the size of a large pizza.

The other $11 billion goes toward more immediate improvements in Intel's manufacturing technology, letting it build chips over the next two or three years with features measuring just 14 nanometers, and then 10 nm. The narrower the features, the more transistors can fit on a single chip, improving performance.

The newest fabs currently use 300 mm wafers, about the size of a vinyl record. Moving up in size will make room for more than twice as many chips to be etched on each, leading to cost savings.

Lowering costs will be a serious priority for Intel as it ventures into the tablet and phone markets, where chips sell for much less than in the PC industry. Intel, which has yet to make meaningful progress in mobile, stresses that its most advanced fabs have the lowest cost per chip produced.

"One of reasons why Intel is so aggressive on capital spending is to maximize the chances it has of protecting its gross margins as it moves into smaller and lower priced CPUs," Longbow Research analyst JoAnne Feeney said.

SPENDING SPREE

Intel is not the first tech company to worry Wall Street with aggressive long-term investments whose payoffs are difficult to estimate.

Investors in the past have criticized Amazon.com Inc for splurging on costly warehouses and other shipping facilities, investments that eventually paid off and contributed to rich stock valuations.

While the size of Intel's capex increase alarmed investors, the chipmaker since 2011 has been spending heavily. Intel normally pours 12 to 16 percent of its revenue into capex, but spending has been closer to 20 percent in the past two years and will probably be higher this year, Feeney estimated.

The costs of developing the new technology to use 450 mm fabs are so high that just a few companies, such as Intel, Samsung Electronics and Taiwan's TSMC, are expected to have the scale to make the jump worthwhile. Building 450 mm plants from the ground up is expected to cost $10 billion or more.

It's not just a matter of creating bigger silicon wafers. Most of the high-tech equipment - sold by the likes of Applied Materials - used in chip manufacturing has to be redesigned as well.

The transition from 300 mm to 450 mm is so expensive and complicated that the world's biggest chipmakers and tool makers are collaborating to establish new standards and timing new technology.

Intel made a $3 billion strategic equity investment last year in chip equipment supplier ASML to help fund the development of future lithography tools for 450 mm fabs, a move followed by rivals Samsung and TSMC.

Intel's Oregon plant will lead the effort to produce chips on 450 mm wafers, with other larger Intel plants upgraded in the future, Chief Financial Officer Stacy Smith told Reuters on Thursday.

Rasgon said Intel's long-term investments in manufacturing will mean more pressure on its margins over the next few years, but that its spending will help ensure it remains a major player in the chip industry over the next decade - though there's no guarantee.

"If there's any company I can look at five years from now, they'll be here and they'll be really successful at whatever they're doing. But I don't know what they'll look like," Rasgon said.

"They have to do this, but it doesn't mean I want to own the stock while they're doing it.""

My sentiment almost exactly.

 

[King4x4]

I think the current trend in hardware is to increase efficiency until the software catches up.

A normal person won't care if it takes 5 seconds more to finish a task but he cares more about his battery running out and with the current market shaking things up and no real software to use the hardware coupled with poor market makes people keep their Core 2 Duo for the time being.

 

[djgandy]

Funny how AMD manages to remain fairly competitive at certain levels even though intel outspends them by many billions every year. Ditto vs Nvidia. Makes you wonder just how far ahead they'd be had intel not had the $5 billion+ they used to bribe Dell and others.

Intel is getting ready to self destruct. They were too late to tablets and too late to phones and their entire business philosophy is a decade out of date.

Are you serious? AMD doesn't even have fabs any more. Intel isn't a one trick pony like AMD, their Capex is more than just CPU/GPU design.

Do you not remember when AMD aquired ATI? $5.6 BILLION! And that is what happens when you make poor investments (And also when your CEO is a complete moron).

$2.5B profit, yes a clearly broken business model.

The hilarious thing is that people moan that Intel won't innovate if AMD aren't around yet now people are saying Intel is screwed because they are increasing CapEx so that they can innovate faster and thus deliver better products. Which way do people want it?

 

[djgandy]

In the semiconductor industry, not having available capacity when you need it is far worse than having capacity that is underutilized.

Indeed, AMD know this only too well.

 

[mrmt]

Do you not remember when AMD aquired ATI? $5.6 BILLION! And that is what happens when you make poor investments (And also when your CEO is a complete moron).

Money is a limiting factor for any company, no matter how big it is.

Having the money at hand is part one of the problem. There are some companies that simply lack the cash generation capacity to develop their projects. You can think here of AMD. AMD has a serious cash problem now, in a few years down the road the company tends to be less relevant than it is today simply because it can't muster enough money to keep them in the front pack.

Investing money is problem 2. In a perfect world, no company would have significant cash reserves as they would always invest in profitable business opportunities. As we don't live in a perfect world, we have companies returning cash to investors (Intel) or sitting in huge piles of cash (Apple). And why companies do that? Because one thing number one is having cash, thing number two is find a place to put cash that will generate sufficient returns to the shareholders.

But to not have new business opportunities isn't the worst thing that may happen to a company. There is nothing worse than delusional, trigger-happy management at the helm of a big company. Just look at AMD or GM. When they had cash at hand AMD decided to give the deal of one life to ATI shareholders, and GM decided that they could be a mini-welfare state inside the US. Management raison d'etre is to manage the company's cash, to decide where the cash will go, stay or leave, and for this sole reason they are one of the most important parts of a company.

What the market is freaking out about Intel is that the company is investing an even bigger amount of money and they see no perspective of added returns in the future. Does this mean that Intel is doomed? No, but it means that the market does not share Intel perspectives about the future of their business, because either Intel didn't disclose their baseline scenarios for those results or because market disagrees with the outlined outcome.

Either way, nobody is really criticizing Intel management about the due direction, but about the pace in which the way should be walked.

 

[nature1ders]

And Intel will just stand still and twiddle their thumbs, right?

Well no lol but I can't see how they'll catch up with their weak IGP at this point while AMD has diverted massive resources into retooling their chipset to work with better an better IGP's. Time will tell

 

[ShintaiDK]

Well no lol but I can't see how they'll catch up with their weak IGP at this point while AMD has diverted massive resources into retooling their chipset to work with better an better IGP's. Time will tell

Working better with chipsets? Please explain.

AMD is running on fumes. Not many resources to allocate.

 

[insertcarehere]

Well no lol but I can't see how they'll catch up with their weak IGP at this point while AMD has diverted massive resources into retooling their chipset to work with better an better IGP's. Time will tell

Except Intel has been improving it's IGPs at a much quicker pace than AMD has over the past few generations.

 

[Idontcare]

Welcome to the forums insertcarehere :thumbsup:

 

[SiliconWars]

Except Intel has been improving it's IGPs at a much quicker pace than AMD has over the past few generations.

It's easy to catch up on somebody when they have a wall in front of them.

AMD's IGP simply demolishes intels, however it's so badly bandwidth constrained it can't stretch its legs. The actual graphical cores are further ahead than ever.

 

[R0H1T]

Except Intel has been improving it's IGPs at a much quicker pace than AMD has over the past few generations.

You do realize that AMD IGP's suffer inherently due to bandwidth constraints & what not ! In a couple of years when DDR4 becomes mainstream AMD will have the lower end of the desktop market all to itself, provided they don't go bankrupt, not to mention their GPGPU strategy & GCN cores will pretty much obliterate anything Intel has or will develop at that point in time !

 

[Homeles]

The actual graphical cores are further ahead than ever.

I don't think so. I'm a big fan of GCN, but Intel hasn't put more emphasis on graphics to no avail. Intel's catching up.

 

[R0H1T]

I don't think so. I'm a big fan of GCN, but Intel hasn't put more emphasis on graphics to no avail. Intel's catching up.

Well that's because Intel keeps on slapping more EU's on their chips, nearly doubling them each gen, so its not like they're greatly optimizing its performance &/or efficiency just moar cores like PowerVR on ARM !

 

[Homeles]

Well that's because Intel keeps on slapping more EU's on their chips, nearly doubling them each gen, so its not like they're greatly optimizing its performance &/or efficiency just moar cores like PowerVR on ARM !

You obviously have not heard of Ivy Bridge, then.

 

[SiliconWars]

Intel has a massive advantage due to a much more gamey cpu core and a process node lead, but AMD still has some 2x perf/watt lead in graphically demanding games, even though they are bandwidth constrained. On a graphic core level there is just no contest.

 

[Homeles]

AMD is definitely ahead, but that has nothing to do with the fact that Intel is actually now caring about their graphics performance. Expect that gap to close.