Question Intel Q2 Results - Terrible

[jpiniero]

https://d1io3yog0oux5.cloudfront.net/_0f37de80c52d83ac6338b4805dea84aa/intel/db/887/8856/earnings_release/Q2+22_EarningsRelease+%281%29.pdf

Revenue down 22%.

Edit: Oh and it gets better... Intel posted a loss!

 

[maddie]

Is the problem of making smaller manufacturing processes for semi-conductors so difficult, that maybe only a handful of people on the planet are capable of it and Intel doesn't currently have any of these people?

I have tried to ask this question before and maybe I didn't word it correctly, but the answers I got were that getting the manufacturing processes right is just a matter of the right management and being sufficiently resourced. Maybe that use to be the case, is it still?

Considering for how long Intel has had issues with their fab processes, from once being an untouchable leader to now being behind TSMC, what explains this?

Surely Intel have thrown insane amounts of money at their fab processes and revamped the teams working on the fab processes, but they seem stuck in limbo, barely able to progress in a timely manner.

So do TSMC have a couple of geniuses in the field of semi-conductor manufacturing that Intel lack and that is making all the difference?

Individuals DO matter in all cutting edge fields. To put another way, pioneers can be considered to be at least lesser geniuses. I think Intel got too political. When you have an established successful organisation running well, cunning political players can often inject themselves in the system and benefit from the inertia of success for a while but unless this is corrected, failure always happens, We see it in all parts of our society. Politics, sports, tech companies, media companies, schools, whatever, you name it. One enabling factor is that the truly gifted players mostly stay away from political games and often lose these battles. BS is too boring for them.

My view anyway, I've seen it too many times. Can't build anything themselves but very good at taking over success.

 

[Exist50]

Individuals DO matter in all cutting edge fields. To put another way, pioneers can be considered to be at least lesser geniuses. I think Intel got too political. When you have an established successful organisation running well, cunning political players can often inject themselves in the system and benefit from the inertia of success for a while but unless this is corrected, failure always happens, We see it in all parts of our society. Politics, sports, tech companies, media companies, schools, whatever, you name it. One enabling factor is that the truly gifted players mostly stay away from political games and often lose these battles. BS is too boring for them.

My view anyway, I've seen it too many times. Can't build anything themselves but very good at taking over success.

As a corollary, when a company becomes so successful it either doesn't have or doesn't see itself as having competition, then the competition becomes other internal teams. You get people reinventing the wheel rather than working with their own colleagues, and in the most extreme cases actively sabotaging the efforts of others. Sears is basically a case study in the damage this behavior can cause when allowed (or encouraged) to run wild.

 

[shady28]

Is the problem of making smaller manufacturing processes for semi-conductors so difficult, that maybe only a handful of people on the planet are capable of it and Intel doesn't currently have any of these people?

I have tried to ask this question before and maybe I didn't word it correctly, but the answers I got were that getting the manufacturing processes right is just a matter of the right management and being sufficiently resourced. Maybe that use to be the case, is it still?

Considering for how long Intel has had issues with their fab processes, from once being an untouchable leader to now being behind TSMC, what explains this?

Surely Intel have thrown insane amounts of money at their fab processes and revamped the teams working on the fab processes, but they seem stuck in limbo, barely able to progress in a timely manner.

So do TSMC have a couple of geniuses in the field of semi-conductor manufacturing that Intel lack and that is making all the difference?

If Intel can get Intel 4 shipping more or less on time, the answer to that would be no. They tried to use existing DUV equipment to get to Intel 7, it took a long time but they did it. They had 7nm chips taped out in 2017 using EUV, but didn't want to spend the money on the new equipment, so went this route. They are basically doing the same thing TSMC is doing with EUV while using older DUV equipment.

I also don't think people realize how good Intel's 14nm was. It really was significantly better than what other fabs were calling 12nm or 16nm, and apparently the yields were almost perfect. The bean counters that ran Intel were in no rush to leave that node. It created a "technology debt" of sorts that they're now paying for.

 

[mikegg]

I don't want to say "I told you so" but I have been pointing out for the last year or two that Intel has terrible progress/competitiveness in server, and even desktop is weak, and I said it will eventually catch up to them. Well, this is the first evidence that I was right.

FYI, most people saw this coming from miles away. This is why Intel's stock P/E ratio has been so low for so long. I'm pretty sure most people in enthusiast market saw this coming too. They've been boosted by COVID chip demands but once that came off, it was going to get ugly for Intel.

Now we have to see if Intel's strategy can work going forward and if they can get back to executing. Right now, everything gets delayed for them.

 

[mikegg]

How can it be growing a lot while its down 15% Y/Y ????

Edit: And I am sure AMD and EPYC are cutting out their share. When we see AMDs numbers soon, it will be clear.

I don't think it's just AMD. Big cloud companies have been making their own chips.

Alibaba Cloud, which was a big Intel/AMD customer, is now well on its way to using inhouse ARM chips.

AWS owns 33% of the cloud market. In 2020, they said Graviton2 accounted for 50% (Anandtech source) of all new EC2 instances. It's almost 2023 and Graviton3 is out. I'm almost certain that Graviton now accounts for 70%+ of all new EC2 instances. This means the market for both AMD and Intel are shrinking.

.33 * .70 = 0.231

In other words, Intel and AMD lost 23% of the cloud market from Graviton alone. You can bet that AWS is going all in on Graviton. Pretty sure x86 chips will only be offered for legacy apps or apps that look for very specific performance profiles. Most server workloads will have better perf/$ using Graviton.

Both AMD and Intel will suffer this. But AMD's earnings report might still be good because they have much better server products than Intel right now.

I expect AMD to not have Intel's issues last quarter. However, I expect AMD to reduce its server growth projections.

 

[maddie]

If Intel can get Intel 4 shipping more or less on time, the answer to that would be no. They tried to use existing DUV equipment to get to Intel 7, it took a long time but they did it. They had 7nm chips taped out in 2017 using EUV, but didn't want to spend the money on the new equipment, so went this route. They are basically doing the same thing TSMC is doing with EUV while using older DUV equipment.

I also don't think people realize how good Intel's 14nm was. It really was significantly better than what other fabs were calling 12nm or 16nm, and apparently the yields were almost perfect. The bean counters that ran Intel were in no rush to leave that node. It created a "technology debt" of sorts that they're now paying for.

Intel 7 is a rebranded 10nm and is DUV ~= to TSMC 7nm also DUV.

 

[pakotlar]

FYI, most people saw this coming from miles away. This is why Intel's stock P/E ratio has been so low for so long. I'm pretty sure most people in enthusiast market saw this coming too. They've been boosted by COVID chip demands but once that came off, it was going to get ugly for Intel.

Now we have to see if Intel's strategy can work going forward and if they can get back to executing. Right now, everything gets delayed for them.

Ah yes investors act with such great rationality. Our great philosophers who focus on 3 month returns.

 

[TheELF]

You are missing the point. Q1 was not good, Q2 for them was terrible, and the real problem is that they have no products (server and hedt mostly) to compete with AMD, who for the last 2 quarters was bringing home the cash in huge numbers. If AMDs Q2 report that comes out Tuesday is better than their Q1, its a trend, and not a good one for Intel. With no competing parts until at least 2024, Intel will keep losing market share and money until that time.. I have no idea what 2024 will bring at this point.

And AMD has not enough product to compete...
AMD made 16.4 bil revenue the full last year which was the best year for AMD ever and includes a healthy GPU segment during a mining boom and all the console sales where ms sony don't have a choice, intel made 15.3 bil in this terrible quarter alone.
(the 16 bil are divided 9bil for client/GPU and 7 for enterprise)

who for the last 2 quarters was bringing home the cash in huge numbers.

Huge numbers for AMD are still one third of a terrible quarter for intel.

�

AMD Quarterly Revenue (Millions of US $)
2022-03-31	$5,887
2021-12-31	$4,826

 

[TheELF]

I'm well aware of all that. TheElf was responding claiming IDM is not about Intel designs which is obviously wrong, Intel designs of course are still part of IDM. It's IFS which is not about Intel designs but fabbing designs of others. That IDM is essentially Intel's new overarching business plan of which IFS is a part of is obvious, but that shouldn't change that CHIPS support goes only to the IFS part.

Well, from the things I read it looked like it's only about fabbing.

 

[Vattila]

They should add a requirement that the money is for foundries only, not IDM, to require Intel to decide whether they want to spin off the fabs and get money, or keep everything in house and do it on their own.

Fully agree. I think this is the inevitable destination for Intel as a manufacturer — Pat Gelsinger has already laid out clear plans for IFS to be an independent unit — but it will take time, I guess. Intel's factories will produce mostly Intel products for a long time yet.

Speculation: Intel will become fabless

With the ongoing 10nm debacle at Intel, what does the future hold for them as an chip manufacturer? Is the integrated business model sustainable? At heart, is Intel a product designer or a manufacturer? Let us assume, for this discussion, that Intel has lost its manufacturing lead for a...

forums.anandtech.com

 

[moinmoin]

Well, from the things I read it looked like it's only about fabbing.

I'd suggest to watch the short video on that page (it has good subtitles). It's significantly more clearer than the text on the same page for some reason.

 

[desrever]

Intel's roadmap is BS. Their node jumps are never going to work. They have 1 product for each of the node jumps to cram nodes in short period but it will never work cause you need volume to bring a process up to production and if only 1 project is going to be made on each node, they will never have the volume to fine tune it. It will just be a mess of delays and low yeilds for each and every node. They might expect that IDM2.0 will save them but they are already floundering on their own, why would anyone trust them with any leading edge manufacturing?

My predictions is that it will be a long way for intel to fall for the next 5 years.

 

[maddie]

Intel's roadmap is BS. Their node jumps are never going to work. They have 1 product for each of the node jumps to cram nodes in short period but it will never work cause you need volume to bring a process up to production and if only 1 project is going to be made on each node, they will never have the volume to fine tune it. It will just be a mess of delays and low yeilds for each and every node. They might expect that IDM2.0 will save them but they are already floundering on their own, why would anyone trust them with any leading edge manufacturing?

My predictions is that it will be a long way for intel to fall for the next 5 years.

Sure makes for fantastical marketing for the dumb & dumber crowd. Isn't this the modern world?

 

[shady28]

And AMD has not enough product to compete...
AMD made 16.4 bil revenue the full last year which was the best year for AMD ever and includes a healthy GPU segment during a mining boom and all the console sales where ms sony don't have a choice, intel made 15.3 bil in this terrible quarter alone.
(the 16 bil are divided 9bil for client/GPU and 7 for enterprise)

Huge numbers for AMD are still one third of a terrible quarter for intel.

�

AMD Quarterly Revenue (Millions of US $)
2022-03-31	$5,887
2021-12-31	$4,826

To your point, this is also not just about Intel.

Intel has its problems with their current position, but the entire client market also just puked in the first half of 2022.

I've read about server market projections showing growth there, but it's worth noting that actual server shipments began to decline in 2021. I haven't found anything on actual server shipments for 2022, but I'd bet if they didn't already fall they are falling now. I don't think it was just the consumer that pulled purchases forward in 2020.

 

[pakotlar]

To your point, this is also not just about Intel.

Intel has its problems with their current position, but the entire client market also just puked in the first half of 2022.

I've read about server market projections showing growth there, but it's worth noting that actual server shipments began to decline in 2021. I haven't found anything on actual server shipments for 2022, but I'd bet if they didn't already fall they are falling now. I don't think it was just the consumer that pulled purchases forward in 2020.


View attachment 65217

I will be very surprised if AMD hits numbers like they did in Q1 2022. It would be great if they’re impervious to the market forces that are hurting Intel, but I’m not holding my breath.

 

[jpiniero]

To your point, this is also not just about Intel.

Intel has its problems with their current position, but the entire client market also just puked in the first half of 2022.

Most of that is Chromebooks which Intel owns more or less. That being said OEMs may have cut orders anticipating future reductions in demand.

 

[moinmoin]

I will be very surprised if AMD hits numbers like they did in Q1 2022. It would be great if they’re impervious to the market forces that are hurting Intel, but I’m not holding my breath.

The thing about AMD's growth so far is that its supply so far was dwarfed by the market demand, to the point AMD was essentially able to plan a steady high growth since it knew it wouldn't be able to satisfy all demand for quite some time to come despite all the growth. Now that market demand is going down, also for AMD, but when will AMD hit the point its supply matches or surpassed the actual demand? I think that's still off for some time, especially with the next gen of server chips being around the corner.

The hard thing for Intel is that it comes from the opposite end: It can't really gain market shares. It would need to expand the market itself. But the market is shrinking instead, while Intel is losing market share on top of it.

 

[shady28]

Most of that is Chromebooks which Intel owns more or less. That being said OEMs may have cut orders anticipating future reductions in demand.

That was the narrative spun in Q1. It fell apart in Q2. Gartner and IDC have both been slashing their estimates.

From Apple's breakdown in earning (Apple, doesn't make Chromebooks) :

• Mac: $7.3B, down from $8.2B in year-ago quarter

 

[Markfw]

I will be very surprised if AMD hits numbers like they did in Q1 2022. It would be great if they’re impervious to the market forces that are hurting Intel, but I’m not holding my breath.

Well, in about 24 hours we will know quite a few answers. I will not comment further until that happens.

 

[maddie]

That was the narrative spun in Q1. It fell apart in Q2. Gartner and IDC have both been slashing their estimates.

From Apple's breakdown in earning (Apple, doesn't make Chromebooks) :

• Mac: $7.3B, down from $8.2B in year-ago quarter

A lot of people are going to be predicting the future after it has happened.

 

[jpiniero]

That was the narrative spun in Q1. It fell apart in Q2. Gartner and IDC have both been slashing their estimates.

From Apple's breakdown in earning (Apple, doesn't make Chromebooks) :

• Mac: $7.3B, down from $8.2B in year-ago quarter

Tim Cook said that they were capacity constrained for Mac and iPad because of lockdowns in Shanghai to the point where they couldn't "test demand" (his words)

 

[shady28]

Tim Cook said that they were capacity constrained for Mac and iPad because of lockdowns in Shanghai to the point where they couldn't "test demand" (his words)

Has this been your observation, that people wanted Macbook Pros and Macbook Airs that they couldn't find?

Hasn't been mine.

People, especially CEOs, say things.

 

[mikegg]

That was the narrative spun in Q1. It fell apart in Q2. Gartner and IDC have both been slashing their estimates.

From Apple's breakdown in earning (Apple, doesn't make Chromebooks) :

• Mac: $7.3B, down from $8.2B in year-ago quarter

It's different for Apple. First, they had huge Macbook Pro supply issues. Customers were waiting 2 - 6 months for their Macbook Pro orders. Second, people held off on buying the M1 Macbook Air so they can buy the M2 Macbook Air which doesn't factor into Q2.

I think if Apple didn't have any supply issues, they would have surpassed last year.

 

[Doug S]

Tim Cook said that they were capacity constrained for Mac and iPad because of lockdowns in Shanghai to the point where they couldn't "test demand" (his words)

Apple has already stated on more than one occasion that when parts were in shortage they were prioritizing iPhone manufacturing over iPad and Mac, so it makes sense that iPad and Mac were the products seeing the declines.

Presumably the same is true for capacity issues in shipping etc. caused by the lockdowns.

 

[IntelUser2000]

According to this article, "Gelsinger was pushed out in 2009 after he was blamed for the failure of Larrabee, an Intel effort to create a GPU that every analyst said was doomed to failure and not his fault. He did a three year stint as COO of EMC before taking over VMware in 2012."

Yes so successor to Otellini was supposed to be Sean Maloney. Not an engineer but was responsible for beinging up the idea of WiFi and pushing it and he saw mobile as a future and also came with the idea of Ultrabooks. Then, it was announced that he had a stroke. Later you learn that he had to retrain one side of the brain. That's how we got Brian Kraznich.

Gelsinger was the youngest Inteler to become CTO but after the Larrabbe debacle he got fired. Corporate verbioge is always half truth but anyone who followed Intel closely enough knew otherwise. Like how no one who knows Intel believed the reason for Kraznich being fired.* The board was likely disappointed with him for some time, but the relation thing provided an excuse for them to fire him. The board was part of the problem and most of the problematic members are gone now.

Maloney then to Gelsinger would have been a natural fix for the company in an hypothetical reality.

*These companies provide lavish parties for their customers and partners after press conferences like CES and IDF, and often sexual in nature. So you have to be also naive to believe the CEO of a multibillion dollar company would get fired for private relations with an employee. Like the rumor is that with some elite clubs they entice you to try doing immoral things? They obviously have no such boundaries but if you succumb to it, the society won't look kindly upon you so they can use that fact later to blackmail you into submission.

Is the problem of making smaller manufacturing processes for semi-conductors so difficult, that maybe only a handful of people on the planet are capable of it and Intel doesn't currently have any of these people?

Sorry to be blunt but you are very mistaken. They had everything in the right place. They likely still have the puzzle pieces to do so again.

Like I say time and time again: It's not about technology and knowledge but people and relationships.

Your knowledge and the intellect you have is worth little if you can't talk to people and have good relationships with them. Their failures are all mismanagement, and culture related which are all parts of relationships. You won't get hired if the hiring guy doesn't like you, simple as that. Because with us humans it's about the spirit of cooperation where the magic really happens. At their peak they treated fabrication vendors like crap. So they started not wanting to work with them. Or the reports that neither Kraznich nor Murthy could hold their temper and their screams were heard from a neighboring campus.

Your morale, spirit and thus the will to do better will fall very quickly.

Intellectual property, tools, patents, and ideas are perishable. It's people that make and create them.