[Verge] Intel revenues down 5%

[NTMBK]

http://www.theverge.com/2012/10/16/3513140/intel-q3-2012-earnings

Nothing to worry about yet, but clearly Intel aren't enjoying the same "boom times" they used to.

 

[Idontcare]

This is right on the eve of Windows 8 launch. Most people looking to upgrade or purchase new hardware that can defer the purchase until the end of October.

I doubt Win8 is going to spur additional sales itself, not above the sales of Win7 boxes that were going to happen had Win8 not been launching this year, but it will certainly have a delaying effect on the market.

Win8 has been hyped a lot this year, even my otherwise totally tech ignorant family has asked me what all the talk is about in relation to Win8. A certain percentage of folks are going to hold off and that impacts both Intel and AMD.

The problem here is Microsoft. Who the hell plans (and let's people know in advance) for a major OS release to occur after the fall's back-to-school upgrade season is over? Win8 needed to be released in June-July for the otherwise seasonally strong Q3 to have not been impacted by deferred purchasing.

 

[Nemesis 1]

http://www.theverge.com/2012/10/16/3513140/intel-q3-2012-earnings

Nothing to worry about yet, but clearly Intel aren't enjoying the same "boom times" they used to.

With Intels phones and tablets reaching the market , I will wager that Next year is new records in every Qt, When 22nm Soc phone is released Intel WILL have the top performing chip and will push apple hard to make a decision . Lets see if apple repeats the mistakes of the past.

 

[Olikan]

With Intels phones and tablets reaching the market , I will wager that Next year is new records in every Qt, When 22nm Soc phone is released Intel WILL have the top performing chip and will push apple hard to make a decision . Lets see if apple repeats the mistakes of the past.

apple is well known to realise worse products, for higher prices and sell unbeliable well...

intel will give a hard time to samsung and etc...because they are not cool

 

[frozentundra123456]

This is right on the eve of Windows 8 launch. Most people looking to upgrade or purchase new hardware that can defer the purchase until the end of October.

I doubt Win8 is going to spur additional sales itself, not above the sales of Win7 boxes that were going to happen had Win8 not been launching this year, but it will certainly have a delaying effect on the market.

Win8 has been hyped a lot this year, even my otherwise total ech ignorant family has asked me what all the talk is about in relation to Win8. A certain percentage of folks are going to hold off and that impacts both Intel and AMD.

The problem here is Microsoft. Who the hell plans (and let's people know in advance) for a major OS release to occur after the fall's back-to-school upgrade season is over? Win8 needed to be released in June-July for the otherwise seasonally strong Q3 to have not been impacted by deferred purchasing.

Personally, I just bought a desktop partly because my old one was having problems and was not worth fixing to me, and partly to get it BEFORE Win 8 came out. That said if I were interested in a laptop or convertible, I would have waited for Win 8. However, even then unless I really needed the device badly, I would also wait for Haswell and more refined implementations of Win 8.

 

[Nemesis 1]

apple is well known to realise worse products, for higher prices and sell unbeliable well...

intel will give a hard time to samsung and etc...because they are not cool

Ya and have you discussed intel atom in phones befor now? When? I would ike to see those comments forsure. I know I have not changed my tune on intel SOC in phones. Likely the only person here saying sooner than later all the while.

 

[pelov]

I doubt Win8 is going to spur additional sales itself, not above the sales of Win7 boxes that were going to happen had Win8 not been launching this year, but it will certainly have a delaying effect on the market.

It hasn't nor will it. The retail channels are expecting lower sales than Q4 of last year. Considering we're supposed to be seeing a whole slew of Win8 devices, hybrids, tablets, etc. in Q4 this year then that dip from last year doesn't make any sense. Not unless Intel/MS are willing to admit that Win8 isn't as interesting to consumers as the Win7 and the crappy products they had last year at this time.

The story Intel and MS have been claiming just doesn't add up. It explains Q3 and even Q2 to an extent, but a weak Q4, the first quarter of Win8's release with all of the products that come with it? That sounds like nobody was anticipating Win8 to me.

 

[Nemesis 1]

Personally, I just bought a desktop partly because my old one was having problems and was not worth fixing to me, and partly to get it BEFORE Win 8 came out. That said if I were interested in a laptop or convertible, I would have waited for Win 8. However, even then unless I really needed the device badly, I would also wait for Haswell and more refined implementations of Win 8.

Ya I had to pay for both my SB and IB , My wife got a free SB how ever . I haven't seen Robert in 6 months . He is in china. I talked to him last week . Says he will be home for Xmas and is bringing me a gift I will love .... I can only hope.. I not picking on you . I just noted your join date and would like to see any commits you made befor the fact rather than after the fact ,

 

[sandorski]

This shows that AMD's falloff isn't necessarily the result of its' Product lines.

 

[Genx87]

AMD's revenue was down about 9% for the same group(consumer). I think mobiles, ultra mobiles, tablets, and smartphones are starting to leave their mark. I dont think Win8 will be the boom these companies are looking for. It is a mish mash of touch and traditional GUI. I think it has the potential to make Vista look like a success.

 

[Dribble]

I think win 8 will come out and then we'll get lots of articles about how it didn't lead to a big sales boom for pc's, and how people are still buying tablets and phones.

Admittedly it doesn't help that it sucks for old fashioned pc's/laptops - I have actively been advising people not to get it - but even if it was good people are still more interested in the next smart phone/tablet then they are in the next windows OS. PC's are becoming like household appliances - people have a fridge, a freezer, a laptop - and none of them get replaced unless they really have too. All the expendable cash goes on trendy gadgets.

 

[NTMBK]

Ya I had to pay for both my SB and IB , My wife got a free SB how ever . I haven't seen Robert in 6 months . He is in china. I talked to him last week . Says he will be home for Xmas and is bringing me a gift I will love .... I can only hope

6 months? Pretty rough, man. Hope you have a good Christmas.

 

[ShintaiDK]

A little hidden factor. The number 8 is a lucky number in Japan, China etc.

 

[nemesismk2]

This shows that AMD's falloff isn't necessarily the result of its' Product lines.

I agree

 

[pelov]

Intel Corp. on Thursday reported its financial results for the third quarter of the year. Even though the company retained profitability, its sales were down 5% year-over-year and the outlook for the ongoing quarter the company provided points to continued issues with demand for personal computers. Nonetheless, the company is on track to start production of next-generation Haswell microprocessors in Q4 2012.

"Our third-quarter results reflected a continuing tough economic environment. The world of computing is in the midst of a period of breakthrough innovation and creativity. As we look to the fourth quarter, we're pleased with the continued progress in ultrabooks and phones and excited about the range of Intel-based tablets coming to market," said Paul Otellini, president and CEO of Intel.

Intel reported third quarter revenue of $13.5 billion (down 5% year-over-year), operating income of $3.8 billion (down 20% compared to the year ago quarter), net income of $3.0 billion (14% lower than a year ago) and EPS of $0.58 (down 11% year-over-year). For the fourth quarter of 2012, the world's largest chipmaker expects revenue of $13.6 billion ± $500 million and gross margins of around 57%~58%.

So margins are down over 5% and sales of x86 and PCs are supposed to continue to look bleak, despite a brand new operating system and all of its accompanying devices.

To respond to a weaker than expected demand environment, Intel has taken several actions. In particular, the chipmaker substantially cut wafer starts at its factories in late Q3 2012 and intends to maintain lower factory utilization rates throughout the fourth quarter. Intel projects these factory adjustments to help bring down its total inventory levels by approximately $500 million. At the same time, Intel stressed that despite of lower demand for PCs, it will start initial volume manufacturing of its next-generation Haswell central processing units this quarter, which will cause an uptick of inventory levels.

"We expect an increase in inventory reserves as we start production on our next-generation micro architecture product code-named Haswell, which we expect to qualify for sale in the first quarter of 2013," said Stacy Smith, chief financial officer of Intel.

At present Intel still does not specifically reveal when does the Haswell chips and products on their base are scheduled to hit the market. The company only claims that the first Haswell-based systems will be available in the first half of the year.

And they've been preparing for this since Q2. No, not by ramping up production for Win8 convertibles and Ultrabooks, but by decreasing it. If there were ever a sign that Intel needs to divorce Microsoft, this is it.

http://www.xbitlabs.com/news/cpu/di..._Haswell_Chips_in_Q4_Despite_Slow_Demand.html

It shows that no matter how good your chips are, if consumers have moved on to another segment of the market, you'd better follow and be ready to compete. If that means embracing lower prices and pandering to Apple and Google, then that might be what Intel need to do.

 

[pelov]

The answer it seems may not be good. Intel’s Q3 results are only half of the news today; the other half of that news is Intel’s projections and planned actions for Q4. Intel has taken an unusually conservative stance on Q4, projecting that both revenue and their all-important gross margin will be down in Q4 of 2012 as compared to 2011. Specifically, Intel is projecting that their gross margin will be 57%, as compared to their incredible 65.5% gross margin from last year. On a quarterly or even yearly basis this would be a major shift for Intel, and it is a strong indicator that the weakness in the PC market will hurt Intel by more than just reducing their net income a bit like what happened in Q3.

This brings us to Intel’s unexpected revelation during their earnings call and the primary reason we're covering this: idle fabs and inventory buildups. Due to a buildup in inventory and a desire to prevent further buildup in what Intel is projecting to be a weak quarter, Intel will be taking the unusual step of letting quite a bit of fab capacity go idle. For Q4 Intel’s fab utilization will be sub-50%, with that being a combination of capacity idled to keep supply down and another fraction idled for the upgrade to 14nm. Because Intel would rather have too much capacity than too little they routinely take fab capacity idle for both production purposes and upgrade purposes – i.e. the 14nm downtime would need to happen regardless – but it’s very rare for Intel to let utilization fall below 50% like this.

Rolling this back into Intel’s finances, Intel’s incredible gross margins hinge on running their fabs at as close to full capacity as possible. So while idle fab capacity is still better than an inventory glut (or price cuts), it’s not without consequences. The consequences being Intel’s relatively low gross margin forecast for Q4, which if it comes true would be Intel’s lowest gross margin since 2009 at the end of the recession.

On that note, perhaps the cruelest part of this is that because Intel’s overcapacity appears to be at 22nm – Intel’s standing inventory is nearly 70% Ivy Bridge – Intel’s options are to produce Ivy Bridge or go idle. Atom is still built on Intel’s older 32nm process, so even if Intel is in a position to capitalize on the strong mobile market they can’t shift from producing PC CPUs to mobile SoCs. In a situation like this Intel’s accelerated Atom roadmap can’t come soon enough

http://www.anandtech.com/show/6378/...kening-market-intel-to-idle-some-fab-capacity

If this keeps up, they won't be able to maintain that healthy fab advantage over their competitors.

 

[Barfo]

This is right on the eve of Windows 8 launch. Most people looking to upgrade or purchase new hardware that can defer the purchase until the end of October.

Funny, if I was planning to buy a new machine I'd try do it before Win 8 launches and I'm stuck with it.

 

[Khato]

http://www.anandtech.com/show/6378/...kening-market-intel-to-idle-some-fab-capacity

If this keeps up, they won't be able to maintain that healthy fab advantage over their competitors.

If it keeps up for 4+ years perhaps. But the current reduction in revenue is more a result of the economic climate than anything else. Sure the consumer PC market is shrinking, but that's almost entirely being offset by growth in the server market and that's not likely to change. There's no question that Intel's only opportunity for growth however is the mobile market.

Regarding Intel's competitiveness, the direct comparison between the RAZR i and RAZR m is certainly a good indicator for 'em. Then in a bit over a week we'll finally get to see how Clover Trail Win8 tablets compare to the ARM based competition on both performance and price... though will we have to wait just a bit still to get a comparison to A15 based designs? Regardless, once A15 based designs do come out, that's going to be the most competitive position ARM is going to get against Intel for quite some time to come - they're technically going to have both an architecture and what could be considered a process lead. We know what to expect next from Intel - 22nm Silvermont based atoms in the second half of 2013, then a 14nm refresh in 2014, and lastly a new 10nm design in 2016. As for the ARM ecosystem, A15 was first announced a bit over 2 years ago and they have yet to announce its successor. Then on the process node side of things TSMC started to ship its first 28nm products to customers at the beginning of 2011, and we know that from there it took about 1 year to get GPUs and 1.5 years to get a smartphone using that node. TSMC is currently claiming that they'll be shipping 20nm in Q1 of 2013, so we might be seeing it used in phones by Q2-Q3 of 2014 if the trend holds. Oh, and TSMC is currently estimating that they'll start shipping 16nm in the 2014-2015 time frame.

 

[dma0991]

Windows 8 is the weakest link here. I don't feel like an upgrade to Windows 8 if I had intended to build myself a rig when Windows 8 is released. Metro works, but only strictly for tablets or any device with touch interface.

It feels clunky and awkward to work with the Metro interface with a mouse and keyboard. They should've left Metro out of the desktop/laptop version, it would have GUI fragmentation from the desktop version to the tablet version but it is a fragmentation for the better.

 

[Genx87]

Intel cant buy its way into this market yet. The Win8 tablets look over priced. And some will be powered by ARM anyways. This is the first time I can say Wintel has serious issues to deal with in the future. People are simply moving into different markets. If I didnt game, there wouldnt be a reason to have an Intel based windows driven PC in my house.

 

[pelov]

Then on the process node side of things TSMC started to ship its first 28nm products to customers at the beginning of 2011, and we know that from there it took about 1 year to get GPUs and 1.5 years to get a smartphone using that node. TSMC is currently claiming that they'll be shipping 20nm in Q1 of 2013, so we might be seeing it used in phones by Q2-Q3 of 2014 if the trend holds. Oh, and TSMC is currently estimating that they'll start shipping 16nm in the 2014-2015 time frame.

The manufacturing lead Intel enjoys over AMD is significant because of AMD's dependence on GF's poor and inconsistent execution. In the ultramobile space that lead is significantly diminished or goes away entirely. If you consider that ARM is shipping 28nm chips already while Intel's still on their 32nm node, it's actually reversed. That's crazy to think about, but that mainly has to do with how unprepared Intel are on the low end. Medfield looks like a very good performer, but used in a very limited selection of products and still unable to distinguish itself from the rest of the pack. I see that as a good thing because it spurs innovation and competition between all of the players, but for Intel, a company who has enjoyed a significant lead in x86 over their biggest rival for years now, it's a shocker.

Win8 isn't going change this, either. You can't blame the economic downturn when last year Q4's sales are actually expected to outpace this year's with Windows 8 and all of its new devices hitting the market. Coupled with the very poor reception of Win8 in the eyes of the public and the early adopters (a majority of Win8 users prefer Win7), it would be patently false to claim that it's just an economic downturn that's at the heart of this.

Intel's response to the ARM threat and tablets has been Ultrabooks. They've missed their target for sales by a considerable margin and year-to-year sales and profit margins are expected to decrease. Although Haswell looks great, it doesn't look to tackle the biggest issue: price. In fact, if rumors are true, it's going to make them even more expensive.

So does Intel have a fab advantage over the ARM space? Sure, but it's not yet utilized and won't be unless TSMC fumbles again or Samsung encounters serious delays. On top of this, GloFo has already taped out ARM SoCs at the 20nm node (matching TSMC) and looks to ramp up production in late 2013 and 2014. Whatever fab advantage and performance gap that exists between AMD and Intel all but disappears at the mobile end. In order for Intel to enjoy the same gap over ARM that they do over AMD requires that their fabs run at full capacity and they enjoy their high profit margins, but the opposite has held true.

What does all of this mean? We finally get to see some cutthroat competition, and I, for one, can't wait

 

[Phynaz]

http://www.anandtech.com/show/6378/...kening-market-intel-to-idle-some-fab-capacity

If this keeps up, they won't be able to maintain that healthy fab advantage over their competitors.

Intel has fabs down for upgrading to 14nm production. I see nothing in this that will affect their manufacturing advantage.

 

[pelov]

Intel has fabs down for upgrading to 14nm production. I see nothing in this that will affect their manufacturing advantage.

What manufacturing advantage? The one they enjoy over AMD? The same company that's on the brink of death? Because in the ARM space they're currently behind, not ahead.

In order for Intel to keep their fabs to themselves and enjoy that same advantage they have in the desktop/server over ARM, they're going to need to increase their revenue and profit margins, not have 3 consecutive quarters of disappointing sales and a 7-8% margin dip.

You can't funnel billions into fabs unless you're raking in billions of profit. Samsung is doing that and TSMC looks to have gained the Apple WSA, yet Intel is claiming it's an economic downturn that's affecting their figures? Samsung, in that same troubling economic climate, has doubled their profits from last year at this time, raking in over 7bn.
http://thelinkpaper.ca/?p=23261

That big fish that is Intel now has to contend with fish just as big as they are.

 

[tviceman]

Well Intel is slightly down, AMD is considerably down, I wonder where this will leave Nvidia. Will be interesting to see if Nvidia's GPU business suffered and/or mobile sales can make up for it.

 

[Khato]

So does Intel have a fab advantage over the ARM space? Sure, but it's not yet utilized and won't be unless TSMC fumbles again or Samsung encounters serious delays. On top of this, GloFo has already taped out ARM SoCs at the 20nm node (matching TSMC) and looks to ramp up production in late 2013 and 2014. Whatever fab advantage and performance gap that exists between AMD and Intel all but disappears at the mobile end. In order for Intel to enjoy the same gap over ARM that they do over AMD requires that their fabs run at full capacity and they enjoy their high profit margins, but the opposite has held true.

What does all of this mean? We finally get to see some cutthroat competition, and I, for one, can't wait

Ayup, as stated the current situation is about the best competitive position that ARM is going to get - they have a marginal process lead and once A15 comes out will have their latest architecture going up against the relic of 2008 which is the atom Bonnell core. The next round will be 20nm A15 ARM going up against 22nm Silvermont - at that point Intel will have a slight process advantage, but the real question is how the architectures will compare. If A15 is only on the level of Apple's A6 or slightly above then yeah... the smartphone market is ready for a 'conroe moment' right?

Edit:

You can't funnel billions into fabs unless you're raking in billions of profit. Samsung is doing that and TSMC looks to have gained the Apple WSA, yet Intel is claiming it's an economic downturn that's affecting their figures? Samsung, in that same troubling economic climate, has doubled their profits from last year at this time, raking in over 7bn.

Sadly neither Samsung nor TSMC have released their Q3 2012 results yet. So to properly compare we have to look at the Q2.

Intel: Revenue of 13.5 billion USD, operating income of 3.8 billion USD
Samsung Semiconductors: 8.6 trillion won revenue, operating profit of 1.11 trillion won (approximately 7.78 billion USD revenue, 995 million USD operating profit.) (Compare this to 9.6 trillion won and operating profit of 1.79 trillion won in Q2 of 2011.)
TSMC: Revenue of NT$128.06 billion, net income of NT$41.81 billion (approximately 4.39 billion USD revenue, 1.43 billion USD net income.)

The point? You can't compare the conglomerate which is Samsung directly to Intel.