And while Intel is fighting for its life, the rest of the industry is moving on:
In reality, Intel is not the giant of the industry. Intel's total share of industry capacity is around 10%, they are not a giant who has stumbled, they are a niche player and have been for years. Admittedly, they occupy a high-value, high-price niche, but it is a niche nonetheless.
The best analogy we can think of here is automobiles. Mercedes sells around 10% of cars in the US, just as Intel has about 10% of industry capacity. Now imagine if Mercedes somehow lost its brand – maybe a massive recall or a series of high profile vehicle-caused accidents. They would not only lose market share but also all their brand value, causing a long term downward sales trend that would be very expensive to dig their way out. Intel is the luxury brand of semis and suddenly their cars do not move fast. We have tortured that analogy enough, the point is that Intel really does not occupy the strategic high ground we all thought it did.
After their last set of results, especially their guidance for 2023, we are increasingly of the opinion that Intel is out of options. They forecast they are going to burn $15 billion in cash next year, a huge amount even for a company with $34 billion of net cash on their balance sheet.
After their disastrous roadmap event last month, we have to call in to question the company's ability to accurately forecast their business. We actually have many more examples of systematic flaws in their forecasting abilities, but none as public as that event. So we have little confidence in the company's $15 billion forecast, it could easily be much higher. Add to that the need to continue to fund their manufacturing needs and their cash needs are immense.
Nor is it clear if 2024 will be any better. At heart, we have always argued that the company has one task before it and that is an existential task – it has to catch up in manufacturing. The earliest they forecast achieving that is late 2024, which means it will likely not factor into results until 2025. By that time the company's bank balances will be dangerously low.
Moreover, if somehow Intel is able to achieve process parity in 2025 it will still have to rebuild its business. This leads to obvious questions about Intel Foundry Services (IFS). The only way Intel can ever garner a more meaningful share of industry capacity is for IFS to start doing real business and poaching some big customers from TSMC.
[...] And while Intel is fighting for its life, the rest of the industry is moving on – with its peers all taking big steps to adapt to a world of custom silicon and heterogeneous compute. With its latest round of cuts, Intel will be far behind the pack in serving those markets. Intel has now exited most of the networking and memory markets, abandoned much of its RISC V efforts, spun off Mobile Eye automotive ambitions, and is likely to exit FPGAs soon. If it catches up with manufacturing, the company will largely be a single-product semis company.
The most frustrating part is that there is no clear alternative course they can take.
Many people would argue that Intel should split in two – a design company and a foundry company – much as AMD / GlobalFoundries did a decade ago. We see the logic in that, we have argued in favor of that in the past. Our guess is that the Street, as well as certain Intel board members, strongly favor this approach. But there are some real problems with this.
First, it took AMD and GloFo most of that ensuing decade to stabilize and return to functionality. Critically, there is the very real problem of how to fund the fabs. GloFo abandoned advanced manufacturing processes years ago. Would a stand-alone IFS do the same? They would start life with only one customer, the design side of Intel, and that customer is dependent on advanced processes. The sheer amount of money required for Intel to catch up is immense and at this point seems incalculable – $50 billion? It is hard to imagine a structure that would attract investors to participate in that funding. The size and seemingly bottomless nature of the commitment is too big even for the biggest private equity funds.
This likely means that the only viable alternative is the one they are currently attempting – raise as much money as possible, beg the government for more, ignore the Street and run like Hell to Intel 20A.
(Score: 0) by Anonymous Coward on Tuesday February 14, @09:16PM (1 child)
A standard industry comment...
Intel: the "t" is silent
(Score: 3, Funny) by Anonymous Coward on Wednesday February 15, @11:36AM
... you mean: the 'c' in 'Intel' is for cutting-edge.
(Score: 5, Insightful) by looorg on Tuesday February 14, @10:05PM (5 children)
Is this stock-buying analysis? Is he trying to dump or pump Intel stock for some reason? Seems he is very in on the idea that Intel should break up into smaller pieces.
It's not that Intel might not be in trouble but the comparison he is doing is quite silly. Intel isn't in the entire industry, they might only be about 10% of the entire industry. But they are a giant in their niche and that is probably enough. It's all that matters. They don't have to be everywhere and run everything. After all unless the author here is suggesting that the world is about to dump x86-64 processors for the desktop and server market then Intel will still be sitting pretty for quite some time. I don't know of any real threat on the horizon. Apple going ARM is probably not a sizable enough chunk to be a threat. A bigger one might be if people just ditch laptop and desktop and goes pad and tablets instead.
Until the day that RISC V etc actually dethrones Intel, unless Intel starts to make them those chips to, they'll still be king of their little hill. Which might seem doubtful considering that the author claims that Intel has ditched out of the market already. Either they think it's a pipe dream that won't come true or it was just to expensive to stay in there or they are waiting for others to do the heavy lifting and then jump back in again.
What homegrown silicon is he referring to? I have not seen a lot of homebrew CPU:s around, talk about niche market if one even exists, and until ARM actually takes over the server and desktop market that is not a thing either. In some regard they may have already taken over the personal computing market if you count smartphones and tablets in the same bracket as desktop and laptop computers. After all only Apple makes actual "computers" with ARM cpu in them as far as I can recall and Apple is small fish in that pond. Talk about niche in a niche in a niche market.
(Score: 2, Interesting) by Anonymous Coward on Tuesday February 14, @10:18PM (3 children)
I'll jump on with a different critique of this analyst -- his car analogy wasn't researched. As soon as I read, "Mercedes sells around 10% of cars in the US", something smelled funny. As I expected, it's just not true. Per this page, https://www.goodcarbadcar.net/mercedes-benz-us-figures/ [goodcarbadcar.net] Mercedes had between 2% and 2.5% of the US car market over the last 10 years. (A couple of other hits more or less confirm this).
If this analyst can't bother to get something as simple as that correct, I'm not likely to believe anything else he writes.
(Score: 4, Informative) by DeathMonkey on Wednesday February 15, @03:58PM (2 children)
And where did that 10% number even come from, anyway? Everything I'm seeing with a quick search still has Intel at like 70% market share.
They do appear to be declining (although there was a small uptick after the pandemic) but they still are pretty far ahead. [statista.com]
(Score: 2) by SomeRandomGeek on Wednesday February 15, @06:52PM (1 child)
I believe that the original point was that even though Intel is dominant in the CPU niche, that is only about 10% of the microchip market, and they are almost completely absent from the rest of the market. You never hear about intel AI, memory, graphics, mobile, or SSD chips. Not good things, anyway. Their efforts to diversify out of the 8086 descendant market have essentially failed.
(Score: 2) by ChrisMaple on Thursday February 16, @04:18PM
Intel graphics gets frequent press, and it's incorporated into many of their CPUs. Intel isn't aiming for the high end of the graphics business. Mobile CPUs are a standard feature in their product line, it mostly just means low power. SSDs are another part of their product line, although sales appears to have become a problem in recent years.
(Score: 1) by khallow on Wednesday February 15, @02:26AM
Negative info would be a short thing. Short interest appears really low (2 days volume is equivalent to in-market short interest and black pool short volume was 38% (of total shares IIRC) which isn't that high) so probably not that. Bad news always sells eyeballs so could be that.
(Score: 4, Interesting) by bzipitidoo on Tuesday February 14, @10:14PM (4 children)
Intel in trouble? Really? I find that hard to believe. In the early 2010s, AMD was falling behind. Zen was vaporware, and AMD wasn't rolling out anything else to stay in rough equality with Intel. Intel was running way ahead. When Zen finally debuted, it restored AMD to competitiveness, but Intel's CPUs still stomp the crap out of AMD for raw math, if not in other ways. If you want to participate in a project such as the Great Internet Mersenne Prime Search, Intel processors blow AMD away.
But supposing Intel is in trouble, where did they go wrong? Was it incompetence in the C-suite? Have they clung too hard to x86? Is it that ARM crushes Intel in the smartphone and tablet market? Is it RISC-V? Maybe it's Apple? Particularly that Apple used Intel silicon for a while but has now switched back to their own custom stuff based on, yep, ARM. Apple's M1 chip showed what big holes there were in PC design. Such a simple thing, just move the most common computational jobs into hardware, stuff such as MPEG4 decoding, instead of relying overly much on juiced to the max raw general purpose computing, and viola! Apple's customers can watch cat videos for a week on a single battery charge!
If it is that the many issues in the x86 design that make it relatively crappy are finally, finally catching up with Intel, you have to wonder why they didn't see it coming. It's not like this hasn't been known since almost the beginning. The Itanium, why didn't that do better?
(Score: 5, Interesting) by Snotnose on Wednesday February 15, @12:07AM
Yeah, they're in trouble. I see 2 big issues: their fab tech is falling behind; and the rested on their laurels for too long and let AMD get a foot in the door.
IMHO, if someone gets an ARM or RISC-V running at 2/3 the performance of Intel for 1/10 the power/cooling requirements that will be a huge game changer.
Remember, it didn't take long for X86 and ARM to take over from SH4, SPARC, MISC, and I don't remember how many CPU architectures were around 20 years ago.
I just passed a drug test. My dealer has some explaining to do.
(Score: 4, Interesting) by takyon on Wednesday February 15, @01:26AM
Intel's foundry/fab business and the geopolitical situation make it essentially too big to fail. But that doesn't mean they can excuse low margins and unprofitable businesses forever.
Intel is going to have to divorce its fabs from CPU design teams, probably without spinning them off. The CPU people will be treated more like external customer.
ARM is constantly overrated with various unfair comparisons to x86. Let's see how Intel's "royal core project" fares a couple of generations from now before completely discounting x86.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 1) by Runaway1956 on Wednesday February 15, @03:50AM
Let me state the obvious, which you maybe overlooked or forgot momentarily. The chip market is no longer divided between Intel and AMD. If you're strictly a desktop, workstation, or server user, it may seem that way. But mobile devices have blown past the desktop and server markets. I know several people who have abandoned desktops, and rely on phones, pads, and sometimes laptops. Then there is Apple, who has abandoned Intel. Automotive computing doesn't seem to rely on Intel, or AMD.
I'm too lazy to go searching for actual market shares, but it wouldn't surprise me if Qualcomm is selling more chips than Intel these days. Then, there are all those Asian chips.
Abortion is the number one killed of children in the United States.
(Score: 1) by shrewdsheep on Wednesday February 15, @08:31AM
I keep hearing that argument, but I am not convinced. Every modern processor has a decoding unit producing microcode. The question is therefore whether alternative ISAs are conceptually different enough so that equivalent microcode could not be efficiently produced from x86. I simply do not see that. A valid point might be that the x86 decoding unit by itself might represent a significant overhead as compared to other ISAs (too less of an expert to judge), a fact that would be mitigated at the moment by staying ahead on node size.
(Score: 5, Funny) by Rosco P. Coltrane on Wednesday February 15, @01:06AM (2 children)
Well duh... Semis are much slower than cars. You don't buy sports cars from Peterbilt do you?
(Score: 3, Funny) by Reziac on Wednesday February 15, @03:17AM
I dunno.... Big Rig drag racing is a Thing...
https://www.youtube.com/watch?v=et9n2g9HHtU [youtube.com]
And there is no Alkibiades to come back and save us from ourselves.
(Score: 2) by DannyB on Wednesday February 15, @05:26PM
Not necessarily.
Remember Toyota's brake troubles and cars that accelerate out of control with no way to stop them?
All they had to do is change their ad slogan. "Once you drive a Toyota, you'll never stop!"
Similarly Intel could survive any F00F or other major bungles. So yes, if you overclock too much it will melt through the Earth's crust and sink. But look at the performance!
How often should I have my memory checked? I used to know but...
(Score: 3, Interesting) by Anonymous Coward on Wednesday February 15, @02:36AM (1 child)
#1 position in their market and unlikely[1] to lose their #1 position in the next 5 years[2] is a very bad place?
Methinks someone is exaggerating or is using ChatGPT to get the drivel he wants.
[1] AMD probably can't even produce enough for the entire market if Intel vanishes.
[2] even on the cloud they'd still be running x86 stuff for years because of legacy corp stuff.
(Score: 2) by takyon on Wednesday February 15, @09:42AM
Years of stagnation in semiconductor fabs, leading to TSMC overtaking Intel. Very bad showing in graphics cards, losing billions [tomshardware.com]. Desktop CPUs are being sold at lower margins than AMD. Intel is losing more server market share than expected to AMD, and now analysts are starting to predict AMD will reach 50-70% x86 server market share. Their magical storage-class memory, Optane/3D XPoint, is done for. The management structure is a bloated mess. Probably more I forgot.
There are big problems at Intel. Not enough to kill the company, but the Intel of 10 years ago (dominating with Ivy Bridge and Haswell) is dead and Intel 10 years from now could look very different. Fabless AMD can't make enough chips at TSMC? They're in talks with Samsung, but we could actually see a situation where Intel fabs are making AMD's chips. Better than them sitting around and twiddling their thumbs because Intel design teams are months/years late.
https://www.theverge.com/2022/10/4/23385652/pat-gelsinger-intel-chips-act-ohio-manufacturing-chip-shortage [theverge.com]
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 3, Interesting) by DannyB on Wednesday February 15, @05:38PM
<not-much-sarcasm>
Major players do lose their leading position.
Who could make computers that challenge the mighty IBM! These pesky "toy" microcomputers began growing and growing. IBM responded. The rest of the industry made cheaper clones without the excess fat profits of IBM. IBM rolled out PS/2. The rest of the industry collectively said "no thanks" and moved on.
Who could possibly challenge Microsoft! Then came 1995, and the rise of the internet. Microsoft almost missed it as Bill Gates said that the internet was just a fad. (yes really!) The problem was their focus was too much on the desktop PC market and blind to other things. Then came 2007 and the iPhone. Steve Ballmer openly made fun of it. It took off. Android also arrived and grew. The rise of smart phones resulted in way more smart phones than PCs. Microsoft ended up completely missing the mobile device revolution and had to play catch up. The rise of Linux, and LibreOffice and other software is mixed up in this story. And open source in general. Eventually by about 2017 Microsoft had to embrace open source.
What search engine could possibly challenge Lycos!
Then came Alta Vista. What search engine could possibly challenge Alta Vista?
Then came Google.
Do you really think that some other thing might not dethrone Google one day? Google gets too focused on protecting their existing business and the 250 mile moat around it?
Back to Intel. Do you really think the bloat and baggage of Intel's instruction set is going to be attractive forever? I would bet on RISC V growing into a serious competitor with data center chips and high performance and better overall specs. It seems to be the story of history for a better younger competitor to de-throne an old entrenched unassailable king of the hill.
</not-much-sarcasm>
How often should I have my memory checked? I used to know but...