The crown jewel of Intel's (NASDAQ: INTC ) competitive advantage is, above all else, the company's leading-edge manufacturing technology. In today's world, any company can license great CPU and graphics IP and develop a processor for just about any market segment other than PCs. The only way Intel can truly differentiate is by having manufacturing technology that no other company can match. While Intel claims to have a manufacturing lead, it's worth peeling back these claims and understanding exactly what's going on here.
OK, what's everybody claiming?
Intel is claiming the following in terms of product rollouts:
- Cherry Trail (14-nanometer tablet product) launching in late 2014.
- Broadwell (14-nanometer PC products) launching in H2 2014.
- Broxton (14-nanometer smartphone/tablet converged product) launching in H2 2015.
- SoFIA 14-nanomater (14-nanometer low-cost smartphone/tablet product) launching in either Q4 2015 or Q1 2016.
On the other hand, Taiwan Semiconductor (NYSE: TSM ) and Samsung, the two remaining leading-edge foundries, are claiming that their 14/16-nanometer process technologies will be in high volume production during 2015. If we look at what has been announced so far in the way of products and timelines, we can get a sense of Intel's competitive position:
- Qualcomm (NASDAQ: QCOM ) has announced 20-nanometer Snapdragon parts for sampling in H2 2014 and in devices by H1 2015.
- Apple (NASDAQ: AAPL ) is reputed to be TSMC's major 20-nanometer customer for an iPhone 6 launch in the August-September timeframe.
- AMD (NYSE: AMD ) has indicated that it will be moving to 20-nanometer during 2015 and then it will roll out designs based on 14/16 FinFET at some point during 2016 (likely mid- to late 2016 if the current product release cadence holds).
Let's focus on Qualcomm
Intel's fiercest direct competitor in the chip space is Qualcomm, so it's worth taking a look at what the product release cadence for Qualcomm's products on new manufacturing technologies has been. (These are first device launches, so silicon is available a few months beforehand.)
- April 2012 -- 28-nanometer polysilicon (Snapdragon S4).
- July 2013 -- 28-nanometer high-K/metal gate (Snapdragon 800).
- H1 2015 -- 20-nanometer high-K/metal gate (Snapdragon 808/810).
The gap between 28 polysilicon and 28 high-k/metal gate was 15 months, and the gap between 28-nanometer high-k/metal gate and 20-nanometer high-k/metal gate (assuming April 2015 product availability of Snapdragon 808/810) looks to be around 20 months. This has some interesting implications.
Case No. 1: 20 -> 16 transition is similar to 28 polysilicon to 28 HKMG
TSMC claims that the 16 FinFET process is simply introducing faster transistors onto a similar 20-nanometer back end of line, which should theoretically allow for a much shorter time to market for a 16 FinFET part than if the 16 FinFET node were all-new. If we assume, then, that the transition from 20-SoC to 16-FinFET is then similar to the 28-polysilicon to 28-high-K/metal gate transition, this would imply a 12- to 15-month gap, landing a Snapdragon 808/810 FinFET based successor in devices by Q2-Q3 2016.
Case No. 2: 20->16 transition is similar to 28 HKMG -> 20 SoC
Since a move to 16 FinFET is a move to a fundamentally new transistor structure, there may be complications on the design side in getting these products to yield enough for high volume. This, then, may make the 20 -> 16 transition look a lot more like the 28 HKMG -> 20 SoC transition in terms of time rather than the 28 polysilicon -> 28 HKMG. If that's the case, then the first 16 FinFET products from Qualcomm become a late 2016/early 2017 affair -- which is, not coincidentally, what International Business Times' Handel Jones appears to believe.
What does this mean for Intel?
Intel saw the first high-volume mobile SoCs based on its 22-nanometer FinFET manufacturing process appear in the September-October 2013 timeframe, with more aggressive volumes ramping throughout 2014. If Qualcomm gets 16 FinFET products out in devices by Q2 or Q3 2016, then Intel will have a lead of about a year and a half (Cherry Trail will probably appear in devices in Q1 2015) in tablets and about a three- to four-quarter lead in smartphones. This is a real lead, but it is not on the order of years as Intel has promoted.
Now, if Qualcomm and the foundry landscape slip to much later (something that seems doubtful), then Intel's lead in manufacturing becomes much more pronounced and the competitive environment becomes a lot easier for Intel. Further, if Intel truly has a density lead on the order of a 35% shrink relative to TSMC/Samsung 16/14-nanometer, then Intel's lead is quite obvious and -- assuming Intel's design groups don't fumble it -- should translate into a good competitive position for the company in late 2015 and beyond.
This chip stock could make you rich!
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of Apple's top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now, for just a fraction of the price of Apple stock. Click here to get the full story in this eye-opening new report.