Intel’s Broadwell Delay: Should You Freak Out?

It is admittedly surprising to see that Intel (NASDAQ: INTC  ) is having such a tough time ramping its upcoming Broadwell processor into high volumes. It's clear that Intel's aggressive goals for pursuing significantly improved transistor performance, as well as a greater-than-normal density improvement, came at a price – the delay of its next generation PC processor. As a result of this, should you freak out?

It really depends on the competition
The "doomsday" scenario for Intel as a result of this delay goes a little something like this:

  • Intel delays its 14-nanometer microprocessor lineup
  • This allows the foundries such as Taiwan Semiconductor (NYSE: TSM  ) and Samsung (NASDAQOTH: SSNLF  ) to "catch up" to Intel
  • Intel's biggest structural advantage -- a semiconductor technology leadership -- goes away

Now, this thesis is largely predicated on the following facts:

  • TSMC's and Samsung's 16/14-nanometer processes are roughly comparable to Intel's 14-nanometer process
  • TSMC's and Samsung's customers can roll out products based on these processes during 2015

If all of those hold true, then yes, Intel's manufacturing lead will have diminished significantly, and its biggest weapon in the fight against the ARM ecosystem essentially disappears.

That's a ton of "ifs"
According to TSMC's and Samsung's marketing departments, they will go into production on their 16/14 nanometer processes, respectively, early next year. What this means for actual products, however, is an entirely different ballgame. Further, Intel claims that it has a performance/density edge over the foundries' respective processes, though full disclosures at a technical conference such as IEDM should shed some more light on the matter.

That said, as investors, we can try to connect the dots. Intel has traditionally had a significant transistor performance lead at any given time. Further, it has adopted next generation technologies, such as Strained Silicon, High K/Metal Gate, and FinFET well before the foundries have. Does it really stand to reason that, after years of pretty sustained leadership, Intel would all of a sudden see its lead evaporate in just one generation?

It seems more likely that Intel simply got too aggressive with trying to push the boundaries of its 14-nanometer process, and that aggressiveness blew up in the company's face -- forcing the product delays.

Should you freak out about the Broadwell delay?
It's disappointing that Intel is late with Broadwell, particularly after having promised production in 2013, only to retract that claim a month afterward. Further, though Intel's CEO indicated on the most recent conference call that the first Broadwell parts had gone into production during the first quarter of 2014, it's a bit alarming to see leaked internal documents hit the web claiming that the first parts don't go into production until July, with other parts following on much later.

Source: VR-Zone China.

It will be important to pay attention to the upcoming Intel earnings call, as at least one sell-side analyst is likely to ask about this delay if Intel doesn't volunteer an update. Listen to answers to the following questions:

  • Will the 14-nanometer delay impact the previously disclosed launch timings of Cherry Trail (14-nanometer Atom for tablets) and Broxton (high end 14-nanometer Atom for premium phones/tablets)?
  • Will this delay of Broadwell impact the launch timing for the next generation product, codenamed Skylake for laptops? (Leaked roadmaps suggest Intel is skipping Broadwell in desktops and moving to Skylake directly in Q2 2015. If so, does that push out the 10-nanometer follow-on known as Cannonlake?

If Intel assures investors that the 14-nanometer Atom product line (particularly Broxton) is still on track to what was presented at its Investor Meeting back in 2013, then Intel's competitive position will still be extremely strong. If not, then the Intel thesis gets a bit tougher.

Foolish bottom line
It's not yet time to freak out about the delay of Broadwell. Wait until the July 15 conference call, where Intel's management team will likely update investors on what's going on here. Delays are never fun, and it's easy to get caught up into thinking that Intel failed to execute while the rest of the industry will march ahead unabated.

However, the reality is that if 14-nanometer was hard for Intel, it's probably going to be even harder for the foundries and their fabless customers.

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  • Report this Comment On July 11, 2014, at 2:45 PM, raghu78 wrote:

    ashraf

    you should now remember how much you argued that Intel 14nm was not delayed when Daniel Nenni said it was. Anyway Nenni has been right all along about Intel 14nm

    https://www.semiwiki.com/forum/content/3660-intel-14nm-delay...

    Meanwhile TSMC reduced risks by going for a 2 step transition from 28nm to 16FF+

    1. dual pattern immersion litho with 20nm planar

    2. 16nm FINFET with 15% density increase over 20nm planar with TSMC 16FF+.

    http://blogs.barrons.com/emergingmarketsdaily/2014/07/02/tsm...

    TSMC is executing very well at 20nm and the ramp is very steep in Q3 and Q4 2014. TSMC expects 10% of wafer revenue at 20nm this year. Thats around USD 2.2 - 2.3 billion given that TSMC 2014 expected revenues are USD 22 - 23 billion. 20nm wafer pricing is around USD 6500 - 7000 per 12 inch wafer. That means 325,000 - 350,000 12 inch wafers. The wafer output in Q3 is expected to be 100k - 120k wafers while Q4 is 200k+. Most analysts expect TSMC to beat their 20nm wafer revenue estimates for Q3/Q4 and the full year too.

    Apple is building up A8 inventory for a Q4 2014 worldwide launch of iPhone 6S and iPad Air 2.

    Qualcomm's MDM9X35 is already shipping in devices like the Samsung Galaxy S5 LTE-A.

    Funnily Intel's comments have come back to haunt them. Intel's arrogance has been well answered by TSMC's 20nm ramp.

    http://www.eetimes.com/author.asp?section_id=36&doc_id=1...

    Intel thought they could go FINFET and dual pattern immersion litho without any problems but thats not the case. TSMC is incorporating the yield learning at 20nm into 16FF/16FF+. The back end of line tools is the same between 20nm and 16FF/16FF+. TSMC will once again prove you wrong with a smooth and steep ramp of 16FF+ next year for the A9 launch. adios amigo.

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