It's a good day for hopeful Fools waiting patiently for a turnaround at Intel (Nasdaq: INTC ) . On Monday, the chipmaker said it had met its deadline for completing design work on its latest chip, which is code-named "Penryn."
Based on Intel's Core microarchitecture, Penryn is to be initially used in high-end desktop and laptop computers. Server vendors, too, are expected to use the chip when it ships in the coming months. That's good news; rival Advanced Micro Devices (NYSE: AMD ) has made enormous gains in servers thanks to its highly popular Opteron chip.
Can Penryn stop the bleeding? It's possible. The chip is built with a 45-nanometer process, which is roughly 30% smaller than existing designs. In an email to me earlier today, In-Stat analyst Jim McGregor said the smaller platform is key to Intel's success with quad-core chips. "To get the 50% to 70% performance boost out of the current generation, you have to deal with 130 watts plus of power consumption." Penryn's more efficient design, McGregor said, will keep costs low and cut power usage.
In addition, Penryn's greater efficiency could produce a more competitive offering at a time when IT managers are complaining about electric bills. AMD got the message months back with its somewhat overhyped though on-target "Green Grid" initiative.
Meanwhile, investors should be applauding because Penryn's smaller-scale design could lead to better margins. And that's not just an attraction for Intel. Dell (Nasdaq: DELL ) , which defected to AMD earlier in the year due to sales woes, is yearning to squeeze more out of every business system it sells. IBM (NYSE: IBM ) , Hewlett-Packard (NYSE: HPQ ) , and Sun Microsystems (Nasdaq: SUNW ) would probably say the same about their server offerings.
Many of the savvy investors in Motley Fool CAPS are asking whether Intel has finally regained its competitive edge. With all due respect, that's the wrong question. What matters is whether Intel CEO Paul Otellini and his team are making decisions now that will pay dividends in later years. On that score, Penryn appears to deserve the nod.
Allow us to chip in with related Foolishness:
- Is Intel the best blue chip for 2007?
- Check out the chipmaker's latest inventory story.
- Get the ins and outs of Intel at CAPS.
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Fool contributor Tim Beyers, ranked 1,152 out of 14,303 in CAPS, is most fond of chips with salsa. And guacamole. Yummy. Tim didn't own shares of any of the companies mentioned in this story at the time of publication. Get the skinny on all the stocks in his portfolio by checking Tim's Fool profile. Dell is also a Motley Fool Stock Advisor pick. The Motley Fool's disclosure policy is a chip of off the Foolish block.