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Intel Corporation's Kaby Lake to Enter Volume Production Later This Quarter

By Ashraf Eassa – Jun 6, 2016 at 10:30AM

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But will the PC market care?

Intel's previous development methodology is on the left, its new one on the right. Image source: Intel.

During its presentation at the Computex trade show in Taiwan, microprocessor giant Intel (INTC 1.25%) talked a little bit about its upcoming processors that will power future personal computers. 

According to Intel's Client Computing Group chief Navin Shenoy, the company plans to enter mass production on its upcoming Kaby Lake processor family -- a so-called "optimization" of the prior generation Skylake architecture -- "later this quarter."

When should we see Kaby Lake in systems?

The first processors based on the Kaby Lake architecture are likely to be aimed at notebook PCs. Since these chips aren't sold directly to customers, but are instead sold to system manufacturers who then build systems based on those chips, there's a time lag between when processors go into mass production and when systems based on those chips will be available for customers to purchase. 

During the presentation, Shenoy demonstrated a functioning 2-in-1 laptop with a Kaby Lake chip inside, built by PC contract manufacturer Compal Electronics. He said that the system would be "ready to launch at the end of this year."

Intel typically launches its less complex, low-power processors aimed at thin and light laptops and 2-in-1 systems first, so I expect that the majority of the Kaby Lake systems launched in 2016 will pack such chips. The higher-performing parts, aimed at high-performance laptops and desktops, probably won't find their way into systems until the first half of 2017.

Does it really matter?

At the end of the day, I don't think that new processors and new systems based on those processors are going to do much to move the needle in terms of the overall PC market. It's not for lack of features and performance that people aren't buying new PCs, but rather some combination of the facts that their current PCs are "good enough" and that they have shifted their tech dollars to other products such as smartphones and tablets.

As proof of this, Intel has actually launched several compelling new CPU architectures over the last several years. In 2013, Intel delivered a major boost in laptop battery life with its Haswell architecture, enabling "all-day battery life" in systems like the MacBook Air and the swarm of Ultrabooks that came out during that time.

Intel's PC sales in the wake of the Haswell launch failed to improve.

In 2014, Intel trickled out a few Broadwell-based Core M chips, but the bulk of its volume consisted of slightly refreshed versions of the Haswell processor. PC sales actually did reasonably well that year, because Windows XP's end of life drove corporate system upgrades -- but the sales had very little to do with the products Intel was fielding into the marketplace.

In 2015, Intel launched its Skylake architecture, which brought several significant power efficiency and performance improvements over the prior-generation Haswell and Broadwell chips. Although Skylake saw success in pockets of the overall PC market which are growing anyway (think gaming PCs), the architecture itself did little to stimulate demand for PCs in general.

As long as Intel continues to field best-in-class products and is able to maintain its market share at robust gross profit margins, then the launches of specific new products for most types of PCs simply won't be all that interesting to investors. 

Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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