According to a research note from BlueFin Research partners (by way of Barron's), chip giant Intel (NASDAQ:INTC) enjoyed "strong month of March production activity." Additionally, BlueFin said that Intel's chip production in during its first quarter grew between 1% and 1.5% from the prior quarter -- 100-150 basis points ahead of BlueFin's previous expectations.
"Our one-quarter lag production model suggests that [Intel] production plan this quarter remains ahead [sic] the current Wall Street revenue consensus of -3% for the June quarter," the analysts wrote.
Additionally, BlueFin goes on to say that the overall personal computer market performed better than expected in March, which led to "shipments slightly above the high-end of [BlueFin's] forecast range of 64-65 [million] units."
Digging into the production increases
According to BlueFin, Intel's production increases "are coming from 14 [nanometer] technology starts at both Fab 24 (Ireland) and Fab 32 (Arizona)." The analysts also say that Intel's production of 3D NAND flash memory -- which underpin the company's solid state drive products -- saw production double quarter over quarter.
The growth in 3D NAND production at Intel's newly started Fab 68 doesn't come as too much of a surprise; Intel is in the process of moving a sizable portion of its NAND-flash based product lines from using NAND flash (some of it 3D NAND based, the rest of it built on costlier planar NAND) produced by factories jointly owned by Micron (NASDAQ:MU) and Intel to its wholly owned Fab 68 factory.
In my view, the more interesting data point is the increase in 14-nanometer chip production. What the increase in 14-nanometer production appears to indicate is healthy demand for the company's microprocessor products, which includes personal computer processors (Intel has largely transitioned these over to 14-nanometer) and its data center/server processors (which began moving to 14-nanometer technology about a year ago).
The reported combination of strong 14-nanometer chip production and better-than-expected personal computer demand likely means that investors shouldn't worry too much about negative financial surprises when the company reports its financial results and outlook later this quarter.
One more thing...
In addition to the production information, BlueFin also offered an interesting tidbit with respect to Intel's chip manufacturing technology prowess. It said, "[Intel] continues to hold the process technology leadership bar none," citing a "survey of the leading [semiconductor] equipment and advance [sic] material suppliers" that it performed.
"[Intel] remains on track to extend Moore's Law and may be providing some future insight on the challenges facing [Taiwan Semiconductor Manufacturing Company (NYSE:TSM)], Samsung (NASDAQOTH: SSNLF), and GlobalFoundries (GF) with their eventual 7 [nanometer] node transitions," BlueFin said.
Obviously, the better Intel's competitive positioning with respect to manufacturing technology is relative to that of its peers, the better off its businesses will be. Intel doesn't compete directly against TSMC, Samsung, and GlobalFoundries for contract chip manufacturing business (Intel offers foundry services but has no real share here today), but Intel's direct competitors rely on TSMC, Samsung, and/or GlobalFoundries to manufacture their chips.
Intel's job going forward will be to increasingly try to leverage whatever advantage it has in chip manufacturing technology to defend its positioning in businesses where it's dominant while at the same time boosting its share in areas where it's not a large player today.