On July 27, chip giant Intel (NASDAQ:INTC) plans to report its financial results for the second quarter of the year. While I plan to do a more formal earnings preview as we get closer to the earnings date, here are three important things that I would like to hear Intel address on the July 27 earnings call.
Intel has publicly said that it plans to begin shipping its first processors manufactured using its new 10-nanometer technology by the end of the year. However, a social media account for the website FanlessTech said, citing an Intel slide from April, that the first Intel 10-nanometer processors are planned for "summer 2018."
There appears to be a severe disconnect between Intel's public statements with respect to the expected launch timing of the company's first 10-nanometer processors and what credible leaks (in other words, what Intel is telling its partners) indicate.
I don't think it's any secret that Intel has struggled mightily to bring its 10-nanometer technology into mass production, but I suspect that Intel wants to keep these struggles under wraps to protect the image that it is multiple years ahead of the competition in terms of chip manufacturing technology.
While Intel can certainly choose to try to keep investors as in the dark as possible, I think that openness and honesty with its stockholders -- especially given the importance that Intel publicly places on chip manufacturing technology -- is the right way to go.
In line with that thinking, I want Intel to talk about its progress on 10-nanometer technology and its expected rollout schedule for the first products built using it on its July earnings call.
3D XPoint memory module progress
Intel had originally planned to launch memory modules based on its 3D XPoint non-volatile memory technology alongside its soon-to-be-launched Xeon Scalable Processor family codenamed Skylake-SP. However, Intel indicated earlier this year that this technology would be delayed and would, instead, debut in a future Xeon processor family codenamed Cascade Lake.
Considering that Intel seemingly expects 3D XPoint memory modules to drive a substantial amount of the growth in the "non-CPU" portion of its Data Center Group (DCG) business unit in the years ahead, an update on the health of the technology, preliminary customer feedback, and maybe even some guidance as to the kind of revenue the company expects to see from the products next year would be helpful.
Intel has made it clear that it wants to serve as a contract chip manufacturer via its Intel Custom Foundry business, but to date the company has only seen limited success in capturing business here.
Given Intel's apparent intent to be more disciplined in its operating expenses, I would think that it will continue to invest in areas where it's clear it can generate a robust financial return and start to ax investments in areas where its odds of success are low.
I would like to hear Intel, then, offer up some insight into the progress it's making (or lack thereof) in contract chip manufacturing. Is the company signing on major customers? And, if so, does Intel see a path to capturing significant share at those customers?
If the answers to both questions are "yes," then some indication of the kind of revenue the company expects to recognize in the years ahead (as well as any potential incremental capital expenditures that Intel will have to make to put the capacity in place to support those customers) would be helpful.
If Intel isn't making such progress, then some insight into why the management team feels that Intel Custom Foundry is still worth investing in would be appreciated.