Late last year, chip giant Intel (NASDAQ:INTC) launched a new family of processors for desktop computers known as Coffee Lake. Within the Coffee Lake lineup were models aimed specifically at gamers and other personal computer enthusiasts -- Core i3 8350K, Core i5 8600K, and Core i7 8700K.
These new chips were notable because they offered significant processor core count increases relative to their predecessor. The i3 8350K came with four processor cores compared to its predecessors' two, and both the i5 8600K and i7 8700K incorporated six physical cores, up from the four that their respective predecessors had.
There have been rumors floating around that Intel is planning to introduce a new chip based on the same Coffee Lake architecture but with eight processor cores. Late last month, an early engineering sample of such a chip popped up in the database of popular 3D graphics performance test 3D Mark.
It's highly likely that Intel intends to introduce the eight-core Coffee Lake chip alongside its upcoming Z390 platform (an upgraded version of the Z370 platform that current Coffee Lake chips currently work with) sometime in the second half of 2018.
Let's go over what this means for Intel's business.
A new year, a new processor
Intel has stated publicly that it aims to introduce new products across its various market segments each year. New products help to both stimulate demand and, at the very least, maintain average selling prices by delivering more value at previous price points.
Based on some leaked Intel product roadmaps from a few months ago, it looked as though the company had intended to keep selling the same hex-core Coffee Lake processors throughout the entirety of 2018 -- surely to the chagrin of the company's performance-hungry gaming customers.
However, the fact that the chip clearly exists means that Intel likely kept this part off the product roadmaps that it gave to some of the partners (particularly the "leakier" of said partners).
It's highly encouraging that Intel seems to be preparing a substantially improved product targeted at gamers and PC enthusiasts for launch later this year, as gaming/enthusiast-oriented PCs represent one of the few growth segments within an otherwise declining PC market.
The impact to Intel's business
There are two possible ways that Intel can introduce the eight-core Coffee Lake chip into its eighth-generation Core desktop product stack.
First, Intel could simply price the eight-core part the same as it does the current six-core 8700K and then bump the 8700K and everything else below it down a notch in terms of pricing. Such a strategy would limit the opportunity for Intel to drive desktop processor average selling price increases (in fact, it could lead to average selling price pressure as the popular 8700K becomes an even better value at a lower price point), though it could have a positive impact on unit shipments.
The second route that Intel could take -- and it's the route that I think is far more likely -- is that Intel could layer this product on top of the current i7 8700K. Intel could sell it as a higher-end Core i7 or it could slap its even higher-end Core i9 branding on the part. Such a strategy would allow Intel to both drive incremental unit demand and potentially significant average selling prices increases within its gaming sub-segment.
Given Intel's apparent acceptance that the overall personal computer market is set to be a no-growth market at best over the long term, it makes sense for the company to try to extract as much value from each personal computer that it sells chips into. Introducing a higher core count product for enthusiasts/gamers -- a market that's well known for being willing to pay more for commensurately higher performance -- is a good way for Intel to boost average selling prices and ultimately revenue in a flat-to-down PC market.