Chip giant Intel (INTC -2.40%) sent Murthy Renduchintala, the company's chief engineering officer and group president of its technology, systems architecture, and client group, to speak at the 39th Nasdaq Investor Conference.
At the conference, Renduchintala discussed a number of topics that should be of interest to Intel investors. Here are three items from his talk that particularly stood out.
Image source: Intel.
10nm (nanometer) insights
Those following Intel probably know that the company's 10nm manufacturing technology has been significantly delayed from when it was originally supposed to go into mass production. Renduchintala firmed up the company's time frame which was originally shared this spring:
So our timeline for 10nm remains as we stated in April. We are aligned with our plan to have client systems on the shelves by the holiday season of 2019 and then the rest of the portfolio product shortly thereafter, including our Xeon Scalable processing capabilities. So no change there, we reiterated that on our last earnings call.
Renduchintala blamed Intel's aim to deliver a boost of 2.7 times in logic transistor density compared to its 14nm technology as a key reason for the significant delay. At its Technology and Manufacturing Day in early 2017, the company said that it had achieved a 2.5 times boost in logic transistor density with its 14nm technology, 2.1 times with its 22nm technology, and 2.3 times with its 32nm technology.
That goal, Renduchintala said, "required a tremendous amount of process and technology innovation; many, many revolutionary experiments to be brought together at the time that we thought were bounded and calibrated, but ultimately when you put all of that chemistry together, we clearly underestimated the challenge ahead of us."
The executive then went on to claim that "we have decomposed the root cause of that risk profile and put in place a plan that we think is now measured toward the timeline that I just spoke about."
Renduchintala also explained that the company's "ambitions for 10 [nanometer] haven't changed," stating that "even though we have had the trials and tribulations with 10 [nanometer], the power and performance and transistor density targets that we set in 2014 remain the same."
Renduchintala argued that Intel's 10nm technology is "really all about continuing to drive the power/performance equation as well as delivering on the transistor density." The improvement in power efficiency that 10nm is supposed to deliver should prove helpful across a number of Intel's important product lines where power efficiency is valued.
One such example is notebook computer processors: Intel reported raking in $19.4 billion in revenue from notebook platforms in 2017. Another example of technology which will benefit from 10nm is data center chips. Intel's data center group platform revenue was more than $17.4 billion in 2017 and has grown dramatically over the course of 2018.
More details on modems
Intel recently announced a pull-in of its XMM 8160 5G modem -- the modem that Fast Company reports will power Apple's first 5G-capable iPhones in 2020. Renduchintala provided some additional clarity around the launch timeline of that device during the conference.
"We will be able to provide samples of that device in the second half of [2019] with commercial devices in the first half of [2020]," the executive explained.
The company said back on its Oct. 25 earnings call that its modem sales grew by 131% year over year in the third quarter.
Analyst Joe Moore asked the following interesting question:
I guess your aspirations on baseband market share would be higher, [and] do you see this as an integrated applications processor being an important part of that?
I liked this question because Apple is the only smartphone vendor I know of that still uses stand-alone modems in its devices; everyone else uses applications processors that also integrate the cellular baseband on the same piece of silicon.
Renduchintala gave the following seemingly oblique response to Moore's question.
I think that the modem -- the modem product line is an interestingly important product line for us, but as an IP wireless is going to be even more explosively important and not just cellular IP, I think it's also going to be WiFi as well, so wireless connectivity in its broadest definition I think are going to be really important IPs.
I mean if you think about it, Joe, Intel's strategy is really all about processing, storing, and distributing data, right. So, wireless technologies in that scenario of distributing data is a really important fundamental technology.
Let's talk about the PC
Renduchintala said that the strength in the company's client computing group (CCG) business, which primarily sells processors into personal computers, "has really been driven particularly from the commercial and gaming environments, and even in the client business; we have also been gaining share in our modem business as well."
CCG made up just over 54% of the company's revenue in 2017, and it's comprised just shy of 52.1% of its sales in the first three quarters of 2018.
The executive claimed that "it's been a great year for the PC business and that reflects the payback of a strategy that has made our business so resilient, which has been based on real segmentation and investing in areas where we see real growth and being tremendously operationally disciplined in the way we invest."
Year to date, CCG has seen its sales grow 8.5% with operating profit up a little over 9.3%.
Looking forward
Renduchintala's remarks touched on some important themes for investors. Over the course of 2019, I'll be paying close attention to whether the company achieves its 10nm production target, and whether its XMM 8160 5G modem samples in the second half of 2019 as planned. I'll also be watching to see if the company's PC business sustains its positive trends.
