Intel (INTC -2.40%) stock has lagged the broader market by a huge margin over the past decade, and its woes have been accelerated by the loss of its manufacturing and technology lead to rival foundry Taiwan Semiconductor Manufacturing (TSMC) in 2018.
TSMC leapfrogged Intel when it started the mass production of chips based on the 7 nanometer (nm) manufacturing process. Chipzilla, meanwhile, failed to make the jump to the competing 10 nm process, triggering a downfall in its fortunes on the stock market as rivals such as Advanced Micro Devices (AMD -5.44%) started eating its cake.
INTC data by YCharts
The bad news is that AMD seems in no mood to take its foot off the gas -- but that doesn't necessarily mean that Intel can't fight back. The company seems to be on the way to reclaiming its lost mojo. Let's look at the steps the chip giant has been taking, and see where they may lead it in the next decade.
Intel is on the road to redemption
AMD's Ryzen processors have been a thorn in Intel's flesh as their superior performance and aggressive pricing have helped them gain market share. However, Intel has been showing signs of turning around thanks to its new products. Citing sales data compiled from German retailer Mindfactory, third-party sources report that Intel has started gaining ground against AMD's Ryzen processors thanks to the launch of its latest Alder Lake chips.
More specifically, Intel's CPU (central processing unit) market share at Mindfactory increased to 30% in November 2021 compared to 23% in October, which is its highest at the retailer this year. While investors should take this market share data with a pinch of salt, as it includes sales from just one regional retailer, they shouldn't forget that Intel's resurgence coincides with the launch of chips based on the 10 nm Alder Lake platform.
Image source: Getty Images.
That's not surprising, as the density of the Alder Lake chips brings them up to par with AMD's latest processors, which are based on a 7 nm manufacturing process. Third-party tests have shown that the Alder Lake processors are giving their AMD counterparts a run for their money, and are priced aggressively. This indicates that Intel may now be on its way to catching up to its rivals, especially considering the company's product roadmap and investments.
First off, Intel believes that it can ship "several million units of Alder Lake to customers" in the second half of 2021. These chips will be followed by the Raptor Lake chips in 2022, which will be based on an enhanced version of the 10 nm process, which could help Intel further reduce the technology gap with AMD. However, it is in 2023 that things are likely to get interesting.
Intel's Meteor Lake chips, based on a 7 nm manufacturing process, are currently being tested, and are expected to hit the market in 2023. These processors could level the field with AMD, which is expected to release its 5 nm line-up late in 2022, setting the stage for a showdown between the two companies in 2023.
The early signs seem promising, as the performance of the Alder Lake chips indicates. More importantly, Intel's product roadmap through 2025 is built in a way so that it can regain its process lead from the likes of TSMC and Samsung.
Intel has also laid out an aggressive capital spending plan to ensure that its plan of leaving behind rivals in four years can be realized. It plans capital spending of $25 billion to $28 billion in 2022, which could increase further in the following years to support its product development initiatives. That would be a huge increase over the $20 billion capital expenditure Intel has planned for 2021, indicating that Chipzilla is about to go full throttle to race ahead of rivals.
Looking past 2025
If Intel's medium-term plan of reducing the gap with its rivals sounds promising, then the company's long-term strategy of leaving them behind certainly looks quite ambitious. The chip giant has revealed the way it plans to increase the speed of its chips while reducing their size at the same time beyond 2025.
The chipmaker plans to pack 30% to 50% more transistors into its chips using a three-dimensional process of stacking chiplets that aims to deliver a 10x jump in density improvement. Intel says that this process of fitting "millions more transistors per die area" can lead to more powerful computing capabilities in the coming decade.
A denser processor node that packs more transistors closely together means that Intel will be able to deliver a nice jump in computing power while keeping power consumption in check. That's because processors made using a smaller node are more power-efficient since they consume less energy to perform calculations, which allows them to perform more calculations without getting too hot.
As Intel is planning a huge jump in processor density by packing in more transistors, the company is looking to pull ahead of its rivals in the long run. So Chipzilla could once again become the king of the semiconductor industry in the next 10 years. That could infuse life into the stock after years of underperformance -- but Intel will need to ensure that it continues to execute well, and avoid the struggles that led the company to lose its technology lead in the past.
