Intel (NASDAQ:INTC) is well-known for its semiconductor manufacturing technology, often touting its lead over the rest of the semiconductor industry. In its traditional PC and server markets, this lead is quite apparent and has paid off quite handsomely in terms of financials and competitive positioning there.
Interestingly enough, this "lead" hasn't translated well in the mobile market, with Intel's phone/tablet chip designs on a given manufacturing technology showing up later than do PC chips. Intel has been working to shrink that gap, and following the company's recent announcement that it is shipping its 14-nanometer Cherry Trail tablet processor, the process gap between the company's tablet chips and its PC chips has shrunken to about two quarters.
The situation in smartphones is more difficult for Intel, though.
Samsung, Apple moving to 14/16-nanometer smartphone chips this year
It has been widely rumored that Samsung will be deploying an in-house Exynos processor built on its 14-nanometer manufacturing technology in the Galaxy S6 slated to launch in the February/March timeframe. Apple (NASDAQ:AAPL) is also expected to move to a 14/16-nanometer manufacturing technology (from either Samsung and/or Taiwan Semiconductor (NYSE:TSM), respectively) for its next iPhone, likely launching in September this year.
Now, while it is true that Intel's 14-nanometer transistors are likely higher performing than the foundry chips, and while the theoretical density of Intel's 14-nanometer process is higher than the foundry 14/16-nanometer processes, this could result in a pretty uncomfortable situation for Intel stockholders (and potentially a PR nightmare for Intel).
Even if Intel's 14-nanometer technology is "better" than the foundry 14/16-nanometer technologies (and I believe this), the foundry 14/16-nanometer technology should be well ahead of the 22-nanometer technology that Intel will be offering in smartphones for essentially all of 2015.
This is a fundamental problem that needs fixing
Having manufacturing "lead" is nice, but Intel needs to bring it to the fast-growing, highly competitive markets that it wants to compete in. Intel had expected to launch its 14-nanometer smartphone part -- known as Broxton -- by "mid-2015." This is still about 6 months later than the Exynos chip, but given the purported performance/density advantages that Intel's 14-nanometer process has, this would have still been a solid showing.
Unfortunately for Intel, Broxton is now a part that will launch at some point in 2016 (Intel wasn't specific at its investor meeting as to when within 2016). If Intel wants this part to be effective and have a chance of winning "hero" devices as the company claimed it wanted to do, then this part really needs to be well into production by the end of 2015 and should show up in designs, on the shelves, in early 2016.
This would still result in a manufacturing lead that's not anywhere near as large in phones as Intel probably would like investors to believe, but it would actually be a lead.
Intel needs to widen this gap longer-term
Over the long term, if Intel can maintain its manufacturing lead, it needs to bring that leadership to the mobile products. During Intel's 2013 investor meeting, CEO Brian Krzanich claimed that the company would accelerate its low-power Atom processors to be "on par" with its big Core products.
If Intel can bring 10-nanometer Atom chips for tablets and phones in the early part of 2017, then that would be a significant achievement. At that point, I think Intel management could unequivocally say that the company has a clear manufacturing lead over its mobile competition.
We'll just have to see how it all plays out, though.