In previous years, chip giant Intel (NASDAQ:INTC) would disclose to investors the percentage of its chip volume that was being built on a new manufacturing process. These disclosures would serve to highlight the health of the company's latest manufacturing technologies, bolstering investor confidence in the company's ability to continue to ramp new chip manufacturing technologies.
For example, for the fourth quarter 2012, then-CEO Paul Otellini said that more than half of the company's total microprocessor volume was built on the company's 22-nanometer manufacturing technology. This was quite impressive given that Intel started mass production of products on its 22-nanometer technology in the fourth quarter of 2011 and launched products early in the second quarter of 2012.
Intel has, until recently, been unwilling to disclose the percentage of its product mix that it had transitioned to its latest 14-nanometer technology. On the company's fourth quarter earnings call, the company finally disclosed this figure.
More than 50% as of November
According to a prepared statement from Intel, as of November 2015, more than half of the company's Client Computing Group units were built on the company's 14-nanometer manufacturing technology.
Intel had begun transitioning its thin-and-light PC volume to 14-nanometer in the beginning of the year with its Broadwell family of processors. Aside from fairly low-power notebook computers (i.e., MacBook Air and 13-inch Retina MacBook Pro-class systems), Intel's PC processor volume during the first half of 2015 was mainly on 22-nanometers.
However, in the second half of the year, Intel finally launched processors based on its Skylake architecture. These chips spanned the entire range of systems, from thin-and-light notebooks to high performance laptops and mainstream desktops, which I'm sure helped Intel achieve this relatively high 14-nanometer mix.
Expect that number to grow substantially in 2016
I believe that the vast majority of Intel's processors across all of its major product segments will transition to the 14-nanometer manufacturing node by the time 2016 winds to a close.
Indeed, it's hard to imagine that the proportion of Intel's client chip shipments built on the 14-nanometer technology will go anywhere but dramatically up during the course of 2016. The performance/power benefits that the 14-nanometer Skylake chips bring over the previous generation 22-nanometer Haswell processors is quite significant.
Additionally, Intel's current server processor lineup (Haswell-EP for 2-socket servers, Haswell-EX for up to 8-socket servers) is built on the company's 22-nanometer technology. The company is expected to roll-out its 14-nanometer Broadwell-EP and Broadwell-EX chips during the first half of 2016.
Although it will take some time for the company's server processor mix to completely shift from 22-nanometer silicon to 14-nanometer silicon, I do think that by the end of 2016 more than half of the company's server chip shipments will be on 14-nanometer.
Practically everything from Intel should be on 14-nanometer by 1H 2017
Although I expect the vast majority of Intel processors to be built on 14-nanometer by the end of 2016, there still may be some 22-nanometer left in the mix. By the first half of 2017, however, I expect virtually none of Intel's microprocessor builds/shipments to be on 22-nanometer or older, with everything from client to server having transitioned to 14-nanometer.
That said, I don't expect all of Intel's 2017 processor mix to be on 14-nanometer as the company had said that it will introduce its first 10-nanometer designs during the second half of 2017. I expect that the first 10-nanometer products out of the gate will be the low-power Ultrabook-class chips for products such as the 12-inch MacBook and the MacBook Air.
It's not clear at this point how aggressively Intel will ramp 10-nanometer product in 2017, particularly with many of the 14-nanometer Kaby Lake processor models not launching until early 2017, but I'd imagine that 10-nanometer won't comprise the bulk of the company's chip shipments until the second half of 2018 at the earliest.
Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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