Readers of my articles are well aware that I have been skeptical of Intel's (NASDAQ: INTC) claims that it has decisive chip manufacturing technology leadership over the rest of the industry. Intel's pace of innovation on the chip technology manufacturing front appears to be slowing down as competitors seem to be accelerating their timelines.
On the company's April 19 earnings call, analyst David Wong asked Intel CEO Brian Krzanich the following question:
Does the restructuring affect your longer-term expectations for [manufacturing] technology transitions? And in particular, are you still hoping to get back to a two-year tick-tock cadence?
Let's take a closer look at the answer that Krzanich gave.
Dissecting the answer
Krzanich began by answering Wong's first question up front, saying that Intel's recently announced restructuring efforts will have no impact on manufacturing process development. Krzanich directly addressed Wong's second question, too, saying that Intel is "always constantly striving to get back to two years."
The executive made explicit, though, that Intel's transition from 14-nanometer to 10-nanometer is expected to take "more like 2.5 years" and that Intel simply isn't sure whether the company can return to a two-year cadence in going from 10-nanometer to 7-nanometer.
The real question, though -- and I suspect one that Wong probably should have asked -- is something more along the lines of the following: "In light of the recent aggressive announcements and timelines put forth by your competitors, do you believe Intel still has a defensible leadership position in chip manufacturing technology?"
Krzanich seemed to have "sensed" that this is the question that investors probably cared about and then offered the following comment:
If you look at the history of Moore's Law, there have always been from 18 months to three years in the lengths of cycles over time. More importantly, what I always remind people is the leadership you have over the competition, which is always what's important.
All of these are getting harder and they get hard for everybody. And so you want to make sure also that your leadership gap, what you're able to do relative to the competition, remains constant as well. Both of those are as important as the other.
The implication here is that despite the delays that Intel has faced, it will maintain a leadership position over the competition. No justification, no acknowledgment of the fact that Intel's rivals have signaled the very opposite of what Krzanich is claiming about the competition -- that they're moving at a quicker pace.
No clarity likely to come until November
My expectation is that Intel will disclose the key details of its upcoming 10-nanometer chip manufacturing technology at some point later this year. Perhaps the company will save the disclosure for its analyst day in November.
Once the specifics of this technology are disclosed, then investors will be able to get a better idea of where Intel actually stands in terms of chip manufacturing technology.
If the 10-nanometer technology is essentially just a shrink/enhancement of the same fundamental 14-nanometer technology that's in production now, then it isn't clear to me that Intel can maintain transistor performance/power leadership against the competition over the next couple of years.
However, if the chipmaker delivers something novel (and significantly ahead of what the competition is likely to deliver over the next two technology generations), then the case could still be made for Intel's "leadership" in chip manufacturing technology.