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Intel Corp.’s Kaby Lake Set to Enter Mass Production in June 2016

By Ashraf Eassa - May 10, 2016 at 11:30AM

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Intel's seventh generation Core processor is apparently coming soon.

Image credit: Intel. 

In July 2015, Intel (INTC -3.69%) formally disclosed the code-name of its next PC processor family: Kaby Lake. According to CEO Brian Krzanich at the time, Kaby Lake would be built on the same 14-nanometer manufacturing technology as the Broadwell and Skylake family of processors and was essentially a new version of the Skylake family of chips but with "key performance enhancements."

According to a LinkedIn (LNKD.DL) profile of an Intel employee, we now have some more information about how the chips will be marketed and when they will go into mass production.

Will be called seventh generation Core; mass production starts in June 2016
 Per the aforementioned LinkedIn Profile, Kaby Lake will be marketed as Intel's seventh generation Core processor. When Intel's fifth generation Core processor family slipped from 2014 into 2015, Intel introduced a "refresh" of the fourth generation Core processors and kept the fourth generation Core branding.

The fact that Intel apparently plans to market these processors as seventh generation Core means that there are at least going to be some interesting changes to the actual silicon (which wasn't the case with Haswell Refresh).

Additionally, according to the profile, Intel plans to take Kaby Lake into "HVM," or "High Volume Manufacturing," in June 2016. If we assume a roughly three-month cycle time (i.e. the typical time it takes for a wafer to fully process), then investors should expect systems based on Kaby Lake to be widely available in the fall.

What does this mean for Intel stock?
The last several years have shown that new processor families and even compelling new systems based on those processors have done little to stimulate personal computer sales. That said, it is important for Intel to continue putting out increasingly sophisticated processors and for PC vendors to put out better systems, if only to keep demand from getting even worse.

Additionally, although Intel competitor Advanced Micro Devices (AMD -4.11%) has not fielded competitive processors for the personal computer market in quite some time, Intel cannot afford to get complacent, lest it open a window of opportunity for its struggling rival.

Losing significant market segment share in a PC market that's already in decline would represent something of a "double whammy" for Intel's Client Computing Group segment. Though Intel no longer cites this as its growth engine, its revenue base here is substantial and the company must do everything that it can to protect it.

That being said, I don't think Kaby Lake will be all that exciting from a pure product perspective; I'm expecting minimal gains in CPU and 3D graphics performance, with the main enhancements being improved media performance.

Intel's follow-on to Kaby Lake, known as Cannonlake, should be much more exciting both architecturally (there should be more dramatic enhancements to the chip design than we will see with Kaby Lake) and due to the fact that it will utilize a newer 10-nanometer manufacturing process.

Intel can't follow this playbook again
It is well known that Intel intends to release three products on its 10-nanometer process: Cannonlake, Ice Lake, and Tiger Lake. Given how much lead time Intel has in planning these three product families, it is important that Intel make a bigger stride going from Ice Lake to Tiger Lake than it will seemingly make in going from Sky Lake to Kaby Lake.

Indeed, I believe that Intel should make significant changes to the CPU and graphics block in addition to enhancements to the media subsystem to maintain its competitive edge.

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