Although Intel posted good figures for its third business quarter, the stock market severely punished the chipprimus as the outlook for the next few months was only moderate. In addition, investors were furious that Intel is making slow progress with its next generation of processors manufactured in the 7-nanometer (nm) process. Corresponding CPUs should no longer be released in 2021, but from mid-2022 (client CPU Meteor Lake) or even only in early 2023 (server CPUs Granite Rapids).
The background is a serious problem in production, which leads to a reject rate that is much too high. Intel basically manufactures its processors itself, but CEO Bob Swan now suggests that he could also imagine outsourcing parts of the manufacturing.
In previous years, Intel had already had enormous difficulties with the 10 nm manufacturing process. Chief Financial Officer George Davis said at an analyst conference in March this year that the 10 nm production process has so far been less productive for Intel than the 14 nm and also the 22 nm process. After years of delay, the chips are now used in ultrabooks and server CPUs of the Ice Lake series, but chip yield and clock rates do not meet expectations. Davis admitted that Intel was lagging behind the competition. With the 7 nm process, however, the company wants to catch up with the rivals – and with the 5 nm process, it will win back the top in a few years.
At Intel rival AMD, however, everything seems to be going according to plan: the Zen 3 processors (Ryzen 4000) are manufactured using the 7 nm process, and the “Vermeer” desktop chip is scheduled to be launched a year ago. The successor Zen 4 (Ryzen 5000), which is produced in 5 nm production, also seems to be progressing according to plan. However, comparisons with the Intel world are not appropriate: The 7 nm process at Intel is not the same as the corresponding production at AMD or its contract manufacturer TSMC.
With all the problems, Intel CEO Bob Swan now felt compelled to deliver a relief. The company announced that it would divide the Technology, Systems Architecture and Client Group (TSCG) into five areas and fire the chief engineering officer Venkata (“Murthy”) Renduchintala, perhaps the most important manager behind Swan to date. The following five groups have emerged from the TSCG:
The teams each receive their own management, which reports directly to Swan. “I look forward to working directly with these talented and experienced technology specialists,” said Swan in a statement. Renduchintala, who came to Intel from Qualcomm in 2015, belonged to the circle of managers, as did the former AMD chip designer Jim Keller, who had only recently announced a new beginning in the house of Intel co-founder Robert Noyce. But Keller, who is considered the star of the industry with previous positions at Apple, AMD and Tesla, resigned in mid-June 2020 after “only two years” for “personal reasons”.
Intel shocked the markets with the announcement now that it was delaying the 7nm production process and considering outsourcing or a manufacturing partnership for manufacturing. A law firm has already announced that it will represent shareholders who were harmed by the delay in the manufacturing process and the resulting drop in share prices.
Despite everything, Intel was able to report very good figures for its second business quarter. Revenue increased to $ 19.7 billion, an increase of 20 percent over the same period last year ($ 16.5 billion). The group also increased its net income significantly: from $ 4.2 billion in the second quarter of 2019 to now $ 5.1 billion. Intel grew primarily with customers from the data center spectrum (plus 43 percent) and with cloud providers (plus 47 percent). The PC business was much slower (plus seven percent).