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Intel stands in the middle of the “post-parting” intersection of Apple

New financial statements released on 24/4 of Intel showed that revenue, gross profit margin and net profit decreased compared to the same period last year, up to 41%. Although CCG’s consumer business (Client Computing Group) revenue increased 8%, behind this figure was due to the impact of users working remotely leading to increased demand.

Meanwhile, Intel’s proud data center business was down 20% year-on-year. As for the field of IoT and autonomous car chips are also significantly affected with a 10% decrease. The current situation is becoming increasingly unfavorable for Intel, as Apple has just introduced the new iPad Pro and iMac line equipped with the latest M1 chip. There is a high chance that chips based on Intel’s x86 architecture will be completely phased out by Apple soon.

Although Apple does not set a new standard for M1 chip products to be compatible with other systems, but in the future the x86 chip line will be replaced by ARM chips developed by themselves. With the current R & D progress, this is a tough challenge for Intel because the Meteor Lake architecture on a 7nm process will not be available until 2023.

The IDM 2.0 foundry project with an investment of 20 billion USD in Arizona, US is being built may be the only determination that Intel wants to catch up with other competitors. Although still having a revenue of $ 70 billion, leading in the field of PC and server chips, when Moore’s Law stands on the brink of being disabled, the damage Intel will face in the near future will be counted. degree multiplier.

Intel’s crisis is not present but in the future

This is the first financial report by the new Intel CEO, Pat Kissinger since he took office and it is not a good start. The problem in front of him is very serious, Intel is losing its position in the field it has long dominated. Intel’s gross profit margin decreased year by year, in 2019 dropped below 60% to 58.6%, in 2020 continued to decline to 56% and net profit decreased by two digits.

Although the epidemic has raised raw material prices, Intel cannot stand alone in such a large environment. Competitor AMD’s data is eye-catching, in 2020, AMD’s revenue is $ 9.76 billion, up 45% year-on-year, and its gross profit margin is up 2%. Meanwhile, Intel either has no results on production inputs, or their products are no longer competitive enough and have to lower prices.

For R&D companies, they must invest heavily in new technology. However, Intel has spent a lot of money on process technology updates, the productivity issue has not been resolved for a long time and it has not been able to launch new products, can only rely on the products. Old PCs have low margins to make money. The drop in gross and net profit was not surprising.

Meanwhile, AMD has quickly grasped the market, partnering with TSMC to launch the Ryzen and Xiaolong Zen2 architecture Xiaolong processors in 2019 with a 7nm process. From 14nm to 10nm, Intel spent 5 years. When the 10nm chip was released in late 2020, Dell Chief Financial Officer Tom Sweet couldn’t hide his frustration: “Obviously we are very unhappy about their delay“.

Of course, Intel differs from TSMC and Samsung in terms of its method of computation. TSMC’s 7nm transistor density is comparable to that of Intel’s 10nm chip. But when 10nm chips were released, AMD’s Ryzen 3000 and 4000 series based on the ZEN2 architecture rolled out a handful of consumer products. There are still very few products that can use Intel’s 10nm chips.

This makes one worry about how long Intel customers’ patience can last. And, of course, investors are also concerned about the data business and CCG center revenue, which Intel’s bet on is falling sharply.

IDM2.0 can bring change?

Intel is well aware of its own situation, and the IDM2.0 strategy is the best testament to regain former glory in the semiconductor field. The plan is ambitious, not only to build a 7nm process, but also to divide the casting business into an independent casting services division (IFS), reporting directly to Kissinger CEO, to compete with TSMC. and Samsung.

As early as 2010, Intel has partnered with semiconductor companies such as Achronix and Nokia, and expanded the mobile chip segment. By 2012, Intel continues to expand the capacity of the foundries and focus on developing key products, PC chips.

Just a year later, Intel will once again return to the casting business. In the two years since they left, the semiconductor market has experienced a severe post-pandemic shortage, leading to a shortage of semiconductor supplies that have persisted since the end of 2020. This is an opportunity that Intel wants to make the most of.

This time they were finally determined to do OEM, but Wall Street was skeptical of IDM2.0. Atlantic Equities analyst Ianjit Bhatti believes Intel’s previous investment will not be profitable until 2025. He simply said: “In the short term (about 2 to 3 years), Intel may not be able to cope with AMD’s soaring market share“.

Despite facing many difficulties, but that does not mean Intel does not have a chance. As semiconductor market demand increases and factories’ capacities are all overworked, Intel will catch up with competitors if it speeds up the 10nm and 7nm process. Over the past few years, Intel’s biggest problems have been strategic repetition and confusion. This time, after making a bold investment, it is more important that Intel really get out of the comfort zone.

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