Vendor promises wrap-up of 10nm chip production this year, but long-term outlook for low growth lingers
Chipmaker Intel has seen better years, and its executive team told investors and analysts that strong growth and market share wins won’t return quickly even as it ramps up production of 10nm processors (and, soon, 7nm ones too).
The Lowdown: After years of delays, Intel says it will start general production of its 10nm Ice Lake processors, including versions for notebook PCs, data center servers, and specialized use cases such as artificial intelligence. In 2021, Intel expects to start production of 7nm chips.
The Details: Despite the forthcoming arrival of smaller chips for greater mobility, processing power, and efficient energy consumption, Intel’s long-term outlook remains down. The company says it expects single-digit growth through 2022 as it competes for market share in the broader computing market — including data center processors, memory, and networking chips.
The Impact: Analysts say the conservative Intel outlook and forecast is reflective of production missteps that sidetracked growth, the continued slump in PC sales that once bolstered Intel’s fortunes, and downward pressure of margins and profitability. Intel says it will have 28% market share in the broader processor market by 2023. While it expects double-digit growth in data center processor sales, most of the positive impact will offset declines in PC sales.
Background: Intel continues to wrestle with the fallout from last year’s poor production schedule, which left the PC market short of processors for the important fourth-quarter selling season. Unable to deliver notebooks and desktops to consumers and businesses, PC vendors suffered sales slumps. While Intel raced to ramp up production in the first quarter to capitalize on demand for replacement PCs, given Microsoft Windows 7’s end of life, PC vendors switched to alternate suppliers to replenish their inventories. At the same time, Intel exited the smartphone modem market, which analysts say is another sign of the chipmaker’s struggle to find its footing in a more competitive market.
The Buzz: “We are very focused on leading technology inflections that will accelerate and create demand for data – AI, 5G, and autonomic [computing],” Swan said at the Intel 2019 investor meeting this week. “We believe in an expanded market opportunity we can play a bigger role in the success of our customers. Our emphasis is on improving execution, accelerating innovation, and evolving our strong culture while making disciplined investments in pursuit of profitable growth.”