Quote:Intel announced its financial results today, and although it posted yet another record quarter, the company unveiled serious production problems with its 10nm process. As a result, Intel announced that it is shipping yet more 14nm iterations this year. They'll come as Whiskey Lake processors destined for the desktop and Cascade Lake Xeons for the data center.
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Krzanich also admitted that the company's density lead over competing fabs is shrinking. Intel has long been the keeper of the Moore's Law flame, and the company has continued to insist that the Law is still alive long after other companies have conceded that it expired. We'll have to see if Intel changes its messaging, but we're a long time removed from the Tick-Tock cadence. Considering that Intel hasn't delivered a smaller process in significant volumes since 2014, it's fair to say that the original Moore's Law is officially dead.

Quote:Although Intel has said in the past that it was using self-aligned quad patterning as part of 10-nm production, Krzanich offered the eyebrow-raising prospect that the company has to employ as many as five or six multi-patterning steps to create certain 10-nm features in response to one analyst question.

Krzanich didn't say whether those figures were merely examples of multi-patterning in general or specific examples of steps needed to produce Intel 10-nm chips, but the sheer number of steps inolved in multi-patterning on that scale could be a major factor in the yield problems that Intel is experiencing. As GlobalFoundries put it to me during our foundry tour earlier this year, every interaction a silicon wafer has with lithography tools increases the chance of a defect, and multi-patterning involves a lot of interactions with those tools as a wafer is shepherded to completion.

Quote:As of this writing, it’s not clear if the Core i3-8121 is an unusual one-off or a sign that a few more SKUs might pop up here and there before the product line launches in wider volume. We’re in uncharted waters at this point. This is the first time we’ve seen Intel delayed so badly on a major product line, and the ramifications for overall development aren’t known. The Core i3-8121 isn’t a particularly impressive specimen, but given that we already know Intel’s 10nm development is troubled, it’s not fair to treat the CPU as a final verdict on Intel’s 10nm, either.

Quote:These statements suggest an answer to what happened to Intel’s 10nm ramp and why it’s so late. Put simply, the company bit off more than it could chew. Intel’s node technology has always been ahead of TSMC, Samsung, or GlobalFoundries — a 14nm chip from Intel is roughly equivalent to a 10nm CPU from one of these companies. With 10nm, as shown on the slides above, Intel wanted to widen that gap and make up for the time it lost in delaying 10nm (note that this was before 10nm slid into 2019).
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Intel’s slip on 10nm is significant. It’s the first time in the last two decades, at least, that the company has taken so long to make a node transition. It’s absolutely opened up a bit more opportunity for AMD than might otherwise exist. But it’s also a straightforward issue related to Intel’s decision to aggressively push for higher transistor densities at 10nm, and the use of EUV at lower process nodes should help prevent the problem from occurring again. In aggregate, Murthy’s overall level of confidence is well placed. Intel can’t afford to rest on its laurels and ignore its competitors, but 10nm slipping into 2019 isn’t going to cripple the company, either.

Quote:As a result of Intel's 10 nm difficulties, analyst firm Susquehanna, who recently downgraded AMD and NVIDIA shares on the expected lowered demand for graphics products from these companies in the wake of the first ever Ethereum ASIC, has now revised AMD's share strategy. Previously set at "Sell", the firm now rates AMD's shares as "Neutral" - specifically citing Intel's difficulties in ramping up the new process as simply giving AMD more chances to catch-up and surpass its blue counterpart. Susquehanna's Christopher Rolland published a note to clients stating basically that - that "We believe Intel's delay will help to maintain/improve AMD's competitiveness for their next generation of EPYC and Ryzen products", adding that "(...) for the first time in memory, AMD will compete at a similar process technology as Intel, a strong multi-year tailwind".

Quote:Its summary mentions quite a few juicy details of the 10 nm process. The biggest of these is the achievement of a 2.7-times increase in transistor density over the current 14 nm node, enabling Intel to cram up to 100.8 million transistors per square millimeter. A 127 mm² die with nothing but a sea of transistors, could have 12.8 billion transistors. Intel 10 nm node also utilizes third-generation FinFET technology, with a reduction in minimum gate pitch from 70 nm to 54 nm; and minimum metal pitch from 52 nm to 36 nm. 10 nm also sees Intel introduce metallization of cobalt in the bulk and anchor layers of the silicon substrate. Cobalt emerged as a good alternative to tungsten and copper as a contact material between layers, due to its lower resistance at smaller sizes,

Quote:Intel responded to several analysts' questions on the state of its oft-delayed 10nm process. Swan announced that "Yields are improving consistent with the timeline we shared in April, and we expect systems on shelves for the 2019 holiday season." Earlier this year at CES 2018, Intel announced that it is shipping 10nm processors, but they turned out to be restricted China and came as low-end dual-core parts with a disabled integrated graphics engine.

Quote:It's likely that "Whiskey Lake" will take Intel into 2019 after the company establishes performance leadership over 12 nm AMD "Pinnacle Ridge" with a new round of core-count increases. Intel is also squeezing out competitiveness in its HEDT segment by launching new 20-core and 22-core LGA2066 processors; and a new platform with up to 28 cores and broader memory interface. AMD, meanwhile, hopes to have the first 7 nm EPYC processors out by late-2018. Client-segment products based on its architecture, however, will follow the roll-out of these enterprise parts. We could see a point in 2019 when AMD launches its 7 nm 3rd generation Ryzen processors in the absence of competing 10 nm Core processors from Intel. Posted below is an Intel slide from 2013, when the company was expecting 10 nm rollout by 2015. That's how much its plans have derailed.

Quote:Intel announced that due to its manufacturing delays, it will split its manufacturing group into three different pieces. Sohail Ahmed, who has been working for Intel since 1984 and leading the manufacturing group since 2016, will quit next month.

Quote:Intel's unusually quick response is telling. The company certainly doesn't need any lingering questions surrounding its progress on its 10nm node, particularly as it nears its earnings call later this week. As an official dispatch from an Intel twitter account, the statement does hold all of the legal weight of any official Intel statement, and misleading statements to investors is a punishable offense.

In other words, Intel is throwing its weight behind the assertions it made in its most recent earnings call that systems with 10nm processors will come to market in the second half of 2019. There has been speculation that Intel could skip its 10nm process in favor of moving directly to its nascent 7nm node. But there is nothing to substantiate those rumors.

Demerjian has been right in the past, correctly claiming that Intel's 10nm process was facing delays while the company claimed otherwise, which does give some weight to his claims. Most of Demerjian's article is behind a paywall, so it's hard to analyze the full rationale behind Demerjian's statements. No analyst is infallible, so only time will tell if Demerjian's claims are accurate, or if Intel is indeed making strides toward wide-scale 10nm availability.

Quote:Unfortunately, it’s not possible to see the actual evidence SemiAccurate provides (archival link, the site is down) for its argument because that information is subscriber-only. It’s difficult, therefore, to test the evaluated claims. But the better question to ask, given the paucity of information, is this: Regardless of whether Intel canceled its previous 10nm process, would Intel walk away from being a leading-edge foundry? And the answer there is an obvious “No.”

There is a multitude of reasons why Intel won’t accept this outcome, starting with the fact that it’s tantamount to ceding future progression to outside companies. And in this context, ” canceling” 10nm could mean something more akin to “drawing up a new plan for future node progression” as opposed to “walking away from the leading edge forever,” even assuming SemiAccurate’s rumors are correct. There’s too much at stake as far as Intel’s perceived manufacturing prowess. Leading edge development is simply too important to the company to quit.
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Our final thought is this. While it’s true that Intel’s 10nm slips have already been unprecedented, regardless of whether this rumor is true, these problems do generally fit the theory we’ve talked about over the years: Specifically, node slips and problematic improvement cycles were going to become more normal than they used to be, as the difficulty of further improvement only grew. Intel isn’t the company we expected to slam into these problems first, but that doesn’t mean they aren’t real.

That doesn’t mean Intel hasn’t made mistakes throughout this process. But it does make those mistakes intrinsically more likely to occur.

Quote:If you’d told me five years ago that Intel was about to stumble into arguably the worst manufacturing problems of its existence, I would have been surprised. Our 2012 story on why Intel leads (led) the world in semiconductor manufacturing now looks more like a historical retrospective than a confident projection of future trends. The company’s slip — and the potential consequences of that slip — have driven a lot of analysis over the past few years, some of it written by yours truly.
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It might be tempting to dismiss this as Intel pivoting away from a metric simply because it isn’t winning in that category any longer, but the end of conventional Moore’s law scaling isn’t unique to Intel. It’s something the entire semiconductor industry is grappling with. But we’re also in a reality where no one is sure which AI/ML products will succeed, or how quickly alternative architectures will ramp, or how long it will be before autonomous vehicles are common. The path forward for conventional silicon scaling below 5nm is deeply uncertain.

It’s easy to say that sure, not being in a leadership position is going to cost Intel something. It’s much harder to predict exactly what that cost is going to be. If I personally had to guess, I’d bet on less disruption rather than more. With the gains from each new node smaller than the node before, the chances that missing a node will prove a major problem are lower as well. The factors that matter to future success are likely to be rooted in the types of products a company brings to market and how well those products are positioned to meet the needs of the new workloads we see rising by the day. Process node positioning/leadership is important to that question, but not the sole determinant.

Quote:Renduchintala's comments on the company's work on 10-nm chips suggest interesting times lay ahead next year as the company begins introducing those products in volume. Renduchintala flatly contradicted the notion that the company has scaled back some of its ambitions for the 10-nm process in order to boost yields. In response to one question, the exec noted that "the power and performance and transistor density targets that we set in 2014 remain the same." That could mean Intel's first 10-nm products will still achieve a roughly 2.7x density improvement over its own 14-nm process.

Renduchintala also shed some light on the company's plans for its 7-nm process technology as part of the Q&A. The company's past comments about 7-nm suggested that the fate of that process partially rested in lessons that it needed to learn from ramping 10-nm. Indeed, Renduchintala said that even though Intel's 7-nm development lies in "a separate team and a largely separate effort," that presumed team has taken "a lot of lessons out of the 10-nanometer experience as we defined that and defined a different optimization point between transistor density, power and performance and schedule predictability."

One takeaway from those lessons appears to be a somewhat-less-ambitious scaling goal for 7 nm. Renduchintala notes that Intel 7-nm parts will return to something closer to a traditional 2x scaling goal—about 2.4x, if past comments by Intel execs hold. While that isn't news on its own, Renduchintala's statements confirm that the company's ambitions for 7 nm might wisely be more conservative in light of its 10-nm woes. Renduchintala also reiterated the fact that 7 nm will be Intel's first process with EUV lithography.

Quote:Swan reportedly told attendees the 10nm delay was "somewhat a function of what we've been able to do in the past, which in essence was defying the odds," and that "at a time when it was getting harder and harder" the company "set a more and more aggressive goal." Intel had gotten used to being able to squeeze blood from rocks--or in its case money from silicon--but couldn't quite repeat the feat.
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Intel said in April that it expected the CPU shortage to ease up a bit in the third quarter of 2019; DigiTimes reported in May that supplies could improve as early as June. A recent analysis from Gartner and IDC suggests that rising PC shipments in the most recent financial quarter resulted at least partly from the increased availability of Intel processors, so things might improve on the CPU front sooner than later.

Quote:There’s no arguing the fact that Intel missed, and missed badly, on 10nm. It’s unquestionably going to impact the company’s finances and competitive position against AMD, which is enjoying a resurgence of its own. But when you step back and take a look at the entire semiconductor market across multiple companies, these kinds of things happen. It isn’t always driven by foundry issues, but when you toss in the possibility for designs to under-deliver, the metaphorical board lights up with examples.

Samsung’s first implementations of big.Little were broken and the resulting SoC’s had high power consumption. Qualcomm’s Snapdragon 810 was viewed as a disappointment, though the company argued that some of this was the result of its own partners failing to implement power management properly. AMD’s Bulldozer architecture nearly killed the company. Jump back in time a little farther, and you’ve got the poorly received ATI Radeon HD 2000 family (developed mostly before the AMD acquisition). Nvidia, of course, had the infamous GeForce FX. Intel had Prescott. The point is, most major semiconductor companies have weathered significant silicon misses. This is something that happens to even the best-run companies.

We’ve known for years that each new node brought greater challenges and tougher problems than the previous; that’s why fewer and fewer foundries bother operating on the leading edge at all. Intel might not have been the company anyone expected to slip, but the chances that somebody would have been rising every node.

Intel is going to face a more competitive AMD and a tougher environment for its own products than it would have had it kept to its original plans. That’s a given. If it can’t bring 7nm to market in 2021 as is currently planned, the situation will get harder. We don’t even know when or if desktop CPUs will make the jump to 10nm, and they might avoid that node entirely until 10nm+ or 7nm are available. But Intel’s fundamental position across its markets is strong. It may lose a few points of market share to AMD — it probably will — but it isn’t going anywhere.

Quote:Intel in a quick rebuttal to the earlier reports from Monday, clarified that desktop processors based on the 10 nm silicon fabrication node are still on the company's roadmap. "We continue to make great progress on 10 nm, and our current roadmap of 10 nm products includes desktop," the company said in its one-liner. Monday's reports predicted a horror story where Intel would drag its 14 nm "Skylake" derived microarchitecture through to 2022, at which point it would be 7 years old.

The Tom's Hardware report that posts the statement, however, pins 14 nm to still last till 2021, if not the 2022 date predicted in the HardwareLuxx report. Intel will sell "Comet Lake" through 2020, succeeded by "Rocket Lake," which takes up much of 2021. Towards the end of 2021, Intel will release a desktop processor based on its matured 10 nm++ silicon fabrication node, which will lead the company into 2022, when it finally launches 7 nm EUV-based desktop chips.

Quote:After the tumultuous 10nm transition, Intel is now bullish on its ability to move back to a regular Moore’s Law cadence for at least the next few process technologies.

Bob Swan explained: "[W]e are accelerating the pace of process node introductions and moving back to a two to two-and-a-half year cadence. Our process technology and design engineering teams are working closely to ease process design complexity and balance schedule, performance, power, and cost. We are on track to launch our first 7-nanometer based products, a data center focused discrete GPU in 2021, two years after the launch of 10-nanometer." Bob Swan further clarified that it would launch in the fourth quarter of 2021.

While it might seem doubtful that 10nm would be a one-time hiccup and the company can regain its ability to deliver on a regular cadence at 7nm, there are some arguments in favor of it. Intel says that it has learned several lessons from 10nm. It has reduced the density scaling target and the introduction of EUV should be beneficial to yield learning, as Intel has said that multiple patterning has been one of the big challenges for 10nm. It has also allowed Intel to vastly simplify the 7nm design rules.

Quote:Intel CFO George Davis in an interview with Barron's commented on the company's financial health, and some of the reasons behind its rather conservative gross margin guidance looking forward to at least 2023. Intel's current product stack is moving on to the company's 10 nm silicon fabrication process in a phased manner. The company is allocating 10 nm to mobile processors and enterprise processors, while brazening it out with 14 nm on the client-desktop and HEDT platforms until they can build 10 nm desktop parts. AMD has deployed its high-IPC "Zen 2" microarchitecture on TSMC's 7 nm DUV process, with plans to go EUV in the coming months.

"We're still keenly focused on gross margin. Everything from capital efficiency to the way we're designing our products. What we've said though, the delay in 10 nanometer means that we're going to be a little bit disadvantaged on unit cost for a period of time. We actually gave guidance for gross margin out in 2021 to help people understand. 2023 is the period that we were ultimately guiding [when] we're going to see very strong revenue growth and margin expansion. We've got to get through this period where we have the 10 nanometer being a little bit late [as] we're not optimized on a node that we're on. But [by] then we're moving to a two to two and a half year cadence on the next nodes. So we're pulling in the spending on 7 nanometer, which will start up in the second half of 2021 because we think it's the right thing to do competitively," he said.

Quote:Intel last week said that its Fab 42, which began construction in 2011, had started operations. The manufacturing facility is producing processors using the company’s 10nm process technology and is the company’s third location to use the company’s latest node. The addition of the third 10nm capable fab to the fleet can significantly improve availability of Intel’s latest products. (Via AZCentral/Intel)
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The addition of Fab 42 to the fleet of facilities that manufacture 10nm products in high volume promises to significantly improve Intel’s abilities to supply said processors. As a result, there will be more Tiger Lake-based designs when compared to Ice Lake-powered designs.

Quote:Improved yields on 10 nm are being reported due to deployment of Intel's SuperFin technology, which improved yields to upwards of 50%, but still keeps them under the ones achieved in Intel's 14 nm process; an eye-opening tidbit in that Cannon Lake on 10 nm originally saw yields of only 25% usable chips per wafer; and that backporting Rocket Lake meant Intel had to deal with unfathomably large chips and high power consumption characteristics. And to add insult to injury, there is still not a definite timetable for 7 nm deployment, with delays being expected to be worse than the previously reported 6-12 months. This all paints a somewhat grim picture for Intel's capacity to compete with TSMC-powered AMD in many of its most important markets; the blue giant won't topple, of course, but it's expected that five years from now, we'll be looking at a very different outlook in the market between AMD and Intel. You can check the talked-about points in the call via the transcript after the break. You should still take the transcript with a grain of salt.

Quote:In response to incredible customer demand, Intel has doubled its combined 14 nm and 10 nm manufacturing capacity over the past few years. To do this, the company found innovative ways to deliver more output within existing capacity through yield improvement projects and significant investments in capacity expansion. This video recounts that journey, which even included re-purposing existing lab and office space for manufacturing.

Quote:As reported by Reuters, activist hedge fund Third Point, which reportedly owns a $1 billion stake in Intel, has penned a letter to Intel Chairman Omar Ishrak asking the company to explore "strategic alternatives," like spinning off its fabs and/or divesting itself of unsuccessful acquisitions, to address the company's recent market share losses. The hedge fund also cites an ongoing exodus of Intel's top chip designers, saying the company has a "human capital management issue" and that chip architects have been "demoralized by the status quo."

The letter cites several of Intel's recent missteps, including losing the chip manufacturing lead to Taiwan-based TSMC and Korean chipmaker Samsung, which comes as a result of the company's delayed 10nm and 7nm process nodes. The hedge fund also notes that several of Intel's long-term customers, such as Apple, Microsoft, and Amazon, are now designing their own chips due to Intel's stagnation, eroding its customer base (particularly in the high-margin server market). The letter also cites Intel's share losses to AMD on the CPU side of the business and Nvidia's dominating position in AI workloads as signs that Intel needs to take drastic measures.
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The prospect of Intel spinning off its fabs entirely seems unlikely. The company's native chip production capacity has helped it to largely avoid the shortages we've seen with other chipmakers, like AMD and Nvidia, in the wake of the global pandemic. Intel's tightly-controlled supply chains are also a strength that has helped it combat the waves of shortages that have impacted all facets of semiconductor production, such as secondary componentry like substrates and power ICs.
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Intel has already signaled an increased willingness to embrace third-party foundries to access their leading-edge nodes, thus expanding its existing use of third-party silicon to its core logic components (a first). However, that isn't a long-term solution to the company's woes: Intel has more than twice the semiconductor output of TSMC, which is largely thought to be Intel's presumptive partner for third-party chips. Given that TSMC is already capacity constrained, it obviously wouldn't have enough output to satisfy Intel's incredible volume without making massive long-term investments of its own.

Those types of investments seem unlikely, given that Intel's business would likely be short-lived. Intel CEO Bob Swan recently said that even though Intel will now engage third-party foundries as strategic partners, it will continue to develop its own leading-edge nodes and has deployed a "fix" for its own 7nm node (though that fix has led to an untenable delay).

Swan says that Intel will decide if it will turn to outside foundries as a stop-gap or invest in its own 7nm equipment, and also where and what to outsource, by "really early next year." However, Intel has taken crushing losses this year: Its stock is down 23% this year and is one of the worst-performing on the Dow. Investors are obviously losing patience – Intel's stock is up 7% on the news of the letter from the activist hedge fund.

Quote:Some of Third Point’s… points are hard to disagree with. It’s true that Intel has struggled to execute in recent years. It’s been long enough, frankly, that “recent years” doesn’t really capture the scope of the problem. Intel’s 14nm was the first node to be delayed due to manufacturing issues, which means you can argue that the company has been struggling with node transitions for the past six years. That’s not trivial.

But there are a few specific reasons to think Third Point is stirring the pot. First, Intel has already stated that it’s considering tapping third parties for cutting-edge CPU production. The company is going to have to talk about these issues in its investor presentations in 2021 — there’s no way to avoid it.
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Second, it’s not clear that splitting Intel’s foundries from the design aspect of the company makes sense for either. Intel’s manufacturing rules are specifically designed for Intel microprocessors. Intel does not always use the same design rules for a given node that TSMC did, and it emphasizes high-performance silicon rather than ultra-low-power chips. The company had trouble finding customers for its client foundry business because Intel’s design rules are restrictive.
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Intel’s biggest problem is that confidence in its manufacturing prowess has waned to the point that conversations like this are happening at all. Semiconductors require long investment cycles that pair poorly with the quarterly focus of the market. Before it delayed its 7nm node, Intel had announced it would regain process leadership with its own 5nm node in 2023. Presumably, the best-case date for that now is 2024. If 5nm were to shift outwards again, Intel might need until a hypothetical 3nm to regain superiority, with an extremely theoretical launch date of somewhere between 2026 and 2028.

All of these facts are already weighing on Intel based on comments made by Bob Swan when he announced the 7nm delay. The case Third Point makes for a spinoff isn’t as cut and dry as the company would like to make it sound, but whatever decision Intel makes on these issues will have a profound impact on the company in years to come, for good or ill. We’ll almost certainly hear more about these issues during the company’s quarterly conference call in January 2021.

Quote:Semiconductor manufacturing is not an easy feat to achieve. Especially if you are constantly chasing the smaller and smaller node. Intel knows this the best. The company has had a smooth transition from other nodes to the smaller ones until the 10 nm node came up. It has brought Intel years of additional delay and tons of cost improving the yields of a node that was seeming broken. Yesterday the company announced the new Tiger Lake-H processors for laptops that are built using the 10 nm process, however, we are questioning whatever Intel can keep up with the semiconductor industry and deliver the newest nodes on time, and with ease. During an interview with Intel's CEO Bob Swan, we can get a glimpse of Intel's plans for the future of semiconductors at the company.
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Just like GlobalFoundries licensed 14 nm technology from Samsung Electronics to produce the node at GlobalFoundries facilities, the same would apply to Intel. However, that is only considered as an option for now. Intel has made a lot of development on the next-generation nodes as well, and that is not counting the current 10 nm one. The 7 nm is going to arrive shortly, and even smaller nodes are in R&D phases. Licensing a node from someone else would simply null Intel's efforts so we have to wait and see how it plays out. Simply put, Intel has no plans in dropping its Fabs as it is the company's competitive advantage and it only plans to grow.