Technology Jul 24

Intel’s tech delays bite progressively harder

 Market share becoming harder to come by in Silicon Valley 

by Reuters
Intel’s tech delays bite progressively harder

In chipmaking, being able to make the smallest, most complex processors isn’t just about bragging rights. Those that can, at scale and at speed, have a huge financial advantage over rivals.

As for the others, they end up like Intel. After losing its lead with a years-long series of product delays and fumbles, the U.S. tech firm said on Thursday that its next generation of chips will be six months behind schedule, wiping almost 10% off its $255 billion market capitalization.

Intel is still cashing in rising tech demand, especially by producing chips used in data centers that power cloud computing. The company reported nearly $20 billion of revenue in the latest quarter, and over $5 billion of earnings – both more than one-fifth higher than a year earlier. But rivals like Taiwan Semiconductor Manufacturing currently have an edge, such as the ability to make smaller chips.

The problem is that market share is getting harder to come by and easier to lose. Apple said last month that it was switching its Macs to processors of its own design. As for data-center servers, Intel’s division that produces chips for them accounts for half of the company’s operating profit. Rival Advanced Micro Devices has seen its market value rise over 30-fold in the past five years as it has become more competitive. News of Intel’s delays sent Intel’s stock down 10% and AMD’s up 7% in after-hours trading. Slow and stumbling loses the race.

CONTEXT NEWS

  • Intel said on July 23 that its new 7-nanometer central processing unit microchips, a component for computers and high-powered servers, were approximately six months behind schedule, causing its shares to fall almost 10% in after-hours trading.
  • In its second-quarter earnings call, the company said the first Intel-based 7-nanometer CPU will probably ship in late 2022 or early 2023. Initial shipments of 7-nanometer data-center CPUs are expected to ship in early 2023.
  • The chipmaker reported quarterly revenue of $19.7 billion, an increase of 20% from the same period a year earlier. The company earned $5.1 billion, or $1.19 per share during the quarter, compared to $4.2 billion, or 92 cents in the same quarter of 2019.
  • By Rob Cryan of Reuters @rob_cyran