Jan 20, 2021 23:00:00

What are the five issues that Intel needs to solve in order to revive?

Intel, an American chip maker, is a leading company in the CPU market and once accounted for more than 80% of the

market share , but since around 2016 when rival AMD announced the Zen architecture , Intel has gradually become AMD is losing that share. Ben Thompson, a former employee of Apple and Microsoft and author of the IT blog 'Stratechery,' explains that Intel has five problems to solve.

Intel Problems – Stratechery by Ben Thompson
https://stratechery.com/2021/intel-problems/

When Brian Krzanich was elected CEO in 2013, Thompson published a positive article entitled ' The Intel Opportunity ,' but 'from 2021, this is too optimistic. It was too accurate. ' In 2018, Mr. Krzanich resigned as CEO because he violated internal regulations, and Bob Swan , a management expert instead of semiconductors, took over, and it is evaluated that 'Intel has lost the opportunity' doing.

Mr. Thompson claims that Intel has the following five problems.

◆ Problem 1: Withdrawal from the smartphone market
Thompson points out that Intel has so far focused too much on improving processing speed and performance, and has neglected power control. As a result, Thompson believes that Apple has fallen behind in the chip industry for Android smartphones as well as for the iPhone, which originally developed its own chip.

Processor development is costly. Over the last two decades, Intel's development costs have reached billions of dollars, but Thompson said the billion-dollar smartphone market was the source of revenue to recover this cost. Insisted.

In addition, Intel had a modem chip business for smartphones, but sold it to Apple in 2019.

Apple announces acquisition of Intel's smartphone modem chip business-GIGAZINE

◆ Problem 2: Dependence on x86
In addition to desktop and laptops, Intel is also making money in the data center sector. Originally for enterprises, Sun Microsystems ( Oracle ) was monopolized, but Google has adopted Intel's x86 for its server instruction set, and other major data center operators have taken this Google approach. Following that, Intel has taken a large share of the data center market.

Intel has an x86 license, and if another manufacturer, such as AMD, develops a processor that uses x86, you will get a license fee. The x86 licensing business is profitable, but not only did rival AMD enter the data center market, but Intel and NVIDIA announced processors based on the Arm architecture. The share in the data center market is gradually decreasing. In fact, Intel's revenue in the third quarter of 2020 (July-September) was reported to be sluggish in the data center sector. After all, Thompson argues that Intel's problem is that it relies on the x86 licensing business and fails to take a radical step.

◆ Problem 3: Delay in semiconductor manufacturing capacity
Roughly speaking, the narrower the circuit line width and spacing of a semiconductor chip, the higher the circuit density (integration degree) per area and the better the performance. With manufacturing process technology to increase integration, Intel struggled to develop 10nm process nodes, resulting in lagging behind semiconductor foundry TSMC.

AMD, a fabless chip maker that does not have its own manufacturing plant, has outsourced production to TSMC, and AMD CPUs are now cheaper and better than Intel CPUs. This also contributes to Intel's share of the CPU market.

◆ Problem 4: The rise of TSMC
In addition, the day after Intel announced that Patrick Gelsinger will be appointed as the new CEO , TSMC announced that it will spend $ 28 billion on capital investment in 2021 to further advance TSMC. I made a strong impression. Intel is already predicted to outsource CPU manufacturing to TSMC, and Thompson claims that semiconductor foundries seem to be prepared to fall behind TSMC.

Market research company predicts that Intel will outsource CPU manufacturing to TSMC, entry CPU in 2021, middle range & high-end CPU manufacturing will start in 2022 --GIGAZINE

◆ Problem 5: Geopolitics
Intel has manufacturing plants in Oregon, New Mexico, and Arizona in the United States. On the other hand, TSMC has manufacturing plants in Taiwan and Samsung has manufacturing plants in South Korea. However, as a result of the Trump administration's US-China trade war, TSMC has announced that it will open a 5nm process manufacturing plant in Arizona.

Will the world's largest semiconductor manufacturing foundry 'TSMC' in charge of Apple's chip manufacturing build a factory in the United States? --GIGAZINE

'The TSMC manufacturing plant in Arizona is expected to open in 2024, but it will arguably be the most advanced manufacturing plant in the United States,' Thompson said. Is supposed to be forced.

Thompson says the solution is either 'split Intel between design and manufacturing' or 'subsidize by the US government.' 'It's important to understand that regaining America's competitiveness will take years more than regaining leadership,' Thompson said.