Intel shares plunged Thursday after the company reported serious manufacturing problems with its next generation of microprocessor. The company suggested it might turn to its rivals to make new chips if Intel cannot make them in its own factories.
Intel said it is a year behind in developing its forthcoming 7-nanometer processors, an ominous sign after the company suffered years of delays producing its current generation of 10nm chips. The latest problems will result in a six-month delay in bringing the 7nm technology to market, according to Intel, which is now due late in 2022 or early 2023.
Investors were blindsided and Intel’s stock plunged 10% in after-hours trading.
The company buried word of its production problems at the bottom of its quarterly earnings release Thursday. Instead, Intel touted strong second-quarter results – sales were up 20% despite the pandemic, well ahead of Wall Street expectations.
Investors spotted the bad news about the 7nm chips immediately, though, and nearly every question on the company’s quarterly analyst call was about Intel’s manufacturing failures. One analyst scolded Swan, saying “investors are frustrated” to hear of the latest defects.
“We’re not happy. I’m not pleased with our 7nm process performance,” CEO Bob Swan acknowledged at the end of Thursday’s call after an hour of browbeating from investment analysts.
Earlier in the call, Swan said Intel had “identified a defect mode in our 7nm process” and insisted there are no “fundamental roadblocks” to the new technology.
Intel develops each new generation of chip technology at its Ronler Acres campus in Hillsboro, advancing computing power on a regular cadence called “Moore’s Law.”
The term, coined by Intel founder Gordon Moore, predicts exponential growth in computing power on a dependable timetable – driven by improvements in manufacturing technology that enable smaller features on each new generation of chips.
As those features approach the atomic level, though, it becomes more difficult to deliver those regular improvements. It’s a challenge every company has been facing but Intel competitors – especially contract manufacturer Taiwan Semiconductor Manufacturing Co. – don’t seem to have run into the same problems Intel has.
Last month, Apple announced it is dumping Intel chips from its Mac lineup of PCs and laptops. Continued production problems could prompt other manufacturers and data center operators to do the same.
On Thursday, Swan said Intel has developed “contingency plans” to outsource production of new chip designs to other manufacturers if it cannot deliver its own technology. It’s a humbling admission from a company that long cherished its title as the world’s most advanced chipmaker.
It’s not clear what that might mean for Oregon, where the company is one year into a multibillion-dollar expansion of its D1X research factory in Hillsboro. Intel is Oregon’s largest corporate employer, with 20,000 people working at its Washington County campuses.
But outsourcing production would certainly be less profitable for Intel and it could cost the company technical advantages it has historically enjoyed by coordinating its architecture design and manufacturing.
“To the extent that we need to use somebody else’s process technology, and we call those contingency plans, we will be prepared to do so,” Swan said Thursday.
-- Mike Rogoway | mrogoway@oregonian.com | twitter: @rogoway | 503-294-7699
Subscribe to Oregonian/OregonLive newsletters and podcasts for the latest news and top stories.
The Link LonkJuly 24, 2020 at 05:57AM
https://ift.tt/32NVSuW
Intel stock craters, investors ‘frustrated’ by new manufacturing defects - oregonlive.com
https://ift.tt/2YXg8Ic
Intel
No comments:
Post a Comment