The era of Intels dominance in the chip semiconductor industry may soon come to an end.
On Friday, July 24, Intel, the chip semiconductor giant, fell 16%, dragging down the NASDAQ.
This setback is not due to the companys poor performance, but more market concerns about Intel 7 nano chip lagging behind its rivals and even considering opening up the chip manufacturing outsourcing business.
In the past decades, Intel has been adhering to the design + manufacturing strategy. But now the strategy is on the verge of collapse, shocking the market.
For a company once known for its perfect execution, the failure of its strategic roadmap is an amazing failure, which may well represent the end of Intels dominance in the computer industry, Raymond James analyst Chris CaSO said in a research paper on Friday.
He further said that the outsourcing of cutting-edge technology, and most likely to TSMC, the worlds largest supplier of customized chips, means Intel has given up its major competitive advantage over the past 50 years.
Better than expected results but poor performance guidance
Intels earnings report on Thursday showed that its second quarter revenue was $19.73 billion, up 20% year-on-year; earnings per share under GAAP was $1.19, up from $0.92 in the same period last year, both exceeding market expectations.
Nevertheless, Intels third quarter earnings expectations were poor, with revenue forecasts of $18.2 billion and adjusted EPS of $1.10 lower than analysts expectations.
In addition, Intel also said in the announcement that due to the production problem of the new process flow (12 months behind the original plan), the production time of the 7-nanometer process CPU originally scheduled to be released in January 2021 was delayed by about 6 months compared with the original plan, resulting in the production trend of 7-nanometer processor lagging behind the original target by about 12 million units.
Intel also said in the financial report telephone conference that 7-nanometer chip will be on the market by the end of 2022 or early 2023, and the 7-nanometer server chip will be on the market in early 2023, which means that Intel will be far behind its rival AMD, which has launched the 7Nm ryzen4000 chip for several months.
Even more deadly, Intel CEO bobswan further said it was considering outsourcing chip manufacturing.
The market is generally expected that Intel is likely to outsource this business to TSMC, the top player in the industry. However, some analysts also called for dont be happy too soon.
Matt Ramsay, an analyst at Cowen, a securities firm, believes that Intel may plan to commission TSMC to contract chips, but other TSMC customers have a competitive relationship with Intel, or oppose TSMC to give priority to Intels orders, and TSMC may not be willing to allocate a lot of capacity for Intel. StanfordC.Bernstein Stacy Rasgon, an analyst, says that TSMC has no capacity to serve Intel.
The news of divorce was announced just a month ago
Within a month, Intel has surprised the market twice. In addition to this outsourcing incident, at the end of June, Apple announced that its MAC computers would abandon Intel chips and switch to their own chips in the future.
From a technical point of view, the main reason for Apples switch to its own chips is the slowdown in Intels performance improvement. After all, Apple has grown into a company with powerful chip design capabilities and computers are no longer its main business.
For Intel, the revenue impact of Apples abandonment of Intel computer chips is also relatively limited, and the end of the cooperation is expected to help Intel focus more resources on its faster growing data center business.
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