By Stephen Nellis and Munsif Vengattil
(Reuters) – Intel Corp said Thursday that its new 7-nanometer chip technology was delayed six months and that it would consider devoting more work to external semiconductor foundries, eroding the fundamental principle that manufacturing is key to its success.
Intel shares fell 9%.
Setbacks will have little effect in the coming quarters, but will cause a year-long ripple effect, delaying chips meant to counter the rise of rivals Advanced Micro Devices Inc and Nvidia Corp until late 2021 or even 2023.
Intel’s 7nm delays extend Taiwan Semiconductor Manufacturing Co Ltd’s leadership in the smallest and fastest chip technology, which is now expected to continue to be at least one generation of technology for years to come. They will likely benefit rivals AMD and Nvidia, which outsource their manufacturing to TSMC.
“We will be quite pragmatic about whether we should do things inside or out, and make sure we have the ability to build internally, mix and match inside and out, or go outside entirely if necessary,” said the chief executive. Bob Swan on a call with investors.
AMD shares rose 6%.
Intel is the leading provider of processors for PCs and data centers, but Nvidia and TSMC are challenging the logic of Intel’s business model as the designer and manufacturer of their own chips.
Swan told investors that Intel’s “Ponte Vecchio”, a data center graphics chip meant to compete with Nvidia, will not be released until late 2021 or early 2022 and could use external chip factories. He said the first 7nm Intel chip, intended for personal computers, won’t arrive until late 2022 or early 2023. Its first 7nm data center processor won’t ship until the first half of 2023.
In recent years, Intel has built on the booming growth of data centers that drive cloud computing as PC sales declined, although both segments have expanded as the pandemic forced to increase the spending on technology to make working from home easier.
The company estimated third-quarter revenue of approximately $ 18.2 billion in adjusted earnings of $ 1.10 per share, compared to analysts’ average forecast of $ 17.9 billion and $ 1.14 per share, according to IBES data from Refinitiv.
It updated its revenue guidance for the full year 2020 to $ 75 billion versus analyst consensus estimate of $ 73.86 billion, according to Refinitiv data.
For the second quarter ended June, Intel said overall revenue and adjusted earnings were $ 19.73 billion and $ 1.23 per share, compared to analyst estimates of $ 18.55 billion and $ 1.11 per share, according to Refinitiv.
Revenue for its data center segment was $ 7.1 billion compared to estimates of $ 6.61 billion, according to FactSet data. PC chip sales were $ 9.5 billion, compared to analyst estimates of $ 9.10 billion, according to FactSet data.
Nvidia, which designs but does not make its own chips, earlier this month overtook Intel as America’s most valuable chip provider, thanks to strong sales to data centers that use Nvidia chips for artificial intelligence work. .
In the PC market this week, rival Intel Advanced Micro Devices this week announced new PC chips that analysts hope will work with TSMC’s manufacturing processes. Last month, Apple Inc said it would end its dependence on Intel chips for Mac computers after nearly 15 years. Apple uses chip technology from SoftBank Group Corp., owned by Arm Ltd.
“Delaying its 7nm roadmap timeline will create even more difficulties for Intel as its risk increases the likelihood of further loss of shares for AMD and for other architecture like Arm in its customer and hub markets. data in the next two to three years, “said Kinngai Chan, analyst at Summit Insights Group.
(Report by Stephen Nellis in San Francisco and Munsif Vengattil in Bangalore; Edition by Anil D’Silva and Richard Chang)
