INTC - Intel

[Dalal.Holdings]

Another legendary American company on the same trajectory as IBM, GE, and Boeing. Tainted by MBA Wall St types with actual engineers relegated to lesser status. Time for America to cede high end chip fabrication—one of the last manufacturing bases left—to Asia.

 

Are we Great Again or what?

 

If we continue in this track, we’ll just be a country of healthcare workers, bankers, social media/web ad engineers, and management consultants. Maybe we can also take out Elon’s companies like some on here want to so there is no more American edge remaining...

[RadMan24]

Another legendary American company on the same trajectory as IBM, GE, and Boeing. Tainted by MBA Wall St types with actual engineers relegated to lesser status. Time for America to cede high end chip fabrication—one of the last manufacturing bases left—to Asia.

 

Are we Great Again or what?

 

If we continue in this track, we’ll just be a country of healthcare workers, bankers, social media/web ad engineers, and management consultants. Maybe we can also take out Elon’s companies like some on here want to so there is no more American edge remaining...

 

To your point above, TSMC will build a $12b fab here in the U.S.

 

The Fab process have changed the ball game and there are great benefits to this development. For example, this provides ample incentive for major tech companies to design CPUs & GPUs for their own various purposes, excluding memory chips. The combination of hardware and software design will continue to lead tech innovation.

 

We also don't know what will happen with quantum computers.

 

I tend to agree Intel's business model and moat are in serious jeopardy and too hard for me to figure out if they win out.

 

 

[Spekulatius]

Another legendary American company on the same trajectory as IBM, GE, and Boeing. Tainted by MBA Wall St types with actual engineers relegated to lesser status. Time for America to cede high end chip fabrication—one of the last manufacturing bases left—to Asia.

 

Are we Great Again or what?

 

If we continue in this track, we’ll just be a country of healthcare workers, bankers, social media/web ad engineers, and management consultants. Maybe we can also take out Elon’s companies like some on here want to so there is no more American edge remaining...

 

To your point above, TSMC will build a $12b fab here in the U.S.

 

The Fab process have changed the ball game and there are great benefits to this development. For example, this provides ample incentive for major tech companies to design CPUs & GPUs for their own various purposes, excluding memory chips. The combination of hardware and software design will continue to lead tech innovation.

 

We also don't know what will happen with quantum computers.

 

I tend to agree Intel's business model and moat are in serious jeopardy and too hard for me to figure out if they win out.

 

Even with a fab build here in the US by TSM May mean that they do copy exact from their other plants here. While this is better than nothing one would want to self developed leading edge process technology here.

 

This is something the US administration (current and next one) should think about rather than steep tariffs or how to keep coal plants running.

 

If someone looks at INTC from a 10k foot perspective , the current integrated model doesn’t make any sense. They should try to make a deal to JV the manufacturing ops with TSM and stick to designing and marketing.

 

It would required an admission of defeat of sorts, but INTC has done this before when they abandoned memory chips (which they invented) because it didn’t make any sense back any more.

[Dalal.Holdings]

If TSMC becomes dominant in the future, then Taiwan will become strategically even more important for the U.S. to keep from China...will only increase the number of potential future flashpoints.

 

Integrated circuits are important for defense—missile guidance, jets, etc...

[Dalal.Holdings]

Another legendary American company on the same trajectory as IBM, GE, and Boeing. Tainted by MBA Wall St types with actual engineers relegated to lesser status. Time for America to cede high end chip fabrication—one of the last manufacturing bases left—to Asia.

 

Are we Great Again or what?

 

If we continue in this track, we’ll just be a country of healthcare workers, bankers, social media/web ad engineers, and management consultants. Maybe we can also take out Elon’s companies like some on here want to so there is no more American edge remaining...

 

To your point above, TSMC will build a $12b fab here in the U.S.

 

The Fab process have changed the ball game and there are great benefits to this development. For example, this provides ample incentive for major tech companies to design CPUs & GPUs for their own various purposes, excluding memory chips. The combination of hardware and software design will continue to lead tech innovation.

 

We also don't know what will happen with quantum computers.

 

I tend to agree Intel's business model and moat are in serious jeopardy and too hard for me to figure out if they win out.

 

TSMC's fab in USA will likely be like Foxconn's proposed factory in Wisconsin. Just an empty building with broken promises of manufacturing revival in the U.S. to get at some tax benefits and goodwill with U.S. politicians while the real work continues to be done in Asia...

[Liberty]

Intel restructuring, chief of engineering is out:

 

https://newsroom.intel.com/news-releases/intel-changes-technology-organization/#gs.bbmg41

[villainx]

In line with some of the conversation here, in recent Pivot podcast, Mark Cuban wondered what would happened to USA strategic strength if Intel (or USA) no longer made the chips.  It's one thing were cotton swab is low supplied but the tech that goes into defense/military/vital industry being made outside USA would be ... not ideal? 

 

I hope I blurbed it correctly.

 

And as such, I thought it was interesting.  And is there an investment angle if one agreed with Cuban's thought process?

[Jurgis]

AFAIK, USA mostly already is not building the chips. Intel is, but if all foreign supply would be cut, most products would not be buildable likely.

[Dalal.Holdings]

In line with some of the conversation here, in recent Pivot podcast, Mark Cuban wondered what would happened to USA strategic strength if Intel (or USA) no longer made the chips.  It's one thing were cotton swab is low supplied but the tech that goes into defense/military/vital industry being made outside USA would be ... not ideal? 

 

I hope I blurbed it correctly.

 

And as such, I thought it was interesting.  And is there an investment angle if one agreed with Cuban's thought process?

 

USA's strategic weakening has been in progress for some time. People encouraging Intel to drop its fabs adds to that. After all, American investors are all about "less capital intensive" businesses nowadays...

 

So ship all those "capex heavy" businesses abroad (let Foxconn and TSMC do all the heavy lifting!) and hope there is no future geopolitical conflict where your opponent can mess with your imports!

 

Meanwhile, load up Boeing/GE/etc with debt to please Wall st and outsource 737 Max software dev to boost them margins...

[Castanza]

June 2020

 

AMD Revenue 1.93B, up 26.19%

INTC Revenue 19.73B, up 19.58%

 

AMD Net Income 1.57M, up 348.57%

INTC Net Income 5.1B, up 22.16%

 

AMD Diluted EPS 0.13, Up 333.33%

INTC Diluted EPS 1.19, Up 29.35%

 

AMD Net Profit Margin 8.13%%, up 255.02%

INTC Net Profit Margin 25.88%, up 2.21%

 

AMD P/E 165 :o

INTC P/E 9

[Spekulatius]

June 2020

 

AMD Revenue 1.93B, up 26.19%

INTC Revenue 19.73B, up 19.58%

 

AMD Net Income 1.57M, up 348.57%

INTC Net Income 5.1B, up 22.16%

 

AMD Diluted EPS 0.13, Up 333.33%

INTC Diluted EPS 1.19, Up 29.35%

 

AMD Net Profit Margin 8.13%%, up 255.02%

INTC Net Profit Margin 25.88%, up 2.21%

 

AMD P/E 165 :o

INTC P/E 9

 

But $AMD‘s narrative is better right now. $INTC is just a boomer tech stock.

[Castanza]

All this buzz over the 6-12m 7nm chipset delay but Intels 10nm chip still outperforms AMD 7nm chip in multiple categories. In the meantime it looks like Intel will outsource some more operations to TSMC while they refine their in-house process. 

[Spekulatius]

All this buzz over the 6-12m 7nm chipset delay but Intels 10nm chip still outperforms AMD 7nm chip in multiple categories. In the meantime it looks like Intel will outsource some more operations to TSMC while they refine their in-house process.

 

I also believe that Intel‘s 10nm process is roughly equivalent to TSMC‘s 7nm process, as they define these differently. That’s not to say that TSMC doesn’t have an edge here, but it’s not as the “nm” delta suggests.

 

Intel hasn’t applied EUV yet ( I think) and they may hit some limitations going forward, or perhaps have already.

[Jurgis]

Assuming 5% growth (which is what M* predicts and close to historical growth), starting with 20B FCF and going with terminal 15PE, INTC DCF shows ~15% expected annualized return. This is good in current market.

 

With tech company though, it's hard to invest at 5% growth expectation.

 

Risks:

 

- AMD captures substantial part of server/data center market. Not very high probability, but possible.

- ARM processors capture substantial part of server/data center market. Not very high probability, but possible.

- Intel continues to piss away FCF on various attempts to grow/diversify/etc. They overpay for some large acquisition. IMO they have been bad at this and I don't see why this would change. I'd say this is moderately high probability.

- Intel has to capex way more for next generation(s) of fabs and FCF falls accordingly. This is quite possible.

 

Possible positive surprises:

 

- ??? I guess something may come out of left field, but I'm not sure what... More AI inferencing workflows on CPUs?

- OK guys surprise me. Tell me your wildest fantasies of how/where Intel will grow or profitably capture some market in next 10 years.  8)

 

Disclosure: No position. I may or may not buy one at any time.

[OnTheShouldersOfGiants]

Why has it been so hard for AMD to grab market share in the Datacenter space?

[Jurgis]

Why has it been so hard for AMD to grab market share in the Datacenter space?

 

It's probably companies just buying standard equipment configurations and replicating them.

Intel was way more geared towards enterprise for long time. And that includes some ridiculous configurations and pricing. Well, part of the pricing is also on Dell/whoever provides the whole computer/board side. But it seemed that both Intel and computer/board OEMs were pretty much geared to push Intel to enterprises. I'd think it's not easy for AMD to get into that sales channel chain. I'm not deeply into the pricing, configurations, sales though, so take it FWIW.

 

The nodes I've seen on Azure are all Intel. Not sure if they have any AMD.

 

AMD is also behind with supporting AVX family of instructions. AMD CPUs with AVX2 were couple years behind Intel and AMD still does not have AVX512 CPUs. But this is something that only few companies might care about, so  ::)

[formthirteen]

Discussion on HN about "What's wrong with Intel, and how to fix it: Former principal engineer unloads (pcworld.com)":

https://news.ycombinator.com/item?id=24068135

 

The article: https://www.pcworld.com/article/3569182/whats-wrong-with-intel-and-how-to-fix-it-former-principal-engineer-unloads.html

 

The principal engineer who worked on CPUs from the Pentium III to Core i7 says Intel has lost focus, and it's "lucky" AMD can't make enough CPUs to do more damage.

 

“First, Intel is really out of focus,” Piednoel said in the nearly hour-long video presentation. “The leaders of Intel today are not engineers, they are not people who understand what to design to the market.”

 

Pienoel admitted his information on Intel is essentially “obsolete” and years out of date. That also lets him speak freely as nothing he spoke of was from information obtained under an NDA, he said. Instead, his analysis was mostly based on public information that’s been swirling around Intel.

 

“Intel is lucky AMD has capacity constraints and because of this, they can’t grab market share fast enough,” he said. “We kind of had the same thing when AMD had Athlon 64 and we were basically trying to catch up with Pentium 4 to Conroe.”

 

Indeed, AMD had made a massive dent in Intel’s performance lead when the Pentium 4 and its Netburst architecture just never closed the door on AMD. For a few years, AMD’s chips were the must-have CPUs, while Pentium 4 was shunned. With Intel’s original “Conroe” or Core 2 CPUs in 2006, Intel regained the performance crown and literally hadn’t lost it until AMD’s resurgence with Ryzen in 2017.

[mwtorock]

i would caution to look up history for guidance though in this case. Management teams are totally different now in both AMD and Intel.

[Jurgis]

i would caution to look up history for guidance though in this case. Management teams are totally different now in both AMD and Intel.

 

Can you elaborate? Are the current management teams better/worse/different how?

[mwtorock]

i would caution to look up history for guidance though in this case. Management teams are totally different now in both AMD and Intel.

 

Can you elaborate? Are the current management teams better/worse/different how?

 

AMD is centered around products. From what I understand, they have a product road map for next 5 years or more clearly planned internally. If we look back the road map they announced from 2 years back, they pretty much delivered all the products across lines. Their R&D people is ranked near the top within the company (from what employees say).

 

On the other hand, intel CEO is a finance guy and an outsider of the chip industry. I don't know anything particularly bad about him. But it is pretty hard to play catch up game with a non product guy. Intel also lost a lot of product talent for various reasons in the last decade. I found a few chip companies that were bought out by Intel. They all more or less had some nice designs or architectures or something Intel wanted, but people told me that they didn't think intel did anything with those (other than controlling the patents). Intel used to have a moat around manufacturing too, but that is gone now with the rise of TMSC. So I am not convinced that Intel will catch up product wise with high percentage certainty. 

[Castanza]

i would caution to look up history for guidance though in this case. Management teams are totally different now in both AMD and Intel.

 

Can you elaborate? Are the current management teams better/worse/different how?

 

AMD is centered around products. From what I understand, they have a product road map for next 5 years or more clearly planned internally. If we look back the road map they announced from 2 years back, they pretty much delivered all the products across lines. Their R&D people is ranked near the top within the company (from what employees say).

 

On the other hand, intel CEO is a finance guy and an outsider of the chip industry. I don't know anything particularly bad about him. But it is pretty hard to play catch up game with a non product guy. Intel also lost a lot of product talent for various reasons in the last decade. I found a few chip companies that were bought out by Intel. They all more or less had some nice designs or architectures or something Intel wanted, but people told me that they didn't think intel did anything with those (other than controlling the patents). Intel used to have a moat around manufacturing too, but that is gone now with the rise of TMSC. So I am not convinced that Intel will catch up product wise with high percentage certainty.

 

What do you mean "catch up product wise?" Are you referencing a pipeline, quality, or competitive products?

 

AMD CEO Dr. Su is a great leader. She has a background in engineering and really knows her stuff.

 

Playing devils advocate to the Intel bears..... If Intel has managed to grow and innovate for the past decade despite a dog shit management team, what happens when they get their very own Dr. Su? Personally I think the resurgence in AMD is good for Intel. A bit of a kick in the pants. Make some changes and bring in the right people.

[rkbabang]

What do you mean "catch up product wise?" Are you referencing a pipeline, quality, or competitive products?

 

AMD CEO Dr. Su is a great leader. She has a background in engineering and really knows her stuff.

 

Playing devils advocate to the Intel bears..... If Intel has managed to grow and innovate for the past decade despite a dog shit management team, what happens when they get their very own Dr. Su? Personally I think the resurgence in AMD is good for Intel. A bit of a kick in the pants. Make some changes and bring in the right people.

 

If they get their very own Dr. Su.  Or do they have a Dr. Su on order?

[rb]

It's been my experience that if you pay enough money one tends to shows up.

[Jurgis]

It's been my experience that if you pay enough money one tends to shows up.

 

Money has close to nothing to do with CEO quality.

 

2 (?) CEOs later Intel still has crappy leadership.

 

Perhaps your experience is colored by hugely successful Microsoft transition to Nadella.

 

I would say that this is more of an exception than the rule. I'd say AMD waited 10+ years for Lisa Su. IBM? Nokia?

 

We'll see how Intel fares and when - if ever - it gets a great CEO.

[Jurgis]

i would caution to look up history for guidance though in this case. Management teams are totally different now in both AMD and Intel.

 

Can you elaborate? Are the current management teams better/worse/different how?

 

AMD is centered around products. From what I understand, they have a product road map for next 5 years or more clearly planned internally. If we look back the road map they announced from 2 years back, they pretty much delivered all the products across lines. Their R&D people is ranked near the top within the company (from what employees say).

 

On the other hand, intel CEO is a finance guy and an outsider of the chip industry. I don't know anything particularly bad about him. But it is pretty hard to play catch up game with a non product guy. Intel also lost a lot of product talent for various reasons in the last decade. I found a few chip companies that were bought out by Intel. They all more or less had some nice designs or architectures or something Intel wanted, but people told me that they didn't think intel did anything with those (other than controlling the patents). Intel used to have a moat around manufacturing too, but that is gone now with the rise of TMSC. So I am not convinced that Intel will catch up product wise with high percentage certainty.

 

Yeah, I think I agree with this picture.