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Intel 4th QTR 2020 Earnings Discussion

Daniel Nenni

Admin
Staff member
Here is the video:


Transcript: https://seekingalpha.com/article/44...n-on-q4-2020-results-earnings-call-transcript

Intel Corporation’s fourth-quarter and full-year 2020 earnings news release and presentation are available on the company’s Investor Relations website. The earnings conference call for investors begins at 2 p.m. PST today; a public webcast will be available at www.intc.com.

Press Release:

Intel Q4 2020 Results.jpg
 

Daniel Nenni

Admin
Staff member
Pat Gelsinger:
“I am confident that the majority of our 2023 products will be manufactured internally,” he said. “At the same time, given the breadth of our portfolio, it’s likely that we will expand our use of external foundries for certain technologies and products.”

"Based on initial reviews, I am pleased with the progress made on the health and recovery of the 7-nanometer program. I am confident that the majority of our 2023 products will be manufactured internally. At the same time, given the breadth of our portfolio, it's likely that we will expand our use of external foundries for certain technologies and products. We will provide more details on this and our 2023 roadmap once I fully assess the analysis that has been done and the best path forward."

Daniel Nenni:
Remember, a majority is 51%. I stand by my prediction that Intel is the reason why TSMC raised 2021 CAPEX 50%. Pat plans to provide more details after officially taking over on Feb. 15 (next investor call).

Bob Swan:
"In July, we highlighted a challenge with our 7-nanometer technology and started a process to improve it while evaluating the best approach for our 2023 product lineup. Since that time, we have made tremendous progress on our 7-nanometer technology. When 7-nanometer was originally defined, the flow contained a particular sequence of steps that contributed to the defect issue we discussed in July. By re-architecting these steps, we've been able to resolve the defects.

As part of this work over the last six months, we also streamlined and simplified our 7-nanometer process architecture to better ensure we'll be able to deliver on our 2023 product roadmap. The inline data we have been collecting and our pipeline of proven yield development projects gives us confidence in our ability to deliver on our commitments going forward.

At the same time, as Pat mentioned, we will continue to leverage the relationships we've developed over the years with our external foundry partners and believe they can play a larger role in our product roadmap given our disaggregated designs. Once Pat has had a chance to join, he'll further assess our analysis and drive the final manufacturing decision for our 2023 CPU products. Therefore, we'll communicate that decision soon after he takes over, but not today."

Daniel Nenni:
We talked about Intel 10nm yield here: https://semiwiki.com/forum/index.ph...estion-about-the-10nm-yield.13594/#post-45179 . Not having EUV was a serious issue. Intel 7nm is expected to be full EUV. Given Pat's technical background hopefully he will address 7nm yield issues in more detail in the next call.

In the Q&A 7nm came up a few times. It looks to be scheduled for 2023 while the TSMC equivalent 3nm will be in mass production (Apple iProducst) in 2022 and rest of word in 2023. In my opinion Intel will have a hybrid product roadmap with Intel 7nm and TSMC 3nm starting in 2023.

Pat Gelsinger:
"Let me just add a couple of points to that. This is Pat again. As we said, we believe the majority will be on our 7-nanometers, but we will be increasing the use of foundry capabilities in that timeframe as well."

Daniel Nenni:
Absolutely.
 

Daniel Nenni

Admin
Staff member
Best Analyst Question that will hopefully be answered in more detail on the next call:

Stacy Rasgon
Hi guys. Thanks for taking my question and Pat, welcome to Intel, glad to see you here. I'm going to address the elephant in the room a little bit and Pat I understand your initial perspective on 7-nanometer from looking at it for a short period of time.

But at the same time, which I've got to say is the company was telling us for a year that 7-nanometer was on track, that it looked great and then all of the sudden, it wasn't to the point of considering potentially massive strategic shifts.

So, now I guess how can we as investors have confidence that after a brief look that you've given it at this point that things really are on track. What are you seeing that gives you that confidence and how should we think about the current process and I guess and how they feed into the risks potentially the future nodes since it sounds like you're sticking around on the total manufacturing, especially just given what we've seen at both 7-nanometers, but also 10-nanometers and 14-nanometers, the last several nodes where we've had problems, like how do we get that confidence?

Pat Gelsinger
Well, I would also say that Bob and the team have been working on this for the last six months diligently. So, even though my investigation was really just a few days, I'm looking at data that's been thoroughly analyzed, trends over the last six months that clearly is bringing them to a point of greater confidence for. I looked at that data, I came to the same decisions that they were.

At the same time, we're pausing, right, to say that everything is resolved to give me a little bit more time with the team to understand the roadmap and to dig deeper into those decisions and like we said, we'll be giving more clarity on that in the near future after I've had time to analyze it more carefully.

Also, the team has been making adjustments of leadership. Ann has been doing a great job as we moved her into that role. You'll be seeing we're making adjustments in the leadership of our product development teams as well where talent is going to come into the company.

We're excited about the roadmap that we're on. You might have seen we just announced a new fellow coming back, one of my absolute favorites when I was here in Glenn Hinton coming back to the company and you'll be seeing other announcements of key leaders coming back in.

So, I think the team has been doing a great job getting us to this point. I expect with the leadership, the roadmap, and a few more weeks of analysis, we'll be making very solid decisions that allow us to put the company on a path that is merited to the great foundation that Intel has had in the past.

Stacy Rasgon
Got it. Good luck.

Pat Gelsinger
Thank you.
 

hist78

Active member
Best Analyst Question that will hopefully be answered in more detail on the next call:

Stacy Rasgon
Hi guys. Thanks for taking my question and Pat, welcome to Intel, glad to see you here. I'm going to address the elephant in the room a little bit and Pat I understand your initial perspective on 7-nanometer from looking at it for a short period of time.

But at the same time, which I've got to say is the company was telling us for a year that 7-nanometer was on track, that it looked great and then all of the sudden, it wasn't to the point of considering potentially massive strategic shifts.

So, now I guess how can we as investors have confidence that after a brief look that you've given it at this point that things really are on track. What are you seeing that gives you that confidence and how should we think about the current process and I guess and how they feed into the risks potentially the future nodes since it sounds like you're sticking around on the total manufacturing, especially just given what we've seen at both 7-nanometers, but also 10-nanometers and 14-nanometers, the last several nodes where we've had problems, like how do we get that confidence?

Pat Gelsinger
Well, I would also say that Bob and the team have been working on this for the last six months diligently. So, even though my investigation was really just a few days, I'm looking at data that's been thoroughly analyzed, trends over the last six months that clearly is bringing them to a point of greater confidence for. I looked at that data, I came to the same decisions that they were.

At the same time, we're pausing, right, to say that everything is resolved to give me a little bit more time with the team to understand the roadmap and to dig deeper into those decisions and like we said, we'll be giving more clarity on that in the near future after I've had time to analyze it more carefully.

Also, the team has been making adjustments of leadership. Ann has been doing a great job as we moved her into that role. You'll be seeing we're making adjustments in the leadership of our product development teams as well where talent is going to come into the company.

We're excited about the roadmap that we're on. You might have seen we just announced a new fellow coming back, one of my absolute favorites when I was here in Glenn Hinton coming back to the company and you'll be seeing other announcements of key leaders coming back in.

So, I think the team has been doing a great job getting us to this point. I expect with the leadership, the roadmap, and a few more weeks of analysis, we'll be making very solid decisions that allow us to put the company on a path that is merited to the great foundation that Intel has had in the past.

Stacy Rasgon
Got it. Good luck.

Pat Gelsinger
Thank you.
Did Pat really answer the question?

Or he was doing a pet talk to the wrong audience?
 

count

Active member
Did Pat really answer the question?

Or he was doing a pet talk to the wrong audience?

That sounded like a non answer to me. That said I have more confidence in Intel 7nm than I did around Intel 10nm. At the same time, TSMC will be in mass production on 3nm by the time it's delivered so it shouldn't really change the overall calculus as I'm concerned - Intel would be better off outsourcing everything.
 

Daniel Nenni

Admin
Staff member
That sounded like a non answer to me. That said I have more confidence in Intel 7nm than I did around Intel 10nm. At the same time, TSMC will be in mass production on 3nm by the time it's delivered so it shouldn't really change the overall calculus as I'm concerned - Intel would be better off outsourcing everything.

TSMC 3nm will have better density than Intel 7nm but hopefully Intel 7nm will be very high performance. That is the split I see: High performance is Intel manufacturing and low power/cost will be TSMC to compete head-to-head with AMD. Sound reasonable?

IDM was mentioned 10 times during the call so I think we can stop the Intel will go fabless narrative.
 

Portland

Member
Sales are stagnant while tsmc is booming. Wasn't for mobileye it be worse.

14 nm is an old node if that's what they're selling next year and the year after Intel is in trouble.

The new ceo hiring retired people isn't a good sign.
 

count

Active member
TSMC 3nm will have better density than Intel 7nm but hopefully Intel 7nm will be very high performance. That is the split I see: High performance is Intel manufacturing and low power/cost will be TSMC to compete head-to-head with AMD. Sound reasonable?

IDM was mentioned 10 times during the call so I think we can lose the Intel will go fabless narrative.
My view on Intel needing to go fabless hasn't changed, and my guess is the negative market reaction today (in spite of otherwise great earnings) was disappointment that Intel did not make a bigger move towards going fabless.
 

Daniel Nenni

Admin
Staff member
My view on Intel needing to go fabless hasn't changed, and my guess is the negative market reaction today (in spite of otherwise great earnings) was disappointment that Intel did not make a bigger move towards going fabless.

It will be interesting to see the Intel 2021 CAPEX. Intel had set a 2020 CAPEX of $17 billion, up from reported 2019 CAPEX of $16.2 billion and reported 2018 CAPEX of $15.2 billion.
 

hist78

Active member
TSMC 3nm will have better density than Intel 7nm but hopefully Intel 7nm will be very high performance. That is the split I see: High performance is Intel manufacturing and low power/cost will be TSMC to compete head-to-head with AMD. Sound reasonable?

IDM was mentioned 10 times during the call so I think we can stop the Intel will go fabless narrative.
But Intel is getting into serious trouble to fight against high performance/cheaper cost products from several competitors. My kids and several their friends were building their own high performance gaming PCs over the holidays last month. They all bought AMD and/or Nvidia products. Intel's was not in their consideration at all.
 

hskuo

Member
Some inputs:
1. Pat's answers in this earnings call were great and surprised me that it was down to the points although he hasn't been officially as CEO and reviewed the progress in a few days only. Some Good Changes can be expected.
2. If we revisit history of intel's FinFET technologies from 22nm(very smooth), to 14nm( a little delay in yield learning) and 10nm(delayed and delayed) and also compare TEM pictures of each nodes technologically, it tells us a lot and consumes confidence for the next. Technology development is not "1-2-3 and delivered". It takes time for team reshuffle and recovery. I do believe 2023 is a conservative timeline.
3. intel 7nm will use EUV. Although EUV is in HVM in tsmc and Samsung, but as we know, EUV is not as mature as DUV was. ASML, tsmc, Samsung allocate hundreds of young, talented engineers to maintain EUV in HVM. ASML has short EUV delivery target in past 4 years consecutively. As we know, learning curve usually depends on how many wafers you have learned. EUV would be a hurdle to be passed.
4. If my memory is right, Morris Chang returned as tsmc CEO when they had technical troubles in 40nm node. SY Chiang returned to tsmc after retirement (RD SVP). in 2009? Some similarity?
Good luck to intel!
 
Last edited:

hist78

Active member
Some inputs:
1. Pat's answers in this earnings call were great and surprised me that it was down to the points although he hasn't been officially as CEO and reviewed the progress in a few days only. Some Good Changes can be expected.
2. If we revisit history of intel's FinFET technologies from 22nm(very smooth), to 14nm( a little delay in yield learning) and 10nm(delayed and delayed) and also compare TEM pictures of each nodes technologically, it tells us a lot and consumes confidence for the next. Technology development is not "1-2-3 and delivered". It takes time for team reshuffle and recovery. I do believe 2023 is a conservative timeline.
3. intel 7nm will use EUV. Although EUV is in HVM in tsmc and Samsung, but as we know, EUV is not as mature as DUV was. ASML, tsmc, Samsung allocate hundreds of young, talented engineers to maintain EUV in HVM. ASML has short EUV delivery target in past 4 years consecutively. As we know, learning curve usually depends on how many wafers you have learned. EUV would be a hurdle to be passed.
4. If my memory is right, Morris Chang returned as tsmc CEO when they had technical troubles in 40nm node. SY Chiang returned to tsmc after retirement (RD SVP). in 2009? Some similarity?
Good luck to intel!

When TSMC was struggling, their major customers had no better alternative to go, at least they couldn't start making chips in-house.

When Intel is struggling, their customers walk away to either use AMD's products or start designing their own chips in-house and contracting manufacturing out to third party foundries.

Now Intel is confident that their future products can be produced on their 7nm in 2023. But can Intel's customers wait and gamble on it?

Apple couldn't gamble on Intel's good faith so they left Intel to use Apple's own chips. And Apple makes a lot of money.

Can $1.7 trillion market cap Microsoft wait faithfully for a $232 billion Intel? Can Google, Amazon, Facebook wait?

Will Intel win the 7nm battle but lose the war?
 
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Portland

Member
The only thing that will buy some Intel campuses some time is a covid outbreak in Taiwan. But as of now it looks like the start of the end. You could argue it started with saying no to Steve jobs but all the attitude against fabless and look at the result.
 
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