Intel's 7nm CPUs are delayed, won't arrive until at least 2022

Intel's 7nm CPUs are delayed, won't arrive until at least 2022

Intel shares plunged 17% at Friday's market open, shedding $44 billion in market value. The company designs and manufacturers its own processors, while many rivals focus on design and tap Taiwan Semiconductor Manufacturing Co.to make their chips.

Bernstein analyst Stacy Rasgon downgraded Intel to "underperform" from "market perform" after what he considered the worst Intel earnings call in the 45 he has covered.

"This just isn't going to be the best node that Intel has ever had". "Intel should negotiate a sale of their fabs and equipment". That's a big change from the in-house manufacturing approach the company has used for decades.

Outsourcing could also have enormous implications in OR, where Intel is the state's largest corporate employer. That includes its Tiger Lake chips and its first 10nm-based server CPU Ice Lake.

While the issue may not make sense to everyone, it could actually put Intel in grave danger.

In other words, for the first time in years, Intel is in a position where it's playing catch up to its chief rival in the PC chip space.

Those regular improvements have become increasingly hard as the features on chips approach the atomic level, but TSMC appears to have been able to maintain a regular upgrade cycle. While Intel might have a handle on 10nm now, 7nm is another story, with the first 7nm-based Intel CPU now being pushed back by approximately six months.

In its Q2 earnings report today, Intel announced that it has delayed the rollout of its 7nm chips by six months. At the end of the call, Swan said that he's "not happy" with Intel's 7nm performance.

Jefferies analyst Mark Lipacis, who has a hold rating and a $62 price target, said there may be a bright side to Intel's news, in that it may force the company to rethink how it is structured.

So a delay in the move to 7nm can't be a good thing for Intel.

"While Intel suggested they at least know what the problem is, it certainly doesn't sound like a fix is forthcoming anytime soon given the magnitude of the delay and Intel's potential solution, namely, to possibly give up and embrace a much larger outsourcing strategy", Rasgon wrote.

"The unthinkable may not be that far away when Intel is forced to acknowledge that the growing gap between it and the TSMC camp is an insurmountable chasm, and outsource key parts of its manufacturing/process technology", BMO Capital Markets analyst Ambrish Srivastava wrote in a research note.

Not everyone was so bleak.

Intel achieved record second-quarter revenues with 34% data-centric revenue growth and 7% PC-centric revenue growth on year. He kept a buy rating on the stock.

If Intel were to increasingly rely on foundries for future products, Swan said, there would be economic implications that would raise questions about how Intel can continue to deliver "attractive" average selling prices and keep them in line with its costs.

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