As my readers are aware, I am currently in sunny San Francisco in order to attend Intel's (NASDAQ:INTC) annual fall Developer Forum ("IDF"). In this article, I'd like to cover the major "big" topics that were talked about, particularly as many of my readers are Intel shareholders (or potential ones) and would like an update from closer to the business than the simple SEC filings and conference calls.
Now, before I begin, I'd like to note that my time is very limited while I'm here in San Francisco (in addition to attending conferences all day, I also have plenty on my plate to write about), and while I would love to address each comment/concern in my typical obsessive fashion, I might not get to your comment right away. If there's anything pressing/urgent, feel free to message my private inbox here and I'll do my best to try to expedite my response to you.
With that in mind, let's begin!
The New CEO And President: I'm Getting A Good Vibe
This was the first IDF at which new CEO Brian Krzanich and President Renee James presented. Quite frankly, while I wasn't initially sold on the "two-in-a-box" type deal, I'm convinced that this was a good decision on the part of Intel's board. Mr. Krzanich is very much a dyed-in-the-wool manufacturing guy whose role seems to be to make sure everything gets executed swiftly.
Ms. James, on the other hand, is more of the "visionary." I don't mean to take away from the real creative insight that is required in the execution of highly technical initiatives, but it seems that it's up to Ms. James to figure out what broader markets and initiatives need to be pursued. Combine that with Mr. Krzanich's ability to figure out how to do it.
More importantly, I walked away from the keynote thinking that these two know exactly what they need to do, and they're more than aware of what needs to be communicated to investors and what doesn't. The presentation wasn't filled with numerous technical details, although the customary explanation of why Moore's Law is so important was an underlying theme of the talk. No, the message that I took away was that Intel will continue to put its nose to the grind-stone to deliver leadership products in any space in which computing is relevant.
Interestingly enough, that doesn't just mean servers, PCs, tablets, and phones. While these are, of course, going to be the major revenue drivers in the years ahead, Intel has made it clear that it will not miss the "next big thing." It showed demonstrable progress in developing solutions for the "internet of things," and even announced an extremely small, low-power X86 chip called "Quark" for things such as wearables, very low power embedded products (think intelligent headlights), and much more. In short, Intel is very clearly gunning to leverage its manufacturing advantages/scale to significantly broaden its exposure to other end markets.
Intel's 14 Nanometer: Up And Running
There has been a lot of talk across the web about Intel's 14 nanometer technology being delayed. While I am starting to believe that Intel will probably not bring as much 14 nanometer capacity online as it may have expected to do earlier, Intel's management confirmed that its first 14 nanometer parts ("Broadwell") would be going into production this year. In fact, Mr. Krzanich showed off a functional "Broadwell" system up and running Windows. Yes, that's right, folks - "Broadwell" is alive and well.
I asked Mr. Krzanich about when the 14 nanometer Atom would be slated to be launched, and he stated in no uncertain terms that it is on track for 2014 (albeit later in the year). The gap between "Core" and "Atom" is shrinking, which is what needed to happen for Intel to really claim "process leadership" across all segments of computing - not just in the PC space.
In any case, it looks to me that Intel's 14 nanometer FinFET parts will be competing with parts built on TSMC's (NYSE:TSM) 20 nanometer planar next year. While there is of course more to the story than just what process node a chip is built on, I'm pretty convinced that next year Intel will have a shot at claiming performance/watt leadership across most - if not all - of its operating segments.
New Server Chip - The Best Gets Better
I had the pleasure of attending the launch of Intel's next generation Xeon E5 microprocessors for the data-center, code-named "Ivy Bridge-EP." This chip was largely a known quantity, but it's nice to see that despite having ~93% of the server market, Intel continues to push on performance/watt at the high end.
The new Ivy Bridge EP beasts come in three flavors: a 6 core, a 10 core, and a 12 core, all at various clock speeds, power levels, and price points. From a financial standpoint, Intel benefits twice here: first, thanks to the 22nm die shrink from 32nm, Intel can sell chips that offered the same performance and capabilities as the prior generation at the same price, but collect a higher gross margin on it. At the high end, Intel packs in more cores and cache, and actually sees the selling prices at the very high end bumped up commensurate with the die size increase over the prior generation.
Note that Intel's 22nm process is mature now (products built on it first went into high volume production in Q4 2011), so despite the more complex dies and large transistor counts, I expect that Intel is seeing very healthy gross margins on these products. I also expect that many server buyers had been holding off upgrading/expanding for when these products were launched, which means that Q3 and Q4 could be excellent for server sales (and will once again pick up the slack from the PC group's decline).
Smartphones And Tablets
While the Internet of Things presentation was nice and all, the growth markets that matter right now are smartphones and tablets. Mr. Krzanich showed off a "Merrifield" based smartphone - that's a "Silvermont" based platform coupled with the XMM 7160 LTE modem. It was interesting to see a phone with the "Merrifield" chip up and running, but there's still so much unknown about it (and how it stacks up), that it's impossible to comment further at this time. I hope to learn more soon.
On the subject of tablets, I can't really say much now, but there's a big keynote dedicated to 2-in-1 devices tomorrow, and I'm sure that there will be more that I can add to what is already widely known. Look for more in the second part of this article series.
Day 1 was interesting, but pretty tame on the news and technical session front. Day 2 should be all about mobility (which means I'll be able to talk about all of the stuff you're all dying to hear about) and there are plenty of technical sessions that I plan to attend. Stay tuned for tomorrow's edition of my IDF 2013 series!
Disclosure: I am long INTC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.