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Fresh off raising $6B, Intel (INTC -0.8%) has received two negative sell-side notes. 1) Raymond...

Fresh off raising $6B, Intel (INTC -0.8%) has received two negative sell-side notes. 1) Raymond James has downgraded shares to Underperform, warning gross margin could fall below 55% from the 62%-65% seen lately, thanks to competition from AMD and ARM-based chips. It's also skeptical any internal replacement for CEO Paul Otellini will provide needed change. 2) Nomura thinks the odds of Apple eventual dumping Intel are high, arguing desktop-caliber ARM processors are now possible and the move could save Apple $100/unit in costs.
Comments (20)
  • wigit5
    , contributor
    Comments (4015) | Send Message
     
    I smell fear....
    5 Dec 2012, 11:19 AM Reply Like
  • SA Editor Samir Patel
    , contributor
    Comments (163) | Send Message
     
    1) AMD is having major issues and at this point isn't a serious competitor, not for desktops/servers anyway. Not a serious consideration for the next few quarters.

     

    2) That's ridiculous. ARM processors at the desktop level would be woefully underpowered, not to mention several nodes behind Intel, and Apple consumers aren't likely to take kindly to sluggish performance from their $2,000 machine. The other issue here - who's going to fab these processors? The industry supply chain is essentially broken just supplying iPhone/iPad processors; there's no spare manufacturing capacity to make lots of desktop/laptop processors too.
    5 Dec 2012, 11:27 AM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (774) | Send Message
     
    Agree about the first point. But as far as the second goes, ARM PC chips would have a very different power profile than smartphones/tablet chips, and that would allow for much better performance. Most ARM mobile processors consume less than 1W, whereas an ARM PC chip could have a peak draw of 5W and still be much less power-hungry than Haswell.

     

    Manufacturing capacity shouldn't be an issue, especially since Mac shipments are far lower than iPhone/iPad shipments.
    5 Dec 2012, 11:49 AM Reply Like
  • amagus
    , contributor
    Comments (39) | Send Message
     
    To add to your points, switching to ARM for Mac OS X would break software compatibility with their entire software base. Macs would also lose the ability to run Windows (either through Bootcamp or Virtualized), which I think is still a key feature.

     

    Apple did the the transition from PowerPC to Intel by writing a PowerPC emulator for x86. The key back then was that Apple replaced PowerPC with a processor much faster than it, so the emulation, while still painfully slow, was at least tolerable. It also helped that the user and software base was much smaller back then. Replacing x86 with an architecture much slower than it would make emulation impractical.

     

    Finally, ARM and it's associated manufacturing processes are designed to be low power, but it doesn't make it scalable. You either design for low power or high performance, you can't have both. You can't take a 1W ARM processor and scale it up to 20W to automagically get Intel performance, not without serious redesign to both the architecture and the process it's manufactured on.
    5 Dec 2012, 03:16 PM Reply Like
  • Matt-Man
    , contributor
    Comments (525) | Send Message
     
    Yes ARM has 5W A15 Cortex chips that consume less than next years 8W Haswell. But performance of A15 is around dual core Atom, Haswell having edge of 3-6x.

     

    Apple providing state-of-art products would have a hard sell with ARM in laptop/desktops.

     

    I am sure there will be many vendors offering cheaper laptops with ARM like they currently do with AMD chips
    5 Dec 2012, 03:27 PM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (774) | Send Message
     
    Dual-core cortex-A15 chips usually consume a lot less than 5W right now. Thus you can't compare them to Core i5/i7 parts that consume far more. The real question is what the performance will be when the CPU and cores are built from the ground up for a ~5W TDP. Apple has the engineers for such a project, and it also now has an ARM architecture license to develop its own cores.

     

    I think performance for mainstream use will be fine in time. Software compatibility is the bigger issue.
    5 Dec 2012, 04:20 PM Reply Like
  • Matt-Man
    , contributor
    Comments (525) | Send Message
     
    8W chip can be compared to 5W chip just fine. Performance of A15 already quite well known, it is close to dual core Atom:
    http://bit.ly/TG0n0D

     

    Also power consumption is similar.

     

    When one is designing iPad6 CPU needs to be in range of 4-8W. In that range A15 loses bad to coming Haswell and ties with 5year old Atom design.
    5 Dec 2012, 04:43 PM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (774) | Send Message
     
    << 8W chip can be compared to 5W chip just fine. >>

     

    Yes. The issue is that dual-core Cortex-A15 chips usually consume a lot less than 5W. An 8W chip inside an iPad might melt the case :). The Tegra 3 (quad-core A9) topped out at 1.26W in a test:

     

    http://bit.ly/11W7ofY
    5 Dec 2012, 05:20 PM Reply Like
  • Matt-Man
    , contributor
    Comments (525) | Send Message
     
    So you mean that ARM can scale their performance up five fold to reach Intel but Intel cannot reduce power consumption about 40% to reach A15 in i5/i7 line?
    5 Dec 2012, 05:33 PM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (774) | Send Message
     
    I didn't say anything about increasing performance 5x, only that performance can be improved a lot if a 5W TDP is the target. And like I've mentioned multiple times, Intel would have to cut power consumption a lot more than 40% to match the A15.
    5 Dec 2012, 06:23 PM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (8872) | Send Message
     
    Eric Jhonsa,

     

    Samsung's Exynos 5250, dual core A15 at 1.7GHZ consumes ~5W at load. http://bit.ly/11GMCl5
    5 Dec 2012, 06:36 PM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (774) | Send Message
     
    Ashraf, those numbers are for the entire Chromebook, not just the processor.
    5 Dec 2012, 06:40 PM Reply Like
  • Matt-Man
    , contributor
    Comments (525) | Send Message
     
    Test has IDLE consumption and 100% CPU consumption, difference between idle and max is >5W. Test is done without display on, so great majority of additional 5W is coming from CPU.
    5 Dec 2012, 06:49 PM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (774) | Send Message
     
    There are a lot of other chips that engaged when going from idle to peak. The DRAM, flash memory, battery charger and power management ICs, the Wi-Fi radio. Not to mention the additional power loss from the AC/DC adapter.
    5 Dec 2012, 06:56 PM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (8872) | Send Message
     
    Eric Jhonsa,

     

    The key is to notice the delta between idle and full load in a pure CPU intensive task. The delta is nearly 5W, and that is attributable to the processor/SoC.
    5 Dec 2012, 07:41 PM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (774) | Send Message
     
    Like I mentioned in my reply to Matt, there are a lot of chips besides the processor that get engaged when going from idle to peak. I'm guessing the Wi-Fi radio is among them for a browser benchmark such as Kraken.
    5 Dec 2012, 08:13 PM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (8872) | Send Message
     
    Classic garbage from the sell-side.
    5 Dec 2012, 12:48 PM Reply Like
  • sid gold
    , contributor
    Comments (184) | Send Message
     
    All of the above assumes NO progress from the R & D at Intel
    I believe INTC is a total buy based on risk / reward and yield.
    It is my largest investment in dollar terms
    5 Dec 2012, 12:53 PM Reply Like
  • candybrady
    , contributor
    Comments (14) | Send Message
     
    I agree with Ashraf Eassa who knows more than I RE the technicalities. In addition to his guidance that INTC has tech capabilities equal or greater than ARM or AMD, lets look at the financials:

     

    INTC sales for 2012 will be about $52 Billion with a 60% + gross margin. ARMH and AMD combined will have sales of about $6.2 Billion - INTC has sales more than 8 times greater than AMD and ARMH together.

     

    INTC sells for about 9.5 times fwd earnings and pays a dividend of about 4.5%. AMD does not make a profit and ARMH sells for about 55 times fwd estimates - emphasis on estimate. AMD pays no dividend and ARMH pays about 4/10 of one percent.

     

    INTC just borrowed $6 Billion part of which will be used to buy back shares. Now let me think, what stock should I buy?

     

    I'm long INTC and will be buying more - I can live with just the dividends for now
    5 Dec 2012, 01:45 PM Reply Like
  • randolphdeleon
    , contributor
    Comments (101) | Send Message
     
    There is no doubt Intc is a "falling knife". Its charts are horrible! The real question is would the "nicks and cuts" be fatal in trying to catch the knife for an extended perior or simply temporary scratches necessarily incurred to hold the stock for the long haul. For one, even at 55% gross margin, the dividend payout is safe. Secondly, Intel still spends billions of dollars in R&D. It was just caught in the wrong direction by the market place wherein power efficiency is now emphasized instead of price power efficiency. Now that Intel like everybody else is aware of the problem, it is inconceivable that their R&D efforts will be unsuccessful given Intel's track record. Thirdly, there are no indications that ARM will come out with a technology to trump Intel in the profitable servers market. Intel will pull all stops to protect its near monopoly turf in the servers market and the still large PC market.
    5 Dec 2012, 03:13 PM Reply Like
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