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Ice Lake-SP Tells A Cautionary Tale For Intel Investors

Apr. 09, 2021 2:32 PM ETIntel Corporation (INTC)AMD103 Comments
Arne Verheyde profile picture
Arne Verheyde


  • On the verge of its Unleashed event with historic Intel Foundry Services announcement, Intel's latest event featured the launch of its Ice Lake-SP server CPUs.
  • Ice Lake-SP has been delayed by at least 1-2 years and continues to trail behind the competition significantly. This CPU embodies everything of the failed Intel in recent years.
  • In 2019, Intel touted Aurora as the first 2021 exascale supercomputer. However, the 7nm GPU was already delayed, and the 10nm Sapphire Rapids CPU is also delayed into 2022.
  • The Unleashed event was about the future, but the Ice Lake launch represents the present. Intel is not yet back.

Ingang van de Intel-Museum in Silicon Valley.
Photo by JHVEPhoto/iStock Editorial via Getty Images

Investment Thesis

Following incoming CEO Pat Gelsinger's recent Intel (NASDAQ:INTC) Unleashed event, and the general stock rally since his appointment, Intel is looking to carry forward this momentum with the Ice Lake-SP data center

This article was written by

Arne Verheyde profile picture
With an engineering background, looking for companies with expertise to be well-positioned for growth and leadership.

Analyst’s Disclosure: I am/we are 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.

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Comments (103)

Kwan-Chen Ma profile picture
yes, a good history telling which has been priced in. Would like to see more finance from your good articles.
Nice rant, but accuracy, eh. A couple of points. Chiplet design is not free, while you presumably manage more yield on the chiplets, getting them wired together is a rather hideous process and is expensive and causes yield fails, and then may impact performance significantly, too. Also the extension to 40 cores is pretty much spec sheet and benchmark engineering, Intel has always been able to build all the cores anyone could want, but high core counts don't always work well in servers running complex workloads, especially on Windows environments. Licensing gets in the way, cache management, core consistency, not to even mention (cough cough) security. Yes it's all been delayed, which is both more and less significant than generally made out. I mean, if Intel had met all schedules, would the stock be at $200 by now or what? Finally there is some question about the volume of 10nm chips making it to customers, is it limited by sales or production, and is it enough to impact revenues and profits and margins, all in good directions? Somewhat yes, but I suspect (from some comments elsewhere on the Interwebs) there are still serious yield and production bottlenecks, even now, and maybe small prospect of them going away. As I always finish: it's just the same at TSM by the way or AMD stock would be $200 by now, too.
"Note that AI has become the most important class of workloads in the data center" That's not true for any of Cloud, Hyperscaler, HPC or Enterprise DCs. It's an important emerging segment, but certainly not the most important for these yet. This hurts the credibility of all other assertions in the article.
The Stock Stooge profile picture
The discussion seems to be centered entirely on Intel vs AMD x86 data center chips. Seems to me that the bigger issue is M1, ASICs, Google and Amazon's chips, etc.
@The Stock Stooge Long term and possibly even medium term yes. But the inertia resisting major change in datacenters is immense -look at how hard achieving market share even WITHIN the x86 segment is for AMD. The question is will the rate of ARM (and possibly RISC-V) alternative improvement sufficient to vault over x86 even with a fierce performance war going on in x86 that is driving massive yearly improvement there? Big hyperscalers like Amazon that can build their own alternative architectures like Graviton have many incentives to do so beyond the cost-effectiveness of home-grown silicon for the specific areas (AWS can't make all their customer instances run on ARM): like using these possible alternatives as a price cudgel on Intel and AMD for the x86 processors they do need to buy.
The Stock Stooge profile picture
Is $20 billion realistically going to get Intel back to leadership in foundry? I would be more bullish if they eliminated the dividend and went with $50 or $100 billion. $20 billion seems insufficient but who knows.
wow&wow profile picture
@The Stock Stooge

"... get Intel back to leadership in foundry?"

Get back? When did Intel have a leadership in foundry before?

Where and how will Intel be able to get enough design services engineers to be "a" successful foundry?

U.S. has lots of "computer science" engineers that aren't helpful in silicon foundry.
@The Stock Stooge Government will come in and help Intel and American domestic semi manufacturing. Do you think US will allow non-US companies to dominate?
@Spike Capital
"Government will come in and help"
Now that is exactly what socialism is, take money from the taxpayer and give it to the govts pet projects.... I know it when I see it I'm in Canada ;>

So much for free markets too ...." not allow non US companies to dominate."
Free markets are the best of US inventions, if another pulls ahead then get your shit together and beat them back with better products don't run to the Govt for handouts/ tariffs / tax breaks/ law changes to make your crap profitable.
Free markets are brutal to bad products, and they should be

( Bit of a rant, sorry ) but I see this in Canada all the time and it pisses me off
The bottom line = Bullish on Intel!
Hey Arne, how would you like to make a cash bet that AMD launches Genoa before Intel launches Sapphire Rapids?
C185 profile picture
@flyfishinginWY why bet? As I pointed out below Intel has given you the date. What date has AMD given for Genoa?

Also did they show support for CXL?
Sapphire Rapids is not delayed at all - It's scheduled for 2023. If it's launched in 2022 it will be absolutely on time
C185 profile picture
@UmbertinaV On the Q4 earnings call Swan stated the following, which means they will be in production of Sapphire Rapids at the end of 2021 or beginning of 2022. The same sequence occurred with Ice Lake. They achieved product qualification at the end of 2020 and in early January started ramping production and shipping. Intel's formal launch events happen after they start ramping volume and shipping.

"We will qualify Alder Lake desktop and notebook for production and begin our volume ramp in the second half of 2021 and we expect production qualification of Sapphire Rapids at the end of 2021."
wow&wow profile picture
"A Cautionary Tale For Intel Investors"

Why is Intel going to have 8 traditional core plus 8 small cores in stead of straight 16 traditional cores to keep things (like logic design, physical design, OS, ...) simple?
@wow&wow looks like a direct response to the Apple chips; however, it could also turn out that the small atom cores will be used to offload high speed datapath operations, as they are used in the p5900 family chips.
wow&wow profile picture

Apple isn't the #1 CPU leader in PC and Intel isn't in smart phone business, so Intel response to Apple for what?

If Intel's process is competitive or good enough, there is no such a need for reducing die size and power consumption.

To reduce their crazy power consumption. Rocket lake is using twice the power of Ryzen 5000 to get the same results. That's crazy power consumption, even tigerlake also lose out in power efficency to ryzen 5000. Intel is trying to use the smaller core to conserve more power to prepare themselves for AMD+TSMC 5nm and 3nm chips.
ULS profile picture
09 Apr. 2021
@author Before I begin writing, I should mention that I have very high regard and respect for prior analyses you have written on Intel. But IMHO, this article was clearly the worst you have written on Intel lately. I found it disappointing because in prior articles you had made your theses much clearer and easier to understand. Here are some reasons why I rate your article so poorly:

#1: Crying over spilled milk usually gains neither writers nor readers anything. All prior delays of this processor are “over the dam”. They happened and they have been priced into the stock. What natters now is the future and not the past.

#2: your point that Intel has execution issues is well taken. I am hoping that Intel is addressing them now. Particularly with Gelsinger on board. Since you offer no insight at all that I could discover, on how well these issues are getting resolved, I suggest you refrain from beating a dead horse even more. Instead I suggest you speak up again, once you can offer meaningful information and conclusions on the subject of execution issues.

#3: as far as performance of this processor goes, it seems to offer a lot, according to your remarks. Since you cannot count your readers to all know as much as you do, I suggest you write a performance summary one can draw conclusions from. And not one that appear to vacillate back and forth.

#4 (my final remark): since all second-guessers who write “analyses” on Intel without sufficient knowledge available to themselves, have a very difficult job producing anything really worth reading, when in doubt, a better idea is – IMHO – to refrain totally from writing an article, until t can offer truly plausible and actionable conclusions.

And I respectfully claim that this article of yours has not reached this stage yet.
For all the handwringing over the "late" launch, this article's discussion of Intel's inherent advantages only reinforced the idea in my mind that AMD's best days are behind it, and that Intel's valuation underappreciates this fact.
@Hamburgers I guess their comm of expected >25% revenue for the next few years counts to u as it’s best days behind it’?

Intel is still capable to do well. But AMD will continue to do well either way, make no mistake. To deny that makes me question how much u really know about the semi industry.
C185 profile picture
I think the 10nm issues can be pretty well attributed to Intel not using EUV at 10nm because EUV wasn't ready on the original 10nm schedule. I don't see extrapolating that to 7nm, as Intel is clearly going to use EUV for 7nm.

Also the "delay" between Ice Lake mobile and server appears quite normal. My recollection is about 18 months is the usual period between mobile/desktop and server releases. Server processors and platforms are much more complex, and require extended periods of validation and qualification.

Just to cite someone other than my recollection, here's Ashraf Eassa who used to contribute on SA. (Note his prediction was correct on Broadwell-EP. It did launch on March 31st 2016, 18 months after the PC client skus.)

[While Intel cites its manufacturing advantage over competitors as a key enabler of its performance and power advantage, it tends to bring its server chips to leading-edge technologies far later than its PC chips. For example, the first 22-nanometer FinFET Intel PC chip launched in April 2012, but the first 22-nanometer server processor did not arrive until September 2013 -- about a year-and-a-half gap.

Now, if we assume Intel will launch Broadwell-EP (14-nanometer server chip) in early 2016, as rumored, then this would keep the gap between first client product (around October 2014) to first high-end server product (roughly March 2016) at about a year and a half.]
I believe the government will tell TSMC to make more fabs in the USA because they always want this is is a serious dent in Intel future fabs. Intel no longer have knowledge making advanced fab only use for older nodes
@Tony215 hilarious. Yeah the US government wants Taiwan (china) to build more fabs (you could not make this up)

Keep up! that ship sailed Intel is riding off into the sunset with 2 fabs in the US and an upgrade in Ireland with most of the funds coming from government grants for the exact reason that it doesn't want any more TSMC centralised chip manufacture.
There is a good reason for the delay of the high core count server chip. AMD design is based on chiplets. The rate of defective chips produced does not climb with core count. Because Intel is using a monolithic chip, the defect rate climbs rapidly with the number of cores. Producing a 40 core version had to wait for their 10nm fab to reduce its defect rate to the point where 40 core chip yields could be produced profitably. Note that TSMC starts their 5nm process producing extremely small chips(Apple) while the early defect rate per wafer is high(mathematically, more usable chips as cutout defects if making smaller chips). Until Intel develops an answer to infinity fabric, it will have trouble keeping up with TSMC as it will always be trying to produce large chips while battling the high rate of silicon defects in early production runs.
@zver11 Sapphire rapids is not monolithic. It uses 4 dies interconnected with EMIB.
C185 profile picture
@zver11 the "Infinity Fabric" is way behind Intel's Foveros and EMIB interconnect technologies.
@zver11 Infinity Fabric is just the twenty year old Hypertransport protocol.It is streets behind Intel :)

"HyperTransport (HT), formerly known as Lightning Data Transport (LDT), is a technology for interconnection of computer processors. It is a bidirectional serial/parallel high-bandwidth, low-latency point-to-point link that was introduced on April 2, 2001"

"Infinity Fabric (IF) is a superset of HyperTransport"

Fooly Finance profile picture
Considering when Intel finally launches it's dated 10nm part Sapphire rapids in 2022 it will feature up to 56 cores and lag the performance of AMD's EPYC Milan which is a 7nm part featuring 64 cores.

Worse yet for Intel, Sapphire Rapids will be launching at the same time as AMD's new 5nm Zen 4 EPYC Genoa part featuring up to 96 cores.

Third party analysis indicates Intels "new" Ice Lake servers perform more in line with AMD's EPYC Rome which launched in 2019. EPYC Milan is currently running circles around Ice Lake, crushing it in all meaningful tests by more than 50%. In fact, Intel's new release even lags Ampere's ARM chips significantly despite retailing at half the cost of an Intel server.

Intel will likely trade down or flat over the next 3-4 years as they absorb losses in market share across all of their product lines due to massive technological shortfalls while their competition continues to innovate and execute.
C185 profile picture
@Fooly Finance I'm pretty sure your "third party analysis" are a couple of websites that don't understand real world server workloads, or what features server buyers value.

“We consider confidential computing as an extension of our general-purpose fleet,” Russinovich said. “And on top of these new Intel processors, we’re also going to be offering new general-purpose, as well as large-memory virtual machine sizes that offer better price to performance ratios than any virtual machine we’ve ever had in our fleet.”
- Microsoft Azure CTO Mark Russinovich at the April 6th Ice Lake launch event. (Note: Azure has already deployed Milan instances so Milan is included in his comparison.)
@Fooly Finance I didn't know AMD added Optane support in Milan. When did that happen?
This may help ( rumor so far )
Perhaps intel is sandbagging to increase profits. Isn't that the thing that intel owners have dreamed about?
edca99 profile picture
AMD's EPYC didn't even get more than 10% of server share after a few years of Intel's delay. Now that Ice Lake is out, and Sapphire Rapids is sampling, and with top tier CEO Pat for faster and better execution, AMD free run seems to be over.

In the GPU ground, with DG2 coming out for gamers and may have aggressive pricing to gain some ground and take away the ridiculous margin from AMD and Nvidia. And for HPC Ponte Vecchio might be killing Nvidia's A100

More into future, Lunar Lake seems revolutionary and exciting. Intel's back.

Disclosure: long INTC
“Intel is not yet back.” yet the share price is getting closer to $70 with a very reasonable PE. Imagine the upside when INTC “does get back”. Thanks for the bullish article
Thank you for this information on INTC.
"The slide below shows what exactly happens..." No, it is illegible.
Do you have a link to a higher resolution version?
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