The AnandTech Intel-disruption chart, plus commentary...
Is there any reasonable chance that Intel is not complete toast? I mean: NVIDIA on GPUs, Apple on performance-per-watt, TSMC on node size, financial capitalism run rogue, & now changing horses in midstream away from the Gelsinger Intel A18 strategy that promised to rescue Intel’s future as a stakeholder production network (it is 0.7% of the US economy) and possibly as a technology forcer, even though the possible future as a long-run equity cash-cow was almost surely gone before Gelsinger stepped into the CEO suite?
It was clear to me when this came out lo these four years ago that Intel was in Big Trouble.
And it was also clear to me that it was not just Apple’s chip designers’ focus on performance-per-watt, the increasing importance of performance-per-watt over time, the ability to take advantage of RISC because of the lack of x86 baggage, and general excellence and industriousness. It was clear to me that a lot of it was what Morris Chang had ringmastered into existence over on the island of Taiwan in the form of TSMC.
After all:
2011: Intel 32nm.
2012: Intel 22nm.
2014: TSMC 20nm.
2014: Intel 14nm.
2015: TSMC 16nm.
2016: TSMC 10nm.
2017: TSMC 7nm.
2019: TSMC 7nm+ (N7+).
2019: Intel 10nm.
2021: TSMC 5nm (N5).
It was, as of 2020, a double-sided failure of Intel on design in an inability to match performance per watt, which would soon, given power and dissipation concerns, turn into performance; and also on process rather than node. Two big areas of relative competitive failure, not one.
2022: Intel 7 (formerly 10nm Enhanced SuperFin).
2022: TSMC 4nm (N4).
2023: Intel 4 (formerly 7nm).
2023: TSMC 3nm (N3).
And now we have, planned: 2025 TSMC 2nm, Intel 18A—with it uncertain whether Intel’s yields will be high enough for it to be truly cost-performance competitive.
My view today is that there is no clear road for Intel back to any form of profitability, and not much value to potential acquires of pieces of it or of the whole, aside from cash payments that the government might seek to make. It is hard to see why anyone not risk-loving would hold Intel equity even at current valuations. And even if you are, you have to be willing to place an extra-big bet that Intel will recover as a process technology-forcer and a production-network, and that profits will then follow that, someday.
My view last weekend was that it was in the national interest, the global interest, and not in current Intel shareholders dis-interest that Pat Gelsinger be allowed to play out the Intel 18A hand, after which we could see where we were. Either Intel knows inside that 18A—however successful as a technology demonstration—will be too expensive to attract customers at any price Intel can afford to charge, or what is happening now with Intel managerial chaos is a very bad attempt by a panicked board to change horses in midstream…
Some of Ben Thompson’s commentaries from 2020, excerpted:
Ben Thompson: Intel’s Disruption, Intel vs. Apple, Additional Notes on the M1: ‘From James Allworth…. “Yesterday, Apple announced the first Macs that will run on silicon that they themselves designed. No longer will Intel be inside. It’s the first change in the architecture of the CPU that the Mac runs on since… well, 2005, when they switched to Intel. There’s a lot of great coverage of the new chips, but one piece of analysis in particular stood out to me — this chart over at Anandtech:
Intel… put their fabrication business in service to their CPU design business… [as] just as much of an integrated company as Apple… at a lower level of the stack….
Mobile… was different: Apple needed chips that were tuned to… power-per-watt…. Intel’s design might have led to its manufacturing lead in the 90s and 00s, but it was fabrication that came to matter more in mobile. In other words, for Intel to prosper, they needed to shift their locus of differentiation from design to manufacturing…. [Now] Apple’s M chips — even this relatively basic v1 — should vastly out-perform similarly specced Intel chips, and use far less power while doing so… <https://stratechery.com/2020/intels-disruption-intel-vs-apple-additional-notes-on-the-m1/>
Ben Thompson: Apple’s Shifting Differentiation: ‘If you ask Apple — or watch their seemingly never-ending series of events — they will happily tell you exactly what the company’s differentiation is based on… integration is at the core of Apple’s incredibly successful business model: the company makes the majority of its money by selling hardware, but while other manufacturers can, at least in theory, create similar hardware, which should lead to commoditization, only Apple’s hardware runs its proprietary operating systems…. Apple can create something truly unique, and by tying said software to its hardware, make its hardware equally unique as well, allowing it to charge a sustainable premium….
Sixteen years on from the PowerPC-to-Intel transition, and Apple’s software differentiation is the smallest it has been since the dawn of OS X…. Where the iPhone is truly differentiated is in hardware: Apple has — for now — the best camera system, and has had for years the best system-on-a-chip…. What is notable about smartphone cameras is that Google’s photo-processing software is generally thought to be superior. What makes the iPhone a better camera, though, is its chip.
Apple Silicon and Sketch: It is difficult to overstate just how far ahead Apple’s A-series of smartphone chips is relative to the competition; AnandTech found that the A14 delivered nearly double the performance of its closest competitors for the same amount of power — indeed, the A14’s only true competitor was last year’s A13. At least, that is, as far as mobile is concerned; the most noteworthy graph from that AnandTech article is about how the A14 stacks up against those same Intel chips that power Macs….
This is the year that the A-series of chips are surpassing Intel’s [in performance]…. It is possible that Apple’s chip team is so far ahead of the competition, not just in 2020, but particularly as it develops even more powerful versions of Apple Silicon, that the commoditization of software inherent in web apps will work to Apple’s favor, just as the its move to Intel commoditized hardware, highlighting Apple’s then-software advantage in the 00s. Apple is pricing these new [Apple Silicon] Macs as if… the company believes it can take both share and margin, and it’s a reasonable bet from my perspective. The company has the best chips in the world, and you have to buy the entire integrated widget to get them… <https://stratechery.com/2020/apples-shifting-differentiation/>
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It also is important for OS choice. MS stuck with x86 architecture for Windows and its software and is only now porting to ARM. MS must not only do that successfully for Windows and their associated suites of apps, but they must ensure that legacy apps can be supported in some way. This is a danger as backward compatibility with older apps is important. Is MS going to have to provide virtual x86 support for legacy apps in ARM-based Windows? Messy. Why not just use another OS and run x86 virtual Windows for x86 apps? One can even run apps from the cloud and locally in browsers with WASM. This could spell not just the decline (and demise?) of Intel, but MS as well. I don't care for Apple as it now acts like MS did around the turn of the century. Computers are fragmenting in hardware, OS, and how software is run. This was the original hope for languages like Java that ran on virtual machines. This may yet provide the solution to avoid OS lock-in and more competitive computing platforms. The hardware should be as efficient as possible, and OSs and applications should be able to run on any hardware with sufficient resources.
Yes, panic for sure. What's the alternative magic strategy to Gelsinger's? And, given the talent wars, what sort of magical execution of Gelsinger's strategy could have been expected? But I guess last summer's layoffs were a sign that time for renewal-through-investment had run out.
It also is important for OS choice. MS stuck with x86 architecture for Windows and its software and is only now porting to ARM. MS must not only do that successfully for Windows and their associated suites of apps, but they must ensure that legacy apps can be supported in some way. This is a danger as backward compatibility with older apps is important. Is MS going to have to provide virtual x86 support for legacy apps in ARM-based Windows? Messy. Why not just use another OS and run x86 virtual Windows for x86 apps? One can even run apps from the cloud and locally in browsers with WASM. This could spell not just the decline (and demise?) of Intel, but MS as well. I don't care for Apple as it now acts like MS did around the turn of the century. Computers are fragmenting in hardware, OS, and how software is run. This was the original hope for languages like Java that ran on virtual machines. This may yet provide the solution to avoid OS lock-in and more competitive computing platforms. The hardware should be as efficient as possible, and OSs and applications should be able to run on any hardware with sufficient resources.
Yes, panic for sure. What's the alternative magic strategy to Gelsinger's? And, given the talent wars, what sort of magical execution of Gelsinger's strategy could have been expected? But I guess last summer's layoffs were a sign that time for renewal-through-investment had run out.