Intel, which has fallen to a historical low, can rebuild the old with Apple?

For the PC market, 2022 will not be easy, and it can even be said to be a cold winter.

As an upstream supplier that controls the pulse of the PC market, Intel knows best how cold this winter is.

Just recently, Intel's financial report for the fourth quarter of 2022 showed that Intel's total revenue was US$14 billion, a year-on-year decline of 32%, the lowest quarterly revenue since 2016.

Looking at the full year of 2022, Intel's performance is not too optimistic, with annual revenue of US$63.1 billion, a year-on-year decrease of 20%.

At the same time, Intel's gross margin fell to 39.2% in the fourth quarter of 2022, down 14.5% year-on-year, almost its worst performance in years.

CEO of Intel  Pat Gelsinger said in a conference call that Intel's market performance is sluggish due to uncertainties such as geopolitical tensions and the global new crown epidemic, and that the PC market will further deteriorate in the first half of 2023.

After the wave of phone replacements caused by telecommuting and learning receded, the challenges facing Intel became more severe.

The main business is in danger, but the side business is thriving

It is too general to use the word "terrible" to summarize all of Intel's market performance, because in addition to manufacturing chips, Big Blue now also has network and edge services, autonomous driving (Mobileye), graphics computing, chip foundry, etc. " sideline".

Among them, Mobieye, a subsidiary of Intel, performed well, with annual revenue of US$1.9 billion in 2022, a year-on-year increase of 35%. Under the general trend of vehicle electrification and intelligence, it has the potential to grow into another pillar business of Intel.

However, since the performance of the customer computing business group, data center and artificial intelligence business group as the core business is far below market expectations, even if the performance of the "side business" is bright, it will be difficult to make up for Intel's overall weak situation.

Intel's client computing business group business will have annual revenue of US$31.7 billion in 2022, a year-on-year decrease of 23%, which has a lot to do with the slowdown in PC market demand.

Due to the emergence of black swan events such as the new crown epidemic, the demand for remote office and learning in the past two years has led to a sudden wave of replacements. The PC market was once in short supply due to insufficient chip supply and other market phenomena. In 2021 Global PC shipments also hit a record high in nearly 10 years.

However, this craze is like the tornado in Jay Chou's song, it comes and goes quickly.

According to a report released by the statistical analysis agency Counterpoint, global PC shipments in the fourth quarter of 2022 fell 27.8% year-on-year to 65.2 million units, setting a record low.

The total annual PC shipments in 2022 will be 286 million units, a year-on-year decrease of 15%. Counterpoint said that macroeconomic headwinds, inflationary pressures and reduced demand for PCs have all had an impact on the PC market.

The decline in demand has also led to the problem of excess chip inventory. Unless manufacturers can sell the remaining chips in the current inventory, it will be difficult for these customers to place more orders with Intel, which means that Intel will have to survive for a while. A long period of pain.

From teammates to opponents

In terms of shipments, the shipments of major PC manufacturers in the world have experienced varying degrees of decline. Among them, Dell, which ranks third in shipments, has the largest decline, with a decline of 37%, and the smallest decline is Dell. Apple, which ranks fourth by volume, only fell 3%.

This is a dangerous signal for Intel, because Apple has basically completed the transition from Intel chips to self-developed M chips except for the top Mac Pro models.

Apple has seamlessly transformed from an important customer of Intel chips in the past to a rival, and judging from its strong shipment performance in harsh environments, consumers still seem to be very interested in this rival.

Recently, Apple released the M2 Pro and M2 Max chips, which basically completed the product iteration from the M1 series to the M2 series chips, allowing the M series chips to gain a firm foothold in the field of energy efficiency ratio.

Although in terms of absolute computing performance, the M-series chips have not yet been able to pose a threat to the top chips of Intel or AMD, but in terms of energy efficiency, the Arm-based M-series chips are much ahead of the two X86-based predecessors. The unique advantages of Mac computers in the market competition.

Some light users who have no hard requirements for the operating system are slowly being taken away by the Mac, and this is the last thing Intel wants to see.

Pat Gelsinger said in an interview in October 2021 that he would never give up the possibility of using Intel processors on Mac computers, and that Intel would need to develop chips that do better than Apple.

At Intel's Innovation Day in 2022, Michelle Johnston Holthaus, executive vice president of Intel's Client Computing Group, also reiterated this view. He said that Intel will continue to fight for Apple to become its customer again, and hopes that everyone can get it. High performance.

However, based on Apple's insistence on the concept of using the Arm architecture to realize the unification of all devices, it is almost impossible for Apple to abandon the M-series chips and return to the X86 camp.

Therefore, if Intel wants to "rebuild the old relationship" with Apple, there is only another possibility-replacing TSMC and making chips for Apple.

It is difficult for a big ship to turn around

Today, foundry production has become a very common production model in the chip industry. An important part of the IDM 2.0 strategy proposed by Pat Gelsinger when he returned to Intel was the establishment of the Intel Foundry Business Service Department, leading Intel to return to the chip foundry industry.

Judging from the financial report data, Intel's foundry business service department is still in its infancy, and its revenue accounts for a very small proportion. However, it is not difficult to see from Intel's operation of burning money to build a fab, Intel has high hopes for this "little seedling". .

In order to grab orders from major customers such as Apple, Qualcomm and even AMD in front of TSMC and Samsung, Intel has to take the lead in advanced manufacturing processes.

Previously, Pat Gelsinger had listed the process blueprint for the next 5 years at the beginning of his return, that is, from Intel 7 (10nm), Intel 4 (7nm), Intel 3, and finally to Intel in the "Ammie (0.1nm) era". 20A.

In the latest financial report, Intel also stated that the Intel 4 process technology is ready for production, and Meteor Lake chips using the Intel 4 process technology are expected to be available in the second half of 2023.

The development of subsequent Intel 3, Intel 20A, and Intel 18A is in progress in an orderly manner, and Intel claims that it is expected to regain its leading edge in transistor performance and power consumption control in 2025.

However, looking around at competitors, TSMC and Samsung’s first-generation 3nm process technology development has come to an end, and it is unrealistic for Intel to surpass the process in the short term.

In order to win Apple, which is keen on advanced technology, as its foundry customer, Intel still has a lot of nodes to break through.

At present, Intel and MediaTek have established a strategic partnership. Intel's chip foundry will produce a variety of chips for MediaTek's series of intelligent edge devices.

In addition, manufacturers including Nvidia are also interested in Intel's foundry services, and Intel is also working hard to find potential customers and raise the "seedling" of the foundry.

Randhir Thakur, president of Intel's Foundry Business Services Department, said in an interview with foreign media that Intel will become the world's second largest foundry by 2030.

In order to achieve this goal, Intel will invest 100 billion US dollars in the next few years to build a new fab, and plans to return to the leading position in semiconductors on the Intel 18A process.

At that time, Intel, the "return of the king", will be able to "propose marriage" to Apple with the latest manufacturing process, and win the foundry orders of M-series or A-series chips.

However, all these advances are only based on ideal circumstances. If the demand for PCs continues to slump and Intel cannot rebound in the next one to two years, its process node may be delayed. Intel has maintained a presence in the semiconductor industry for more than ten years. The stable situation may be broken by competitors such as Apple and AMD.

Cut the crap.

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