My colleague Peter Clarke
has been hearing rumors Intel will make high-end router chips for Cisco.
Turley is hearing rumors Intel might make Apple’s A series mobile
Both deals make sense. The Cisco and
Apple chips are strictly for internal use only, so there’s no
competitive threat for Intel. To the contrary, both Apple and Cisco have
the potential to be much larger customers of Intel than they are today,
potential a foundry relationship could nurture.
Such a shift
requires a new kind of thinking about who Intel really is. Interesting
then that the company abruptly announced its chief executive, Paul
Otellini, will retire a year earlier than expected and that it will not
name a replacement until May.
Turley speculates the Intel board
may have given Otellini the boot in a meeting where they were at odds
over Intel’s strategy. I suspect it went a bit differently, and the
announcement was intended to let the world know the top spot at the
world’s biggest semiconductor company is open in hopes of shaking some
unsuspected candidates out of the woodwork.
I think Intel needs
an outsider to reformulate its identity. It’s a tricky task, a sort of
tightrope walk. It requires big changes in how Intel is seen both
internally and externally. It takes creativity.
As I have stated
before, I think Intel needs its equivalent of Lou Gerstner, the RJ
Reynolds exec who led IBM from being a lumbering computer maker to a
successful services giant.
What’s the future for the world’s
largest semiconductor company? Yes, that’s a question that ought to call
to some brilliant and ambitious mind hungry for a business challenge of
Intel, what is your timeline...???
Foundry biz a logical way to go short term, yes.
Platform biz under Otellini's watch...failed.
Why not do a real "leap" and use your market brand and tech strengths to sell your own mobile products...??? Compete with your customers, yes so what. Will your home grown products resonate with end customers...heck yea.
If you do...I will invest...
If Intel were to makes chips for Apple it will be entering a sub 35% Gross Margin Business. In late 90s Intel exited the ASIC business for the same reasons, namely poor GM.
if you take a look at what Apple pays Samsung to manufacture its A5[A6 etc] processors, they are getting a Superb Deal;
Would I expect Apple to pay more ? Maybe 1-3% more but not 25-30% more ?
On the other hand does it makes sense to lockout Asian foundries from the Sub 28 nm Market ? Assumption being the Ciscos, Qualcomms and Junipers/Broadcom would crank out new ASICs in an Onshore Intel Fab ; this would require a Major Protectionist Policy change which will affect the Semi Equipment Mfrs;
Will it happen ? Unlikely unless it is championed by the New Horsemen [Jacobs, new Intel CEO, Ellison of the Semi space;
You know, maybe he is leaving because he is really rich, has only a few years left in this world, and wants to enjoy the rest of his life in relative peace?
I've been paying attention the last few years to how old CEO's are when they retire. Early 60s is the most common answer.
Grove had vowed that Intel will never move into consumer products as lesson learned from their Microma digital watch business in 1972. Why they should run Atom based smart phone business?
To make the new era foundry business successful meeting Intel's current margin now, they need to do:
1. Better architecture to balance power and performance. Arm architecture had done a good job in power targeting mobile application and is moving aggressively toward server and other applications by beefing up the computation muscles. What is the answer from Intel? How to integrate more function to provide Apple/Cisco with better mobile CPUs than Arm core?
2. They could adding more value than just mfg. foundry with design service and provide complete set of library. They can further optimize design and technology with thorough DFM consideration which is badly needed by advanced technology nodes. These are the advantages that Intel has against mfg. foundry giants. The design service could also add more value to customers and deserve higher margin.
3. Better customer oriented service: learning from foundry king: TSMC. They need to be humbled and attentive to customers needs not just "to teach customers how to use their technology".
4. Stringent cost reduction mind set in mfg. line. Copy exactly might need to be revamped like copy smartly with some cost consideration. Dumb fabs operation should be injected with more engineering talent to fine tune equipment and process for lower cost operation.
I don't see why Intel would give access to its only key differentiator in the market. Especially to apple, so apple can compete with a better phone and limit use of Intel's own atom based phones? Doesn't make sense.
Now what Intel might do is to convince apple to use an x86 CPU in its next-gen processor in exchange for its fab. Now that would be a great strategic move. This way they have their cake and can eat it too.
Long term this will be a bad strategy for Apple as they will get an inferior mobile CPU and be held hostage by the big monopoly.
While the obervation about shrinking PC market is valid, I see two problems with the proposed shift. First, Intel has never played in a highly competitive market with razor thin margins, which is basically what the cell phone and tablet market is. Yes, they have had to contend with competition from players like AMD, but they have always released innovative products that had good margins (not to mention high volume, which was also helpful).
Second, they have consistently had about the industry's worst track record on power efficiency--it just wasn't as high a priority in the desktop segment. Combine this with the fact that they have never done well in the embedded market, either. I'm not sure battery operated phones and tablets are an area where they are going to leverage much expertise. That may be where the volumes are headed, but whether they could succeed technically or financially in that arena is an open question.
It's a great idea but Intel is its own industry sector---they do everything in-house, from basic architectural and physical design, through their own EDA/chip design tools that are tuned to their fab process, and of course their own fabs. It will be a challenge to integrate some pieces from third-party workflow--it probably isn't as simple as reading a VHDL from ARM and synthesizing a foundry output file.
Intel is used to making custom chips for its custom process. I think in the short term Intel can have more success in making ASICs (making chips for other people, using its design Library) rather than Foundry (let fab less design using there Design kit) .