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DMcCunney
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This should not be a big surprise
DMcCunney   1/25/2014 6:33:11 PM
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If you've been watching the industry for a while, you know there are business cycles.  When times are good, R&D is increased, and staff is added.  When the market dips, expenses including headcount and CapEx are trimmed to bring them in line with revenues.  This is not the first time Intel or anyone else has made moves like this.

Part of the problem in the semi-conductor industry is the length of the business cycles.  Intel, for example, recently admitted it was wrong in its forecasts of demand.  But Intel was trying to forecast three or more years out.  You start in forecasting by assuming more of the same, then modify your assumptions based on the latest information and trends you see.  But with that kind of lead time, it's still too easy to get blind-sided by changes in the market you didn't (and probably couldn't) see coming.

I expect Intel to cut CapEx - they largely have to - and the question will be where they cut. Intel knows it has to maintian a technological lead, so I expect advanced R&D to continue, at perhaps a slower rate.  Since Intel is fab heavy, I expect cuts in possible funding for new construction.

But Intel is in a somewhat unique position. Intel develops process technology that eventually gets used on other people's fabs.  Who are Intel's competitors in the R&D area?  Who else can do the sort of new process development Intel does?  I think it's a pretty short list.

 

rick merritt
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Re: Other shoe to drop for Intel
rick merritt   1/24/2014 5:55:02 PM
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@Tarra: I think Intel will do fine in servers for years with the way its executing on its Core and Atom strategy.

But it's got to get its client strategy figured out and I am not sure its enhanced focus on embedded and IoT with Quark and etc is nearly enough. It may have lost the client battle.

jasiojasiojasio
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Samsung IBM ST Global Foundries vc Intel
jasiojasiojasio   1/24/2014 8:01:16 AM
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They advanced FD SOI (easier designs and much better yield than FinFet and Intel has yield problem on 20 1nd 14 nm nodes with FinFets) and on 28 nm node ST has the fastest and the lower power consumption processor for smartphones.

The asme is comong to servres: FD SOI rendering IBM cloud server business (they got rid of old low end 86 generation servers). Google sterted with Qualcomm the same (not necessariry on FD SOI). So Intel despite of its excellence must work harder and for less money now. 

Junko Yoshida comments are very good. I just add my 2 cents and add 3 more Intel competitors. Together they are formidable force.

jasiojasiojasio
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Rookie
Samsung IBM ST Global Foundries vc Intel
jasiojasiojasio   1/24/2014 8:01:14 AM
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They advanced FD SOI (easier designs and much better yield than FinFet and Intel has yield problem on 20 1nd 14 nm nodes with FinFets) and on 28 nm node ST has the fastest and the lower power consumption processor for smartphones.

The asme is comong to servres: FD SOI rendering IBM cloud server business (they got rid of old low end 86 generation servers). Google sterted with Qualcomm the same (not necessariry on FD SOI). So Intel despite of its excellence must work harder and for less money now. 

Junko Yoshida comments are very good. I just add my 2 cents and add 3 more Intel competitors. Together they are formidable force.

JimMcGregor
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Re: Intel is cutting production expenses
JimMcGregor   1/22/2014 2:20:18 PM
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Actually, it's about cutting production and personnel. With some of the challenges Intel faces, I doubt that the cost cutting will be limited to just these two areas. It's clear that the company faces challenges as it tries to break into new markets and applications. In the end, if Intel is successful, this may not be an issue. But, few tech companies emerge from and industrywide change the same as they did before.

TarraTarra!
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CEO
Other shoe to drop for Intel
TarraTarra!   1/22/2014 1:55:14 PM
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I dont see how things will get any better for Intel going forward. It has enjoyed this bubble in the PC and server market with very high volumes, good margins and little competition. In the semiconductor industry this is too good to be true. That run seems to be ending.

 

The PC industry slow down was imminent once the mobile devices got smarter and could do most things that people used PCs for. A few saw this coming. IBM got out of the PC market ahead of time selling that to Lenovo. What is telling now is that IBM is similarly getting out of the Server business as well. I am sure the forecasters at IBM see higher competition and commoditization in that space as well. If Intel is suffering because of the PC market, then the second shoe is waiting to drop when the server market sees increased competition.

 

 

 

Tunrayo
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Rookie
Re: The elephant in the room
Tunrayo   1/22/2014 11:29:30 AM
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I suppose Intel, along with the PC manufacturers - DELL, HP etc were collectively let down by Microsoft.

Software is clearly a chief driver of innovation in the microprocessor market. Apple innovated and created new technologies in the mobile market while Microsoft and its partners sought "faster, cooler and multi-core" processors as you say.

I wonder what these companies were doing while Google responded by developing Android. I suppose they didn't realise how successful the mobile market would become.

Now everyone is just playing catch up!

zewde yeraswork
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Blogger
Re: Intel is cutting production expenses
zewde yeraswork   1/22/2014 11:27:24 AM
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They did overestimate the PC market....in fact they admitted as much in their most recent earnings call...but then again, who has not overestimated it to this point? The fact is no one saw this much decline coming, but now the question is can Intel recover and will they finally be able to make their way into low-power solutions and tablets and smartphones in particular while keeping their major advantage in the cloud. As long as they do that, the deciline in the PC shouldn't doom them.

Tunrayo
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Re: Intel is cutting production expenses
Tunrayo   1/22/2014 11:15:07 AM
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I feel there is need for some concern... the issue stems from Intel's estimation of the growth or decline in the PC market. I suppose there will be some sizeable financial write down because of this estimation gap.

zewde yeraswork
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Re: Intel is cutting production expenses
zewde yeraswork   1/22/2014 10:44:14 AM
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There's been a lot of focus on Intel recently---with the cut backs in the workforce and the cancellation of their Fab, but also some of their latest technologies. My suspsicion is that the company will be fine in the long run, but competition in servers is sure to keep them on their toes for a while.

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