Intel had another roller coast day with a stock decline of 9% amid reports it is likely to lose its place on the Dow Jones Industrial Average because of its 60% decline in all of 2024.
By contrast, compare such dismal news to Intel’s exultant simultaneous presentation on Tuesday at IFA 2024 for its global launch of next-gen Intel Core Ultra for PCs, code-named Lunar Lake. Officials in a livestream described Lunar Lake’s power efficiency and ability to handle AI applications from multiple vendors, but the better news might have been Lunar Lake support from PC vendors such as HP and Dell and Windows OS creator Microsoft.
Michelle Johnston Holthaus, general manager of client computing at Intel, said 80 designs from 20 OEMs will be available in 30 retailers globally on Sept. 24.
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Intel’s strong tradition in designing PC chips has been matched against its devastating August 1 decision to cut $10 billion in expenses and lay off 15,000 workers. What will happen to ambitious plans to build new fabs in Arizona, Ohio and Germany have been questioned. There’s also a rumor Intel might sell off its Altera unit that designs FPGAs to, perhaps, Marvell. Intel had bought Altera for $16.7 billion in 2015.
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Intel has not responded to requests to comment on any of these rumors, directing reporters to its more positive Lunar Lake news.
But some analysts are weighing in with more serious commentary about Intel’s fate. Ben Johnson, founder and analyst at Stratechery, on Tuesday wrote that despite the optimism over Lunar Lake, the tiles in Lunar Lake, including its CPU, are made by TSMC “which is both embarrassing and also terrible for margins.” (TSMC uses its 3nm process to make the Lunar Lake computing module and its 6nm process for the platform control module. It is the first processor design where all the logic dies are fabricated by an external foundry, in this case, TSMC.)
He ticked off concerns raised by many analysts, including not finding a flagship customer for its 18A process node, not getting into mobile early and not getting into AI soon enough to be a competitor to Nvidia and AMD at the data center.
Most damning, he said, “There is no market-based reason for Intel Foundry to exist,” partly because of all the advanced node production done by TSMC in Taiwan. Johnson dismissed Intel CEO Pat Gelsinger’s argument that TSMC is under constant threat from China. Some US officials make that point about a constant threat also, to which Johnson recommends creating a new foundry entity, not Intel, to produce chips with US government purchase guarantees that are not beholden to x86 chips and avoid Intel inefficiencies, including its sizeable workforce. (Intel in April reported its foundry business lost $7 billion in 2023, after losing $5 billion the year before.)
“The best thing we can do is purchase guarantees—on the order of hundreds of billions of dollars over the next decade—and a prayer that someone can make such an entity stand on its own,” he said.
If that would happen, Johnson said, it means the new foundry would have to earn business from Apple, Nvidia, AMD and also the fabless Intel that remains. “The tech world has moved on from Intel; the only chance for US leading edge manufacturing is to do the same.”
Some other analysts have not called for such drastic response, however, noting the large role that Intel currently plays with its chips in the market, including 80% of laptops and PCs and Intel Xeon CPUs used in 70% of data centers. Even set against the substantial Intel foundry worries, Patrick Moorhead, founder and analyst at Moor Insights & Strategy, said the other large global fabs, TSMC and Samsung, do not have enough capacity “to support a total Intel meltdown” which would impact global supply for PCs and data centers for years.
"TSMC doesn't have enough supply if Intel were to significantly falter," he said. "Therefore Intel will be a factor."