IoT, Modems, 5G, Memory are all interesting and look to be business that will grow. So it sure sounds good to the board and financial analysts that Intel is positioning itself in them, easy to fool the non-experts! To the layman it looks credible, intel is a silicon technology power house with good manufacturing, decent factories, leadership silicon technology, and a good design history in x86 and of course the leader in Moore’s Law! Thus the stock has risen with the rising tide as nothing “yet” to burst the lies hidden beneath the surface!
Why it won’t work and all lies and worse to investors and the employees the most!
All these are all very competitive fields ( IoT, memory, 5G, modems ) with multiple players and Intel brings no unique competitive advantage except money and reputation. Even the recent noise about ARM at 10nm has many many competitors ( Apple, Qualcomm, Samsung and of course ARM ) The most fundamental issue is Intel doesn’t have a cost advantage nor manufacturing scale. Their whole technology and factory size were setup for optimizing high margin x86, not a commodity and predatory competitive environment where chips sell for few bucks to tens of bucks. Intel hasn't made money with their overhead structure in that business in more than 30 years. Then you have their track record of success or should I say lack of when they tried. In any market where speed to market with good PPAC is required intel has failed, even in Intel’s competitive days with AMD in the late 90’s Intel barely could beat AMD who was running in much smaller factory, fewer resource and far inferior silicon technology yet they beat Intel sometimes and was competitive for a long time, says a lot about how a monopoly weakens the organization. Then lastly look at the case of Tablets, Phones and Foundry as all three were huge growth areas and correct me if I'm wrong, did intel try there with the goal of losing. No, Intel tried desperately for three process generations but their design and process advantage resulted in billions in loss in a booming market. TSMC and Samsung and every other foundry made money, lots of it with far inferior process technology and beat Intel’s pants off. How can that be, if process was such the advantage then, what is different this time around? Was it just too many people and 12K ACT fixed that, think not!
I have not seen one thing that Intel has changed in their new thrusts that will change the story for memory, IoT, modems, our Foundry that will result in a different end result. Maybe someone can share what they have changed but I certainly didn’t see anything inside that changed that would make intel different this time around, and don’t say ACT, LOL.
Sorry ACT didn’t make intel leaner, it demoralized all the organization and gutted many of key expertise and put the rest of the organization on eggshells. The 12K reduction didn’t fundamentally fix the issues in technology, design, time to market, usability of the process, or PPAC to improve intel’s competitive position.
Conclusion NOTHING HAS CHANGED. X86 market will continue to shrink, Server will grow hiding all the miss execution for a little longer, but the billions being spent on IoT, Memory, foundry, 5G will all come to market in 2017 and 2018 where much more competitive companies also have solutions and Intel’s will not be more compelling on PPAC, thus MORE LAYOFFS in 2017 and 2018.
Another reason why it is going to get worse. Intel lost the virtuous cycle of silicon technology. The volume x86 to feed process and design and bankroll is over soon at intel. 25 years ago Intel was behind on process but the gift of x86 monopoly and the explosion of the volume allowed intel to catch up to the leaders. Huge volumes with every new generation of x86 enabled confident investment in huge factories and aggressive research & development targets, investment in factories & technology over the 25 years Intel became the leader in process. They conquered IBM, Motorola, DEC, SUN, and many other larger Japanese companies in silicon as none had the volume nor reward for that investment. Guess what, that virtuous cycle now belongs to TSMC and Samsun! Those two know with each new Cellphone generation they got a Tick Tock smashing intel. Both of them ramp volumes much larger than Intel and the ROI for that is huge. It is easy to see that Samsung and TSMC are embracing things like EUV and other things, and now have far larger and more motivated and efficient teams. The other thing, TSMC and Samsung have is that after they are done with ramping their Aps processor they can fill the factory with many other products from other companies getting more reuse out of the factories, intel they have no other usage for their factories. Last I checked TSMC after making Apple product in their 28nm is making Intel modem, how ironic! Intel is desperate in hope they can fill them with IoT, memory or such, but I already discussed why that will fail.
Conclusion more layoffs in 2017 and 2018, or a complete change of leadership and cultural and every way they do business which would also including more layoffs whenever the new boss shows up.
Enjoy your Monday noodling the changing of the guard. It has been 20 years in the making of lost opportunity and layoff and a few new initiatives as it stand currently won't change the tide of the ARMy and TSMC/Samsung