The Six Five team discusses new Intel SVP & GM provides Foundry updates.
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Transcript:
Daniel Newman: You and I sat in. We heard from Kevin O’Buckley, the new senior vice president and general manager of Intel Foundry. I mean look, after the last couple of weeks they had … Was there anything that could be said on that call that gave you confidence? Or what was your perspective of the conversation under Kevin’s new leadership?
Patrick Moorhead: Yeah, so first off, a little bit of background on Kevin, right? Lineage, Marvell Tech. I believe I met him when I was at the last Analyst day. He ran their ASIC business. Before that he was at Vera and then before that he was VP at GlobalFoundries where he was in charge of product development. And then he was at IBM for 17 years in tech development, even sales and relationship marketing. So, his lineage is really good on this, because he’s got customer experience and he has founder experience. And this was really a meet and greet that Intel set up with the analysts that I appreciated. There was no new news brought out, even though I think the Intel press release said, what’s new? They had disclosed that information either in earnings or in disclosures beforehand. What is important though, there were some affirmations about 18A, which literally is the process that Pat Gelsinger says will give the best performance at the lowest cost.
That’s including TSMC. TSMC recently said, “We beg to differ. Heck, our three nanometer has better characteristics than 18A and our two nanometer will run circles around it in terms of performance and cost.” Those are fighting words, by the way. That’s about as much out of TSMC as you’re going to get. Two first products, one for client and one for server are powered in booting an OS. I loved the booting the OS part, because that is key. You can power on anything, but by the way, it has to boot into BIOS, then it’s to boot into operating system. That is a good sign. That doesn’t mean it’s running windows. It’s probably a variation of Linux. That’s how this works. PDK 1.0 and a PDK is what you give customers, partners and IP houses to go in and really bang on this thing and integrate your flows with theirs.
And even though the first tape-outs for the Intel products, Panther Lake and Clearwater Forest have already come out. The first external tape-outs will be, and by the way, Intel is well beyond tape-out with Panther and Clearwater. It’s booting, as I said, but the first third-party external second half of 2025, which means those first products will likely show up in the first half of 2026. It takes about a year to go from tape-out to high volumes. And then a little bit of an affirmation about the overall business IFS, and this is three, this is 18A. This is everything is at over $15 billion. That includes wafers and their packaging business. Big number, just as comparison, TSMC is 100 billion, that this is bigger than GlobalFoundries. And in the Q4 call, Intel said they’ve taped out over 75 ecosystem and customer test Chips and has 50 chips in the Foundry pipeline for ’24 and ’25, 75% is on 18A. Final comment, again, they made this announcement before, but Microsoft is a committed Intel 18A partner and my guess is that is the chip that will tape out in the first half of 25. Could be Cobalt, could be Maya. My guess is Maya, which is their data center AI accelerator. Just because of what TSMC is doing with raising their prices.
Daniel Newman: Yeah, so you hit it on the head. I mean, this wasn’t new, but it was sort of a, I like the word, reaffirmation. Look, this particular moment for Intel is complicated. I mean, Pat, I tweeted something yesterday. They’re trading it effectively at book value. They’re literally the company, if it just liquidated its assets, that’s what it’s trading at. It’s really hard to see this. This company’s a national treasure. It’s been critical to the entire development of the compute era. We’ve seen fabulous design skyrocket while Intel has struggled. The foundry business is something that the world needs. It actually needs Intel to be successful in this particular space. Yes, TSMC can do more here. Samsung can do more here. SK, they can all come here and build fabs. But it is good for the world to have a strong U.S.-based manufacturer of chips and a fab and a Foundry in chips.
So, I’ll say that. It’s good to see some of the things that you hit on overall, it’s good to see the pipeline developing. The problem is the cost and timeline to value is much different than, if you’re a fabulous design, you can get, especially now with the EA tools and all the design support arm and IP licensing, you can get to value pretty quick. That’s why you’re seeing all the hyperscalers build their own because it’s become very, very possible to do in short periods of time. And they can vertically integrate and deliver quality products and increase margin. But they do need to have these chips fabbed out. They do need to have these produced. There is three nanometers sold out for two years. Certain CoWoS sold out for multiple years.
Patrick Moorhead: Certain CoWoS not working yet.
Daniel Newman: Some of the other CoWoS isn’t working yet. We actually didn’t even really talk about it here, Pat, which is kind of funny, it didn’t make the list. But NVIDIA had a delay this week and we don’t need to. It got covered so well, maybe that’s why we didn’t have to cover it here. But the bottom line is, is that this business is hard. This business is hard. From design to output it’s very, very tricky. The amount of capital … The capital intensivity of this is exponentially more difficult than just the design side. And so, Intel’s got a tough road ahead. I think its biggest problem is that you just really have to be … You have a decade horizon to really see Foundry from a profitability standpoint. David Zinsner, I think you’ve talked to him this week. I talked to him next week. He’s been pretty candid about, it’s really the turn of the decade is where they see this thing really starting to generate profit. But again, a company like Intel can’t be betting on the short path. They have to be betting on the long, they have to. Returning to technology leadership is a big challenge in itself. That’s something Pat stood by. It’s not going to be easy, but technology leadership is one thing. The world needs more Foundry, it just does. You’ve got it TSMC and you’ve got Samsung, but Intel succeeding here is good for the world. Everything else you covered I think is pretty good.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
