Since this is all about future, this section is going to have more questions than answers. We will have a whole host of questions about Intel’s options. In the next section, we will have three questions for every other eco-system player.

Intel’s competitive advantage was driven by x86 and their manufacturing strengths. Until he was 30, Jordan could play the physical game. He went near the rim and dunked the shots.

At 30, he had to change course. He started utilising his other weapon, the jump shot – he started getting a higher % of his goals with 15 feet jump shots.

Taking the environment into account, Jordan selected the right weapon in the armoury. Will Intel be able follow Jordan’s example?

Can play on the front foot with its manufacturing strengths?

Intel is a deep pocketed, well-heeled, participant in the PC/Server industry with huge negotiating advantage over their customers, even on bad days.

So, this is not a transition that will happen in a hurry, even if it were bound to happen. It will be a conquest of attrition, spread over decades. The final position of the game will be determined by strategic positions of players as well as their tactical moves every season.

General Business Questions

• Will Intel define its role as leadership in computing rather than leadership in ‘every segment we compete’? Link
• Apple M1’s bill of material estimate is about $60. It offers near top performance. What will be the impact of Apple M1’s BOM in Intel’s pricing negotiations with the other PC brands?
• Will Intel build custom ARM chips for the PC players – for them to get competitive advantages? Dell for example, as Gelsinger has a great relationship with M.Dell.
• Can Intel make huge improvements in the power performance of the x86 chips? Does the architecture allow such improvements?
• Will Intel be able to retain its best Chip design and Manufacturing design people, given the hot developments all around the market?
• How much negotiating power does Intel have with the PC brands to stave off ARM designs until it makes these huge power performance improvements?
• How well can Intel compete (in terms of price performance and availability) in its main market of play (PCs) with AMD?

Can AMD’s CEO Lisa Su continue to out-think Intel, with Pat Gelsinger at helm?

• The current smartphone players aspire to launch PCs. They have a legacy of ARM on Android/Chrome OS offerings. Can Intel establish its value proposition and ‘its aura’ with these newer players? (Mi for example).
• Will Intel have leverage with Microsoft to ensure they optimise for IA? [Most probably Yes. But MS will also pursue ARM designs]
• How will Intel initiate a new revenue stream? Given the PC biz is stalling and data centre business getting complicated, where is the next growth engine? Will they have the patience to brew a new business?
• Culturally, will they be able to work on short development cycle processors with SOC integrations?
• What is the implication of not having a strong 5G strategy? They missed out on 4G due to WiMax focus. Now they are not strong with the 5G stack. Do they have the chops for 6G leadership?
• One reason people are not shifting to ARM based designs (Chromebook for example) is inertia and comfort of the familiar. At what point and for what value proposition will customers tip over from Intel to ARM?
• Will Intel continue to exert influence over the software ecosystem to optimise for Intel Architecture so as to create a performance edge?
• Will they start measuring people on ‘IA:ARM PC’ market share?

How will they fare on price performance over ARM processors in Data Centres.

For specific work loads like AI, ML?

For generic work loads?

• Will Intel have the management bandwidth to fight a multi-point battle:
  • At entry level with Crome OS/Qualcomm,
  • PC with AMD,
  • Data centre with AMD and with ARM processors like Gaviton (from AWS), Nvidia
  • Entry into Mobile or IOT or other new markets
  • Figure out one new, multi-billion dollar, 60% gross margin growth business

Capacity

• The industry is cyclical. The manufacturing capacity is limited. The demand for semiconductor for IOT will continue to grow. Samsung and TSMC will start squeezing the chip makers (AMD, Nvidia, Qualcomm) for margins. How well can Intel utilise its manufacturing capacity and competitive advantage?
• How fast can it go to high yields on 5nm-3nm? It if achieves so, will it have capacity to produce processors for other vendors (mobile processors for example) as a manufacturer?
• If it is not able to invent its way forward, will Intel licence process capability from Samsung or TSMC?
• Will they catch up on the 3nm or some future process and offer manufacturing services to other chip customers? Will they treat TSMC’s margins as their opportunity?

Intel has locked in mfg. capacity with TSMC for its 11^th Gen chips. Can it acquire more and more to suffocate lower margin AMD and Nvidia businesses of capacity? Will TSMC bleed AMD and Nvidia of margins?

Given a chance, Intel will consume TSMC’s capacity until it ramps its own process capability. TSMC will be watchful.

! With ARM’s revenue at $2B [Loss of $400M], and TSMC at $45B[Gross Profits of $24B], it is clear that chip design is NOT capturing the value. Manufacturing is. TSMC’s $250B+ valuation (vs. ARM $40B) also indicates.

Intel can consider TSMC’s profits as its opportunity. Who better than Intel to crack the Moore’s Law code.

Alternative architectures:

• Will Intel launch ARM processors, knowing the lower margin structure of the end products? Can it establish a value proposition for mobile processors? [Btb, Intel is an ARM Licensee]
• Will the Intel development teams, used to a longer cadence of delivery, adapt to rapid iterations on ARM SOCs?

Will Intel be able to stave off Nvidia’s ARM take over?

• How well can it defend the data centre, with trillion dollar gorillas (AWS to start with) ogling the space with some taste? Will Intel be able to retain dominance in the data centre with AWS, Azure and Google through custom processors and differentiated offerings and ward them off from exploring ARM deeper?
• How well can Intel compete with M1 processor and its successors? Can Intel establish a performance supremacy that has credibility in the eco-system (not cherry-picking benchmarks)?
• Will it skip a form factor (PC > Laptops > Mobile (skipped) > IOT Devices) and establish a clear value proposition in the IOT space?

For the IOT space, will Intel adopt MIPS or RISC-V or other open-source RISC architectures to meet the power performance? Will it offer ARM architecture? Will there be a hybrid architecture?

• Can Intel be the ‘US Robotics and Mechanical Men Corporation’ [Asimov iRobot] in real life? How about positronic brains? Weren’t they the brain of the computer?

Geo-political risks

• What will happen to PRC market? Will more vendors come under embargo (a la Huawei)?

In the very long term (for example 2030) will PRC develop its own viable processor with MIPS or equivalent architecture to challenge both ARM and Intel? Will this challenge extend outside China?

Will the TSMC capacity in Taiwan pose a threat to the overall industry due to geographical risks?

• Will US Government endeavour to build 3nm and 5nm capacity with Intel in US shores?
• Will automobile and other IOT demand surges eat away TSMC’s capacity?

Gosh. That was long. In the next blog, let us figure out a few key questions for other players in the eco-system.

Next: Written in Rosetta Stone #13: Other players, other layers