Manufacturing is in Intel’s DNA and won’t be abandoned, says GlobalData

Intel is not about to abandon manufacturing, despite pressures from investors, says GlobalData, a leading data and analytics company. The company will, instead, continue its hybrid manufacturing strategy in order to maintain the strategic advantage of manufacturing on US soil. In fact, at tomorrow’s (21 January 2021) quarterly earnings call, Intel is likely to stress that 10nm production of its latest processors is ramping up after those three years of problems and delays. It is also likely to report tangible progress in developing 7nm technology – although it will still likely need to outsource 7nm production until 2023.

Head of Thematic Research Cyrus Mewawalla commented, “While the manufacturing problems with its ten nanometer (nm) process technology caused it to lose significant market share to rivals AMD and Nvidia, Intel has enough breadth and depth of technology, longstanding strategic customer relations, alliances and supply chain to be a serious challenger to these companies, as well as the prospective Qualcomm Nuvia combination. I would not bet against Gelsinger restoring Intel to something like its former dominance by 2025. In an era of geopolitical tensions between the east and west, the decades-long trend in the chip sector of outsourcing production is nearing an end. The fact that Intel continues to make its own chips on US soil will give it a strategic advantage over the next decade.”

Intel’s overriding focus in the future will be on the enterprise market for artificial intelligence (AI) systems. According to Intel, enterprise AI is a $300bn market to address compared with the $30bn PCs market. A new architectural approach will be needed, as extending Moore’s law becomes ever more difficult and costly per transistor. This will involve tightly knit heterogeneous packages of general-purpose chips and function-specific circuits.

Mewawalla continued: “The winners in the new data-centric age will be the companies that have the most comprehensive integrated product line-ups, the packaging skills, and the ability to design for and work with new third-generation materials. With strong Intel pedigree and a track record of success at VMware, Intel’s new chief executive Pat Gelsinger is the right choice to spearhead the company’s much needed restructuring and plot its course through the AI era.”

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