Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Intel Discloses Newest Microarchitecture and 14 Nanometer Manufacturing Process Technical Details SANTA CLARA, Calif.--(BUSINESS WIRE)--August 11, 2014--
Intel today disclosed details of its newest microarchitecture that is optimized with Intel's industry-leading 14nm manufacturing process. Together these technologies will provide high-performance and low-power capabilities to serve a broad array of computing needs and products from the infrastructure of cloud computing and the Internet of Things to personal and mobile computing.
Intel 14nm Manufacturing Process - 14nm Package (codenamed 'Broadwell') (Photo: Business Wire)
Key Points:
-- Intel disclosed details of the microarchitecture of the Intel(R) Core(TM)
M processor, the first product to be manufactured using 14nm.
-- The combination of the new microarchitecture and manufacturing process
will usher in a wave of innovation in new form factors, experiences and
systems that are thinner and run silent and cool.
-- Intel architects and chip designers have achieved greater than two times
reduction in the thermal design point when compared to a previous
generation of processor while providing similar performance and improved
battery life.
-- The new microarchitecture was optimized to take advantage of the new
capabilities of the 14nm manufacturing process.
-- Intel has delivered the world's first 14nm technology in volume
production. It uses second-generation Tri-gate (FinFET) transistors with
industry-leading performance, power, density and cost per transistor.
-- Intel's 14nm technology will be used to manufacture a wide range of
high-performance to low-power products including servers, personal
computing devices and Internet of Things.
-- The first systems based on the Intel(R) Core(TM) M processor will be on
shelves for the holiday selling season followed by broader OEM
availability in the first half of 2015.
-- Additional products based on the Broadwell microarchitecture and 14nm
process technology will be introduced in the coming months.
-- For more information, including images, visit:
http://newsroom.intel.com/docs/DOC-5677
"Intel's integrated model -- the combination of our design expertise with the best manufacturing process -- makes it possible to deliver better performance and lower power to our customers and to consumers," said Rani Borkar, Intel vice president and general manager of product development. "This new microarchitecture is more than a remarkable technical achievement. It is a demonstration of the importance of our outside-in design philosophy that matches our design to customer requirements."
"Intel's 14 nanometer technology uses second-generation Tri-gate transistors to deliver industry-leading performance, power, density and cost per transistor," said Mark Bohr, Intel senior fellow, Technology and Manufacturing Group, and director, Process Architecture and Integration. "Intel's investments and commitment to Moore's law is at the heart of what our teams have been able to accomplish with this new process."
About Intel
Intel (NASDAQ: INTC) is a world leader in computing innovation. The company designs and builds the essential technologies that serve as the foundation for the world's computing devices. As a leader in corporate responsibility and sustainability, Intel also manufactures the world's first commercially available "conflict-free" microprocessors. Additional information about Intel is available at newsroom.intel.com and blogs.intel.com, and about Intel's conflict- free efforts at conflictfree.intel.com.
Intel, Intel Core and the Intel logo are trademarks of Intel Corporation in the United States and other countries.
*Other names and brands may be claimed as the property of others.
Tenchu,
That is foreign concept to FPG.
It was a war and Intel won is standing and AMD lost and is hobbling.
AMD existence was a copycat of Intel X86 architecture.
This is fact and not fiction
If yo dig deeper, the most of the sales are in China. Even that is disappointing according to some.
Who ever needs ipad already owns it in US. Like you said there are too many options in tablet category.
This is second time in a row that ipad sales are lower. Even ftre guidance was not that impressive.
That is what hurting these folks. Can't see what is going on. Just want to say something to opposite what the market is doing.
These folks want Intel to fail in share price, technology roadmap, in mobile/smartphones/IoT.
Intel should be replaced by ARMH/Qualcom and or other licenses of ARMH.
And that is not going to happen and all of these folks will end up loosing their shirts.
truth always hurts-right.
Andy-Who is making this up you or WBMW?
You have tendency to lie at every step even when things are presented to you on platter.
Exactly. TSMC produces 60M, it does not have a yield problem and Intel produces some millions it is a problem.
Intel is on 14nm and TSMC is on 20nm if true. Intel has already produced more than 100M+ on its 22nm 3D process. TSMC is without 3D.
Intel proved in its 2nd quarter results that it is extremely profitable and doing just fine and will keep on doing so in the coming months and years.
I am not confused. I do admit I am not knowledgeable enough to discuss with you to that extent.
But I am sure if you remove chip from IBM system and pop it another, it will definitely affect performance.
I am not confused. I have seen this before from Intel. Customization of any nature is customization. Here it involves firmware(per article you posted) with coding for Oracle only. These codes will not help non Oracle customers. I doubt it that these codes can be erased and product can be set back to original for use by others. If that was the case, then Oracle could do itself without Intel help. Even if it could be erased, still it involves rework and double handling and it all costs money.
Like I said call it what you want to call. Implications are like that of customization.
Thanks for the link though.
There you go. It is customized to the point that is unique to Oracle. The FPGA portion of the die is being used to customize for customers. Call it whatever you do. Main CPU is for everyone to use
Why not? However small the change be, it is change and that part can't be used by other companies.
From a business point of view it is big deal. These parts are made for Oracle. There is predictability to business that way.
Very well put. Thanks.
That is why I replied in the way I did. Some folks have made up their mind that Intel is incapable of competing at any level.
All the issues have been discussed here before-make arm Chips, too much capacity, PC dead and going forward not able to support Intel manufacturing lead, ARM eating into Intel server products, TSMC and Samsung soon will catch up to Intel. No one has any data to back up what they are saying.
It is all "WHAT IF"
One can speculate the hell out of what ifs. The only folks who know this best is BK and company.
As Intel investors you must trust the management Intel investors have been rewarded well.
That is 12 months target which I am sure you know. I am not sure any one knows 12 months out. It is hard to know next quarter.
Yes. I agree. Momentum is on upside.
I am sure most of you have seen this.
-------------------
Intel's Haswell coming to Xeon E5 chips this quarter
The Xeon E5 chips code-named Grantley are the next generation of Intel's biggest-selling class of server chips
By Agam Shah
July 15, 2014 08:09 PM ET
3 CommentsinShare
IDG News Service - Intel has started shipping Xeon E5 chips based on the Haswell microarchitecture to server makers, and the chip will be in servers this quarter.
The Xeon E5 chips typically go into two-socket and four-socket servers and are the company's biggest-selling server products. The new chips, code-named Grantley, will succeed former chips code-named Romley, which are based on the Ivy Bridge microarchitecture.
Lenovo has already announced plans to launch a new line of servers based on Grantley this quarter. Server makers including Hewlett-Packard and Dell also use Intel's server chips and could announce products.
"We think ... it's going to be a very powerful product," Intel CEO Brian Krzanich said during an earnings call on Tuesday.
The Grantley chips have already started shipping to cloud and high-performance computing customers who build their own computing gear, Krzanich said. Most chips ship out of the factory to server makers, who test the chips, design servers and then make products commercially available.
Xeon E5 accounts for roughly 75 percent of Intel server chip shipments, said Dean McCarron, principal analyst at Mercury Research.
The predecessor Romley chips are still out there, but Grantley will step in as customers look to upgrade servers. Intel's server business is booming, but Krzanich was restrained when asked about expectations for the server chip.
The data-center volumes are "lumpy," Krzanich said, adding that Xeon E5 order sizes could vary as companies look to upgrade data centers.
"They tend to come in big pieces," Krzanich said.
However, in the long term, the chip will continue to drive Intel's data-center business, Krzanich said.
The Grantley chip will have DDR4 memory controllers, and memory DIMMs are expected to be available from Micron, Kingston and others this quarter. The chip will have more processing cores than did its predecessors.
Grantley could face competition from Advanced Micro Devices' Opteron 4000 and 6000 x86 server chips. But Intel has close to a 95 percent market share, and in the Xeon E5 segment it's even higher, McCarron said.
"There's really not a lot of competition for that particular server product," McCarron said.
AMD is betting its server future on Arm processors, which could emerge as competition to Intel's x86 server chips.
Intel has also said it will be willing to customize chips with specific features. The bulk of Grantley shipments won't be custom chips, McCarron said.
The chip maker also sells Xeon E3 chips for single-socket servers and E7 chips for servers with four sockets or more.
Intel stock is around $34.50-high of the day so far is $34.48
I had the same thoughts.
A lots of upgrades:
Most Bullish
INTEL <INTC.O> : JEFFERIES RAISES PRICE TARGET TO $45 FROM $40; RATING BUY
Least Bullish(I would call it bearish as it is lower than $33.00-current price by a mile)
INTEL CORP <INTC.O> : MORGAN STANLEY RAISES TARGET PRICE TO $30 FROM $28; RATING EQUAL-WEIGHT
Current thought process on part of analysts.
---------------------------
Intel already said its second-quarter results will be better than expected. Now the question is whether the good times can last.
The big maker of computer processors has been suffering as consumers shift their spending to smartphones and tablets - - markets where Intel chips have been largely ignored by hardware makers.
But businesses have stepped up their PC buying, Intel said in mid-June. The company projected it will post $700 million more in revenue than it previously expected--Intel's first positive revision to its financial forecast since the third quarter of 2009. Analysts now expect per-share earnings of 52 cents, up about 33% from a year earlier, on $13.7 billion in revenue, a rise of about 7%.
One often-cited factor is Windows XP, Microsoft's long-outdated operating system. Microsoft ended technical support for that product in April, prompting many companies to finally upgrade their PCs to run more recent versions of Windows.
With that lift now factored into Intel's share price, investors will be watching the company's third-quarter guidance Tuesday and other comments that might indicate whether the PC buying binge will continue.
"Really the important issue going forward is how sustainable is that enterprise PC improvement," says Brian Fox, senior vice president and portfolio manager at Standard Life Investments, who oversees investments that include Intel shares.
Intel reports earnings after the close of New York trading Tuesday, and will hold a conference call at 5 p.m. ET. Here are some more things to watch:
Move to Mobile: Intel has been spending heavily to catch up in chips for mobile devices, offering subsidies to tablet makers that switch from chips based on ARM Holdings technology. While the red ink in that segment is bound to have recurred in the second quarter, a rise in revenue for that business would be a welcome shift.
Server Success: Intel's share of chips sold for servers recently reached 97%, and the cloud-style services offered by the likes of Google and Amazon.com have bolstered revenues. But Fox said investors would like to see double-digit percentage growth in that data center business in the second period--not a sure thing as other corporate buyers focus more on using their existing hardware more efficiently.
Rise of the Things: Intel last quarter for the first time broke out revenue from one of CEO Brian Krzanich's newest priorities: selling chips for an array of non-computer devices that are sometimes lumped together as the Internet of Things. Revenues rose a healthy 32% for that segment in the first quarter; analysts would like to see more signs that the new field isn't just a fad.
More from Moore: Intel prides itself on shrinking chip circuitry every two years or so, a cadence of technology improvement called Moore's Law, named after company co-founder Gordon Moore. But the latest generation of chips based on new technology are about six months late. Signs of a firm arrival date for those new processors would help bolster confidence in Intel's position.
More at The Wall Street Journal's Digits blog, http://blogs.wsj.com/digits/
Chromebook and cheap laptop with windows-great competition helping Intel
---------------------------------
Microsoft says super-cheap Windows devices are on the way
BY CHRIS VELAZCO @CHRISVELAZCO 9 HOURS AGO 257
It used to be that if you only wanted to pay $199 for a brand-new laptop, you'd have to try your luck on Black Friday or pick up a Chromebook. Not so anymore. Microsoft COO Kevin Turner outed a $199 HP Windows laptop called the Stream at the company's Worldwide Partner Conference this morning, and it should see the light of day in time for the holiday season. Fine, it doesn't sound like the biggest deal ever. There are already a few solid Windows laptops floating around there for less than $100 more, after all, and at this point no one's sure what $199 will actually get you. That's a fair point, but c'mon: on some level this move is all about symbolism. Microsoft is telling the industry -- and the consumers that fuel that immaculate machine -- that it's not giving up low-end computing to Google without a fight.
Nadella and his crew are banking on the fact that Windows provides greater functionality and extensibility than ChromeOS right out of the box. When computer shoppers can own the full Windows experience (for better or worse) for the same price as committing to a Chrome-y connected lifestyle, they'll have to mull that choice over. That's exactly what Microsoft wants. Turner also confirmed that the next few months would bring at least a few full-blown Windows tablets priced to move at $99. That announcement wasn't as much of a surprise since the folks in Redmond revealed that the OS would be free to manufacturers when its installed on device's with screens under 9 inches. It was only a matter of time, but hey -- that doesn't make the gesture any less meaningful.
I know what you are saying. Now it is all earnings dependent and future guidance coming tomorrow after market.
Here is another positive note:
-------------
SAN FRANCISCO (MarketWatch) -- Intel Corp., grappling with a PC industry in transition, is scheduled to report its fiscal second-quarter results after the close of trading Tuesday. Here's what you should expect.
Earnings: Analysts surveyed by FactSet estimate that Intel (INTC) will earn 52 cents a share, up from 39 cents a share in the same period a year ago.
Revenue: Intel is forecast to report revenue for the quarter, which ended in June, of $13.7 billion, compared with $12.8 billion a year ago. The company itself has forecast revenue in a range of $12.5 billion to $13.5 billion.
Stock performance: In terms of its stock price, 2014 has been a good year for Intel. The company's shares reached a 52-week-high of $31.58 on Monday, and are up about 21.5% for the year.
Other matters: Technology research firm Gartner Inc. said last week that the PC market, which remains Intel's bread and butter, showed slight growth in the second quarter, putting an end to two years of declines. Any gains in overall PC sales should give Intel some reason to feel good about its prospects.
Analyst Doug Freeman, of RBC Capital Markets, said he is looking for "strong September quarter" guidance from Intel, which may still end up being below its historically seasonal rates.
"At this point, we consider Intel to be a company in transition as focus of growing into new markets likely proves to be mission critical," Freedman said.
More must-reads from MarketWatch:
It works both ways. Here is upgrade:
-------------------
Imperial Capital initiates coverage on Intel (NASDAQ: INTC) with a Outperform rating and a price target of $37.00.
Analyst Ashok Kumar states, "Following the 2Q14 upside preannouncement on 6/12/14, we expect the company to report results consistent with the revised Street non GAAP EPS estimate of $0.52. The revised revenue outlook for 2Q14 was $13.7bn at the mid-point, up from prior outlook of $13.0bn. The mid-point of Intel s guidance implies 7% yoy and quarter-over-quarter (qoq) growth, or better than seasonal trends. With a richer product mix, gross margins were guided up 100bp to 64%. The better than seasonal revenue performance can be attributed to the ongoing PC replacement cycle in the commercial segment and not just an end-of-life Windows XP event. We see improving sales for both desktop and notebooks PCs from pent up corporate demand and Microsoft s license fee reduction for value priced PC fueling emerging market sell-through. Intel now expects some yoy revenue growth for 2014 versus prior expectations of flat top line. We believe that current Street 2014 revenue estimate of $54.6bn, up 4%, could prove conservative. The stock remains highly correlated with gross margins. Gross margins for the year are expected to come in the upper half of the prior outlook of 61%, +/- a few points."
Earnings are next week. we can all get the real answers if some analysts dare to challenge Intel
I had seen Apple news a couple of days back. Nothing new. Apple news does not prove anything about availability of Intel chips. It could be due to Apple own schedule
Highlighted news about TSM as relates to 3-D transistors.
----------------------------------------
Tech Today: AAPL a 12-Month Pick, Amazon’s Cloud, TSM’s Transistors
By Tiernan Ray
Here are some things going on this morning in your world of tech:
PC-related names are reversing some earlier losses and getting a little lift here following yesterday afternoon’s relatively news from Gartner and IDC that Q2 sales were flat to slightly down, year over year, following two years of quarterly drops.
Microsoft (MSFT) stock is up 7 cents at $41.74, Intel (INTC) stock is up 11 cents, or 0.4%, at $31, Hewlett-Packard(HPQ) is down 5 cents at $33.60, Western Digital (WDC) is up $1.06, or 1%, at $95.36, and Seagate Technology (STX) is up 26 cents, or 0.4%, at $58.74.
However, Rob Cihra of Evercore Partners raised his estimates for both Western and Seagate, though he prefers the shares of the former.
Speaking of Microsoft, the Street today is contemplating CEO Satya Nadella‘s long memo to staff laying out thoughts on company direction and philosophy. Citigroup‘s Walter Pritchard wrote in a note that there’s enough in the memo to serve as fodder for both bull and bear, but that we’ll just have to wait to hear more when Nadella takes to the company’s earnings call on July 22nd, after market close.
Apple (AAPL) stock is down 81 cents, or 0.9%, at $94.58, despite being featured this morning in a note from Morgan Stanley trumpeting the stock as one of 15 stocks that should be good picks for the next 12 months.
Speaking of Apple, shares of Taiwan Semiconductor Manufacturing (TSM) are up 26 cents, or 1.2%, at $22.68, following a report this morning by The Wall Street Journal‘s Lorraine Luk stating that the company has “begun shipping the computing brains used in smartphones and tablets to Apple,” citing multiple unnamed sources.
TSM had for some time been rumored to be stealing away chip manufacturing business Apple had formerly contracted to Samsung Electronics (005930KS).
Speaking of chips, this is the week for the annual semiconductor equipment gathering in San Francisco, Semicon West. Bernstein Research analysts Mark Li, Stacy Rasgon and team today issued an 18-page note to clients regarding 3-D transistors, saying that the “battle begins” for the so-called “FinFet,” the term that TSM uses for the parts.
The team thinks TSM will “face incrementally greater challenge in this node” than with prior manufacturing milestones.
Shares of Amazon.com (AMZN) are down $1.44, or half a percent, at $328.53, as the company’s “AWS Summit” proceeds in New York, the conference that covers topics for the company’s Amazon Web Services cloud computing. Amazon announced some product updates, including a new offering it calls “Zocalo,” billed as “a fully managed, secure enterprise storage and sharing service with strong administrative controls and feedback capabilities that improve user productivity.” Competition for EMC (EMC) and NetApp (NTAP), perhaps.
In case you missed it, Business Insider‘s Myles Udland has the strange story of CYNK Technology (CYNK), whose shares have soared from 10 cents to almost $15 in two weeks, a greater-than-24,000 % return. “But there is, as you could imagine, a slight problem with CYNK: It’s not clear if there’s any value to it,” writes Udland. CYNK seems to be just a Web site with some vague e-commerce and social network features, he writes.
http://blogs.barrons.com/techtraderdaily/2014/07/10/tech-today-aapl-a-12-month-pick-amazons-cloud-tsm-transistors/
It appears that you live and sleep with Dell on your mind. You just can't think beyond Dell. Please keep on "Delling"
Some of these folks bash Intel or say negative things about Intel when no one even mentions anything about Intel.
These folks think they can say whatever please them but when others say to counter that. Then they cry foul.
In your disturbed mind every processor made by Intel is at fault.
What he stated was that one use of robots, Whether it contains Intel processor or someone else. That is the next step.
But how would see the next step if you don't know the first step.
Here is the complete article.
------------------------
Intel: Bernstein Ups to Hold; Market Didn’t Care About Short Thesis
By Tiernan Ray
Shares of Intel (INTC) are up 13 cents, or 0.4%, at $30.91, after Bernstein Research’s Stacy Rasgon this afternoon raised his rating on the shares to Market Perform from Underperform, and raised his price target to $28 from $22, writing that while his “structural short thesis” on the stock has “played out,” nevertheless “the market didn’t care (the party was thrown but nobody came).”
While Intel still faces challenges, Rasgon admits there are “near-term positive catalysts that could continue to smack a short position” and so, “while it pains us greatly, we are upgrading the stock to Market Perform.”
Rasgon’s argument about Intel was based on a structural change in Intel’s business, with the company shifting focus from its traditional high-priced, high-margin chips for personal computers to cheap chips for smartphones and tablets, and the risk to profit and cash flow.
“However, we got two things wrong,” he acknowledges:
First, the market seems to have accepted the idea of structural headwinds, and we never got the de-rating that we sought; quite the opposite in fact, as multiples have climbed rather than compressed (indeed, the party was thrown, but nobody came). And, of course, near-term PC strength is a definite headwind for the short thesis (we have always said the bear call is not “PCs stink,” and as such are not troubled by stabilization, but it is a fact that a more robust recovery derails the short). And unfortunately, the near-term bear case is now, indeed, “PCs stink,” as we wait to see if recent corporate strength is real, or simply pull-forward on the Windows XP EOL, leading to an air pocket down the road. While we believe this is very plausible at some point, the specific timing is uncertain.
A lousy PC market is not enough to hang a short thesis on, he writes, and there are several potential catalysts ahead for Intel:
Prospect for an overall broader recovery in PCs, as always, exists;
Potential for continued gross margin strength as 14nm rolls in (particularly if one believes Intel’s presentations about forthcoming transistor scaling).
Headline risk on the mobile front (we don’t expect significant revenue, but even newsflow on design wins could help support the multiple);
Another potential Data Center upgrade cycle with the advent of Grantley; Potential for further announcements on the capital allocation front – the company will shortly exhaust their existing buyback authorization, and could announce another;
Finally, Q3 consensus estimates that appear sub-seasonal (which could indeed be the case after a very strong Q2, but could also be light if the corporate recovery continues, Data Center is strong, and/or at least some mobile revenues start to shine through).
http://blogs.barrons.com/techtraderdaily/2014/06/26/intel-bernstein-ups-to-hold-market-didnt-care-about-short-thesis/
What a joke! Stock is already close to $31.00
---------------------------------
Bernstein upgraded Intel (NASDAQ: INTC) from Underperform to Market Perform with a price target of $28.00 (from $22.00).
Additional information on the same
--------------------
Micron Technology, Inc. (Nasdaq: MU) announced an ongoing collaboration with Intel to deliver an on-package memory solution for Intel's (Nasdaq: INTC) next-generation Xeon Phi processor, codenamed Knights Landing. The memory solution is the result of a long-term effort between the two companies to break down the memory wall, leveraging the fundamental DRAM and stacking technologies also found in Micron's Hybrid Memory Cube products.
"The ecosystem is changing and the importance of scalable on-package memory and memory bandwidth is now coming to light," said Chirag Dekate, Research Manager at IDC. "Memory is at the heart of the solution space which will benefit both big compute and big data. This announcement is a clear validation of how Micron is advancing the role and impact of memory on systems and the value that 3D memory can deliver."
Delivering 5X the sustained memory bandwidth versus DDR4 with one-third the energy per bit in half the footprint, the Knights Landing high performance, on package memory combines high-speed logic and DRAM layers into one optimized package that will set a new industry benchmark for performance and energy efficiency. The memory stack provides optimal levels of reliability, availability, and serviceability, which are critical elements for high-performance computing systems. One of the first applications of the Knights Landing system-a next-generation Cray XC supercomputer-was announced by NERSC on April 29.
"Intel's many integrated cores (MIC) architecture and Micron's high performance memory is a formidable combination," said Tom Eby, vice president for Micron's compute and networking business unit. "Intel's and Micron's advanced technologies successfully marry the processor to a memory system that delivers the very rare coupling of low power and extreme bandwidth."
"The next-generation Intel Xeon Phi(TM) processor, codenamed Knights Landing, will launch with up to 16GB of high performance, on-package memory that delivers dramastically improved the sustained memory bandwidth versus DDR4 and brings tremendous power-efficiency and space-savings. It is the first Intel HPC processor to use this new high performance on package memory," said Charles Wuischpard, Vice President, General Manager, Workstations and High Performance Computing Data Center Group at Intel. "This will allow the world's leading researchers, scientists, and engineers to run larger workloads faster while maintaining current code investments. We're pleased to be working with Micron to deliver it."
Some strange news. Apple using Intel baseband processors.
-----------
This Morning: Apple’s Baseband Intentions, BlackBerry Upgraded, Pondering Intel
By Tiernan Ray
Here are some things going on this morning in your world of tech:
Shares of Oracle (ORCL) are higher by 12 cents, or 0.3%, at $40.94, after the company said this morning it would spend $5.3 billion in cash to purchase Micros Systems (MCRS) for $68 per share, a 3% premium to Micros’s $65.77 close on Friday. Mind you, Micros had run up on a week of speculation about such a deal.
Net of cash on Micros’s balance sheet, the deal costs Oracle $4.6 billion. Micros makes point-of-sale terminals such as those you might see in a restaurant being used by servers to ring up orders. Mark Hurd, Oracle co-president, said that “We anticipate delivering compelling advantages to companies within the Hospitality and Retail industries with the acquisition of MICROS.”
An Apple baseband?
Shares of Broadcom (BRCM) are down 6 cents at $38.22, as Cowen & Co.’s Timothy Arcuri this morning ponders whether Apple (AAPL) could be a buyer of the baseband wireless chip business Broadcom has put on the block. “We see some evidence to suggest AAPL could be a potential buyer of the assets and engineers,” he writes.
In the same breath, Arcuri asks whether Apple might switch to using Intel’s (INTC) baseband processors for an “iPhone 7,” given that the baseband unit of infineon Technologies AG (IFXA), which Intel purchased in August of 2010 for its own baseband effort, was the original supplier of baseband for the very first iPhone.
“Our work there continues to suggest some evidence AAPL has re-embraced INTC in a bigger way for discussions around iPhone 7 (2015) but we continue to feel this is ultimately more of a ploy to obtain pricing concessions from Qualcomm (QCOM) and AAPL is ultimately unlikely to choose INTC for iPhone 7,” writes Arcuri.
“Regardless, we believe this certainly lends credibility to INTC’s LTE baseband efforts.”
Lauding Intel
It’s something of a banner day for research on Intel. Pacific Crest’s Michael McConnell reiterates an Outperform rating on the stock, while writing that the rest of the PC chip landscape is not so rosy. He cut his rating on Nvidia (NVDA) and Advanced Micro Devices (AMD) to Underperform.
McConnell writes that “While improving corporate PC demand trends have buoyed PC supply chain metrics in Q2 […] we note that this demand trend only benefits Intel (25% to 30% sales exposure to corporate PCs, ~40% sales exposure including traditional server enterprise customers), with AMD and NVIDIA each having less than ~5% sales exposure to the corporate PC market.”
On a less sanguine note, Canaccord Genuity’s Matthew Ramsay writes that two things keep him at hold on the stock: competition in the server chip market from the likes of Applied Micro Circuits (AMCC) and Cavium (CAVM), which “could render 15% long-term [data center group] DCG growth targets too aggressive,” and a return to “mid-single digit secular PC declines.”
In praise of sensor, hub makers
Speaking of chips, McConnell’s colleague, John Vinh, reiterates Outperform ratings on sensor maker InvenSense (INVN) and sensor-hub chip maker NXP Semiconductor (NXPI), writing that “Following our Asia trip, we are more confident that the iPhone 6 will support NFC, the larger-screen iPhone 6 (5.5”) will support OIS (optical image stabilization) and Renesas SP drivers are expected to maintain their primary incumbent position in the upcoming iPhone 6,” all of which causes him to raise his estimates for both chip makers.
Brighter ‘Berry
Shares of BlackBerry (BBRY) are up 20 cents, or 2%, at $10.01, after Evercore Partners’s Mark McKechnie yesterday raised his rating on the shares to Equal Weight from Underweight, and raised his price target to $10 from $6, writing that he sees “ meaningful progress in John Chen’s turnaround plan,” including “stabilizing cash burn (opex & HS outsourcing) and a good plan to hold onto the core subscriber base (EZ Access, BES12 in November).”
Nokia’s nicer prospects
Also on the upgrade path today, Raymond James’s Simon Leopold raised his rating on shares of Nokia (NOK) to Market Perform from Underperform, writing that “The sale of the Devices & Services business to Microsoft strengthens the balance sheet, lifts margins, and positions the company for top-line growth.”
“As we consider the longer term, we see Nokia on a promising trajectory from diversification into higher growing areas but with the wireless market maturing and the next cycle involving small cells not having significant impact, we view the shares as fairly valued and we would stay on the sidelines.”
http://blogs.barrons.com/techtraderdaily/2014/06/23/this-morning-apples-baseband-intentions-blackberry-upgraded-pondering-intel/
Tax Inversion may lead to more M&A in semi
---------------------------
5:26 PM ET
Qualcomm for ARM? Intel for MediaTek? Pondering Chip M&A
By Tiernan Ray
A couple of folks on the Street today were banging the drum for mergers and acquisitions in semiconductors, arguing that both tax reasons and the search for earnings growth should propel further deals.
FBR & Co.‘s Christopher Rolland today opines that semiconductors are primed for a phenomenon known as “tax inversion” that has already prompted a lot of deal making in the pharmaceuticals industry, in which a U.S. company basically moves almost all its equity to a foreign property in order to shelter overseas cash.
“An inversion occurs when a U.S. corporation reverse merges into foreign acquisition and re-domiciles in a more favorable tax jurisdiction. Besides a favorable ongoing tax rate, the new entity is often able to repatriate its U.S. cash without penalty,” explains Rolland.
Going into a bit more detail:
The U.S. tax code allows corporations to benefit from a foreign inversion if, after an M&A transaction, less than 80% of the equity in the new company is owned by legacy shareholders in the U.S. corporation and the company has significant foreign operations. Companies are unable to benefit if they have more than 80% legacy U.S. equity holders, the foreign company acquires “substantially all” of the U.S. assets, and the new company “does not have substantial business activities in the foreign country.” “Substantial operations” is defined as more than 25% of the new corporation’s employees (in either head count or compensation), assets, or gross income. Companies who meet these criteria are deemed “inverted corporations treated as domestic corporations” and are not respected as a foreign corporation—continuing to be taxed as U.S. firms. This prevents any of the benefits of an inversion.
Rolland notes there’s been a lot of dealmaking thus far, and there might be more:
While the semiconductor industry has witnessed 11 medium to large acquisitions in 2014, and three in just the past few weeks, a wave of tax inversions may serve to accelerate the consolidation process. Given the highly technical 20%, 25%, and 40% rules (discussed later in this analysis), there are surprisingly few combinations that fit the tax requirements to be considered a “bona fide” inversion by the U.S. Treasury.
Rolland posits some theoretical takeover deals that are rather eye-opening: “Qualcomm (QCOM) for ARM Holdings (ARMH), Texas Instruments (TXN) for NXP Semiconductor (NXPI), Intel (INTC) for MediaTek (2454TW) , and Cavium (CAVM) for Mellanox (MLNX),” all of which, potentially meet the IRS requirements for inversion, he notes.
However, his favorite chip picks in this context are Altera (ALTR), Advanced Micro Devices (AMD), ARM, NXP, ON Semiconductor (ONNN), Qualcomm, And Xilinx (XLNX).
Similarly, Romit Shah of Nomura Equity Research notes that “Mergers and acquisitions happen in waves.”
“Our understanding is that today we are in the middle stage of a powerful swell,” he writes.
“We’ve seen announcements in the last week from Analog Devices (ADI) and Hittite Microwave (HITT), Synaptics (SYNA) and Renasas, ON Semi and Aptina and SanDisk (SNDK) and Fusion-io (FIO).”
“These transactions come on the heels of RF Micro Devices (RFMD) and Triquint Semiconductor (TQNT) and Microchip (MCHP) and Supertex in Q1.”
Aside from SanDisk’s buy of Fusion-io, “none add revenue growth. It is all about EPS accretion,” leading him to conclude “We believe that potential acquirers are looking at companies with prospects for improved operating expense leverage, strategic fit and valuation.”
As such, Shah offers 15 candidates for a take-out within those three broad categories:
“Sub-scale companies“: Many companies offer unique products with strong IP protection that generate strong gross margin (60%+). However, they may be sub-scale and are spending significant amount of operating expense (as percentage of sales) especially for selling and administrative functions [...] Five companies in this category include Integrated Device Technology (IDTI), Intersil (ISIL), M/A -Com Technology Solutions (MTSI), Micrel (MCRL), Semtech (SMTC), and Silicon Labs (SLAB).
“Strategic companies“: Strategic acquisition is the most common reason for M&A [...] For example, Avago’s acquisition of LSI allows Avago to have a more balanced profile of growth and profitability, while ADI’s acquisition of Hittite offers a more complete set of production in the full electromagnetic frequency spectrum [...] Six companies that fall into this category include ALTR, Applied Micro Circuits (AMCC), Atmel (ATML), Broadcom (BRCM), CAVM and Monolithic Power (MPWR).
“Undervalued companies“: We see semiconductor company valuations highly correlated to the profit margin. Highly profitable companies like Linear Technology has a high valuation multiple, while companies with low profits such as Fairchild has low valuation multiple. Three companies in this category include Diodes (DIOD), International Rectifier (IRF), and Microsemi (MSCC).
More on the same topic
---------------
Intel, long known for cookie-cutter computer chips, is stepping up efforts to let companies customize its processors.
The Silicon Valley giant is using an industry conference in San Francisco Wednesday to announce an unusual plan to package its standard server processors alongside a different class of chip, which can be electrically programmed to handle specific calculating functions. Intel says the combination can let Web companies and other customers achieve dramatic performance gains on some tasks.
Intel is offering other customizing options for its widely used Xeon line, including building in specialized circuitry that customers design themselves. But that process could take many months.
The company says the new two-chip combination--which includes what the industry calls an FPGA, for field programmable gate array--allows customers to quickly adapt the functions of those chips in a speedy process akin to changing a piece of software. They can also modify those programming instructions after the servers are installed with no hardware modifications, if their software or business problems change.
"The pace of software innovation is crazy fast," said Diane Bryant, a senior vice president who is general manager of Intel's data center group. "This is a great way for the silicon to keep up with software innovation."
FPGAs have been sold for years by chip makers such as Xilinx Inc. and Altera Corp. Ms. Bryant declined to disclose Intel's partner on the latest effort, or when the resulting products would hit the market.
Some customers already plug FPGAs into server systems to accelerate certain workloads. That can bring a tenfold speedup in some jobs, Bryant says.
But placing the FPGA and a server's central processor together in the same package can be twice as fast, she says, because they exchange data on a faster kind of connection and share memory more efficiently.
Bryant says some customers she won't identify are trying out the dual-chip offering. Last year, Intel disclosed that it has modified Xeon models to benefit customers that include Facebook and eBay, with a total of 15 customized products developed. This year, Bryant vows to deliver more.
Meanwhile, Intel on Wednesday is also disclosing the official name--Xeon D--for a new multi-function version of the product line expected out next year. Where Intel has such "systems on a chip" for low-power applications already, based on its Atom family, the Xeon D will be beefier "SoC" and will use the company's latest production process.
Why all the effort? After all, Intel commands roughly 97% of industry shipments of server chips.
For one thing, big Web companies including Google and Facebook have made noises about experimenting with new chip technologies, including the Power line that originated at IBM and the ARM Holdings designs that many companies sell for mobile devices.
For another, Bryant is pushing to get standard processors from Intel into networking, data storage and other applications that now typically use chips based on Power or MIPS designs (MIPS Technologies, once a high-profile Silicon Valley company, fell by the wayside in the mainstream computer market and was purchased by the British company Imagination Technologies Group last year). Backers of ARM are racing to grab those same applications.
"As we have seen many times during our history, times of disruptions call for a choice for organization to embrace innovation or risk losing their position in the market," Bryant noted in a blog post drafted to accompany her announcement, which came during an appearance at the Gigaom Structure conference.
Intel to offer more customized Xeon chips
--------------
SAN FRANCISCO, June 18 (Reuters) - Intel Corp is taking a new approach to the powerful server chips it sells to Internet heavyweights like Facebook and Google .
The Santa Clara, California company is integrating its Xeon processors with programmable chips that will give customers with unique technical requirements more flexibility to optimize their servers.
With a stagnant PC industry and little progress in smartphones and tablets, selling high-end server chips is an increasingly important source of profits for Intel.
Most servers are made with off-the-shelf Intel Xeon chips, but last year Intel manufactured about 15 customized versions of those processors to meet the particular needs of high-end customers like eBay and Facebook.
It plans to manufacture over 30 customized chips this year, Diane Bryant, who leads Intel's data center division, told reporters at a briefing this week.
The technology Bryant announced at an event Wednesday goes a step further, letting data center operators customize the chips themselves, as often as they want.
Intel dominates the server market but it faces a new source of competition as rivals prepare low-power processors based on technology from ARM Holdings .
The new component integrates a standard Xeon processor and a
chip known as a field-programmable gate array, or FPGA. Customers can configure the chips as needed to make servers faster at handling proprietary tasks, like providing web-search results or updating social networks.
"If they have an application that spends a lot of time on a particular algorithm, they can take that algorithm, take the soft (intellectual property), and load it into the FPGA and accelerate that workload," Bryant said.
Intel already sells server products that combine Xeon chips and programmable chips but on the new component they will be much more closely integrated, resulting in up to double the performance, Bryant said.
She declined to say when Intel would sell the new product, how much they would cost or what company would supply the programmable chip, a technology distinct from Intel's focus on processors.
Programmable chips are typically used by manufacturers making small quantities of products or prototypes that do not warrant the expense of designing a new chip from the ground up. On Wall Street they are used to run complex financial simulations.
Microsoft has already been experimenting with using programmable chips to help power its Bing web search engine.
Intel announced in March it was expanding its existing contract manufacturing relationship with programmable chipmaker Altera to develop future components that combine different kinds of chips. Bryant said that arrangement was unrelated to the upcoming Xeon offering.