Intel Corp (INTC)

[Ideal_Inv]

Is 3DXP Intel's Silver Bullet?


About 4 years back, I recall that there was an analyst question as to why Intel was expanding its capacity rapidly while the PC market was plateauing.

I distinctly remember Stacy Smith (along with Paul Otellini) responding that they see a PC market turnaround and if that doesn't materialize, Intel knows very well how to handle the excess capacity they were creating.

Russ Fischer of Seeking Alpha (who has always been very optimistic about Intel, so his analysis may have to be discounted a bit) has hypothesized that the excess capacity that was created was much higher than what could be utilized in a PC turnaround...and that the excess capacity was for memory - what we now know as 3DXP.

What We Know Now - Possible Reason:

1. Intel has built excess capacity over the last few years, some factories are still idle - Was this new capacity built "covertly" for 3DXP and had to be kept idle due to delays in 3DXP? Will we see more Dalian-type conversions of some factories to memory manufacturing?

2. Intel has not been particularly aggressive with Atom both in design and moving it to advanced nodes - Were they expecting to get a huge leap over other mobile SoCs by integrating 3DXP and the delays in 3DXP resulted in lackluster Atom products over the past couple of years?

3. Stacy Smith had talked about increased BoM for Intel - getting more of the OEM dollars for additional features - Integrating 3DXP either on chip or package would not only provide a better SoC but would provide more revenue $ to Intel making it a market worth pursuing in the future.

Seems like this is one way that the pieces can fit.