Intel Corp (INTC)

[SemiconEng]

I wondering but I don't know:
This may be the cause of the inventory build. Rather than discontinue the old line they kept it running until the new line came up.
Apple just made an announcement that they will have NO product in one of their lines for the next two months because they discontinued the old line before the new line was ready. That is much worse than Intel's situation.


***Historically, when intel moves microprocessors to a new process, they use the previous one for chipsets, and/or flash. in this case the "old" (cough), 130nm process, would most likely be converted over to chipsets, since I think I read somewhere that intel was ramping the Colorodo facility on Flash. No doubt, the 130nm is not only fully depreciated, but probably in major cost reduction project mode by now. My guess is, that when intel saw the initial stepping yields and poor heat performance on Prescott, they extended the manufacture of Northwood, and delayed the conversion of 130nm to chipsets, in order to fill the orders of the customers, by using boutique processing, to squeeze the 130nm Process for higher bin splits, probably at the cost of yield.


One would think that an old fully depreciated line should be more profitable than a new process. The only good "excuse" is that there is an alternative use for the line.
I don't know enough to know whether this is true, but what would your guess be?


***Now subsequent steppings of Prescott are beginning to find acceptance in the marketplace. With improved yields and bin splits on the 90nm lines, I believe that has caused a Northwood/Prescott inventory build up, forcing intel to re-evaluate the 130nm Northwood vs. 90nm Prescott manufacturing strategy in favor of 90nm.

I believe that intel has already started some chipset manufacturing on 130nm. What I would do, and what it appears to me that intel has done, is shut off Northwood Production on 130nm immediately, which intel has already announced and ramp up the chipset manufacturing on 130nm. This would probably reduce wafer starts initially in the 130nm 8 inch Fabs, which should help reduce inventory in Q3, until the additional capacity can be switched over to chipsets. #1 candidate..... Grantsdale.

Anyway, that's what I think