DigiTimes, Taiwan's biggest publication and one of the more reliable sources of information as far as the PC triumvirate are concerned has just published a report stating that they expect Intel's supply issues to last through 2020 till the end of the year. This is in line with what we have heard as well and considering DigiTimes has sources well placed inside Intel and its AIBs - it seems like this is going to happen.
Intel supply situation will not get better till the end of 2020 according to report out of Taiwan, partners planning to switch to AMD
I would like to mention here that this is not, in itself, particularly surprising. Intel has previously admitted to being stuck between a rock and a hard place and their CEO, Bob Swan, gave a very candid explanation for the situation they are in right now. It does, however, mean that AMD *will* be eating away more market share from Intel as OEMs and AIBs have to switch to AMD parts to maintain their volume as Intel's foundries are running at peak capacity and cannot keep up with demand. Every chip order that Intel is not able to meet means market share gained by AMD.
It also doesn't help that Intel's chips ship at a premium (and it makes no sense to kill that premium right now when demand exceeds supply) and OEMs/AIBs have to pass that cost down to consumers who may prefer to go with AMD alternatives anyways. If there is one thing we know for sure it is that 2020 is going to be a make or break year for Intel and things won't start looking up for the company till late 2021.
The one thing that the company has going for it right now is that 7nm progress should theoretically not be affected by the delay in 10nm as that is an independent process based on EUV lithography and while it might not return Intel's lead to it, it should level the playing field as far as process technology goes. According to a report by Gartner, Intel has also recently regained its crown of being the no. 1 foundry in the world - which is an impressive achievement and shows just how maxed out their foundries are right now.
What we know so far: first 7nm product launching in Q4 2021, CEO explains what went wrong with 10nm
In what seemed like a never-ending flurry of hard questions, Bob Swan candidly answered questions about how Intel got into a position where it has lost a massive chunk of its CPU market share to AMD and is in a position where it is unable to meet demand (this is in contrast to its old philosophy of prioritizing err-ing on the side of caution and always having spare fab capacity):
How we got here is really kind of threefold, one we got a lot faster than we expected and the demand for CPUs and servers grew much faster than we expected in 2018. You’ll remember we came into 2018 projecting a 10% growth and we grew by 21% growth so the good news problem is that demand for our products in our transformation to a data-centric company was much higher than we expected.
Secondly, we took on a 100% market share for smartphone modem and we decided that we would build it in our fabs, so we took on even more demand.
And third, to exacerbate that, we slipped on bringing our 10nm to life and when that happens you build more and more performance into your last generation for us – 14nm – which means there is a higher core count and larger die size.
So those three – growing much faster than we thought, bringing modems inside and delaying 10nm resulted in a position where we didn’t have flexible capacity. - Intel CEO Bob Swan
While most of this is old news, this is the first time that Intel has given a solid reason for why it is not able to meet capacity - namely that it decided to produce smartphone modems in-house which in return meant that they were not able to focus on the CPU side of things. It is also a fairly plausible explanation for why Intel cannot even meet the demand for 14nm anymore and instead has to resort to extending 22nm products.
When asked specifically to explain what went wrong, Bob Swan candidly responded with an admission that Intel had gotten overconfident in its ability to beat the industry standard and suffered the consequence. Calling it "Scar tissue" here is the explanation Bob gave:
The scar tissue really started with Moore's Law. Two times scaling factor every two years and that's kind of the simple rule of thumb. That's worked for a very long time. And the transition from 22 to 40 nanometers and then 14 to 10 we decided that despite the fact the physics was getting more challenging we decided to set a higher bar for ourselves in terms of performance. So the 22 to 14 is not a 2 times density, it was 2.4 and it was bumpy along the way but it worked and that working gave us the confidence that for 14 to 10 why don't we take the scaling factor up to 2.7 when you do that the implications of trying to get more and more density and more and more performance [ you start to see the problem]
Secondly, we're not going to try to do 2.4 scaling or 2.7 scaling as we think about 7 nm, you know, we put 2.0 back in line with historical trends as we think about 5nm, which would be our competitors 3 nanometer...
In our first 7nm product in the fourth quarter of 2021... I would also argue that another positive of some of the challenges around 10 nm is that you kind of learned how to make 14 better along the way and you know, we have 14+, 14++ and and despite the fact that you've been on the same node for four years now performance of the chips that continue to improve as we go to 10. - Intel CEO Bob Swan
With Intel chasing a 2x scaling factor for 7nm and shifting to EUV as well, it seems like the company is all set to introduce its first 7nm products (equal to TSMC 5nm) in the fourth quarter of 2021. Bob also further stated that he expects to hit 5nm (equal to TSMC 3nm) by 2024.
