Friday, January 17, 2014

Intel Is Being Soundly Beaten By ARM

Intel had it's earnings call yesterday and then dropped 5% in after hours trading. They said a number of interesting/disturbing things. Reading between the lines, the following is clear:

  • ARM is soundly beating Intel in mobile and will do so through at least 2015.
  • Bay Trail is a failure.
  • 64-bit ARM has a reasonable chance making significant inroads in both desktop and server areas.
This may not be a permanent state of affairs, but Intel is a long way from turning things around. The problem is not so much that Intel cannot make power-efficient processors, but rather in the way they are doing it. Basically their gains are all based on advanced manufacturing processes. Intel is using their lead in process to produce chips that are competitive with ARM in power and performance. However, the process is expensive, both to create and to use for manufacture. Currently Intel has to heavily subsidize their chips in order to get any designs wins at all. This obviously cannot continue indefinitely. Intel swears they'll be able to resolve all of this in 2015... but I no longer believe Intel until I can see a real part in a real product. The advanced processes made a lot of sense when chips were expensive, but in a world of $30 chips it is just not working.

Intel was desperately trying to hide all of this. Doing things like blaming the "government shutdown" and virtualization for slowing server sales. They also kept touting the fact that they have 64-bit mobile chips already. That's just not important in the mobile world yet. Samsung is only just now getting ready to release 4Gb chips. For power reasons, mobile devices tend to use only one memory chip. Despite Apple marketing, 64-bit isn't important until more than 4Gb is needed _and_ available on one chip. Apple's use of the 64-bit A7 might win CPU intensive benchmarks, but the resulting waste of cache and memory did a grave disservice to iOS users. Because of the use of 64-bit, Apple's iPhone 5S effectively has 1.5Gb of memory... a pitfully small amount when compared to the competition. (Consider the 3Gb Samsung Galaxy Note).

Oh, and really big news here, there is now an ARM chip beating Haswell (Desktop!) graphics performance:
NVIDIA Tegra K1 early benchmarks show it topping Intel Haswell - Android Community

First, if you are not familiar with Cherry Trail, Broxton and Sofia, try this article:
Intel updates Atom road map, announcing chips for tablets, smartphones | PCWorld

Here's a set of items of particular interest that came out [Quotes from Intel Earnings Release and CFO Comments and the earnings call transcipt]:

  • "We had a solid fourth quarter with signs of stabilization in the PC segment and financial growth from a year ago"
    This is misleading. Looking at the whole year, things shrank. If by "PC" one means "Wintel" PCs, then things were really grim. Intel's 4Q was saved by the Mac faithful lining up for newly released Macbooks and by all those Haswell-based Chromebooks (which generate much lower revenue for Intel). This doesn't in any way reflect a stabilization of the traditional PC market.
  • "achieving all-time records of i5 and i7 unit shipments".
    Given that Revenue was flat, this is very odd indeed. On reflection, there were many Ivy Bridge i5 and i7 laptops available... one suspects a fire sale on the parts as these systems were selling in the $400-$600 price range. This again goes very much against their claims of "stabilization".
  • "The other Intel architecture operating segments had revenue of $4.1B, down 7% year over year. The year on year decline is driven by lower netbook sales."
    This is the "Atom" group. It wasn't driven by lower "netbook" sales, it is driven lower by not having competitive products available at competitive pricing. If Bay Trail had really been ready and priced well, does one really believe it wouldn't be used in low-end laptops and Chromebooks?
  • "The other Intel architecture operating segments had revenue of $1.1B, up 4% from the third quarter. Year over year, the other Intel architecture operating segments revenue is up 9%." This one is particularly annoying. It makes it sound like "Atom" is doing well. The truth is the unit lost over 600 million this quarter. They hide this gotcha so well, I cannot find the number in the sources I'm quoting. This one item, points directly at Intel's dilemma, they just are managing to make the (relative to desktop and server) low-end chips at a profit.
  • Intel expects flat revenue in 2014.
  • A number of analysts are also questioning Intel's server claims. Not really my area, see this collection for sources.

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