Intel reported record-breaking 2020 revenue after the close of business on January 21. The pandemic has been nothing short of disastrous for the global economy, but if you laser-focus in on the semiconductor industry, it's been a massive growth event.
Intel reported $77.9 billion in revenue for 2020, up 8 percent from 2019. The Q4 figures are nuanced, and not quite so positive. Intel logged a substantial increase in client computing sales (desktops, notebooks), alongside declining sales in data center, IoT, MSG, and PSG. Intel no longer considers personal computing to be a defining pillar of its business, but personal computing remains the largest percentage of its business by far. Client computing accounted for $40.1B in revenue for Intel through FY2020, compared with $26.1B in data center sales. Most of Intel's business segments compare better if you examine them year-on-year as opposed to quarter-on-quarter.
Intel's margins have taken a hit since 2019, dropping from 58.6 percent to 56 percent. The last time Intel hit its vaunted 60-percent margin target was 2018, but the decline this year is understandable. Intel's growth has been more recently driven by data center sales than by increased revenue in the consumer market. Market demand in 2020 drove consumer sales upwards, but reduced data center shipments meant that Intel's average selling prices (and therefore its gross margin) shrank even as CPU sales grew.
What About 7nm?
According to Intel, it's now ramping 10nm in three different fabs, with a 4x improvement in 10nm supply compared with the same period last year. 7nm progress is said to be 'strong.' Rocket Lake and Ice Lake SP are now shipping, and both Alder Lake and Sapphire Rapids sampling to customers.
During the investor call, incoming CEO Pat Gelsinger said: "I have confidence that most of our 2023 portfolio will be internal, but with an increasing use of foundry at the same time." This implies that Intel wants to continue using external foundries mostly for non-CPU products. The TrendForce prediction that Intel would shift the Core i3 to 5nm at TSMC is looking pretty shaky right now. Gelsinger pledged to "dig deeper," but professed confidence in Intel's plans for 2023. According to outgoing CEO Bob Swan, "Expectation is that we will deliver client first, then server. We're improving 7nm to hit that cadence of leadership products in 2023."
Intel's specific references to 2023 suggest that we'll see the node hit volume manufacturing at some point during that year. That implies at least one more mobile refresh on 10nm after Alder Lake, for the 2022 upgrade cycle. Meteor Lake is the CPU currently expected to follow Alder Lake, so maybe we'll get an "Alder Lake Refresh" similar to the Coffee Lake Refresh -- or maybe Gelsinger's got something else in mind.
Gelsinger stuck to his guns on 7nm timing and the amount of improvement Intel has seen over the past six months, even when pressed. According to him, Intel will have a "Grovean attitude' towards execution and will emphasize engineering and a data-driven process as "we rebuild the company."
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