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Intel says New Chip Technology is Six Months Behind, Shares drop 9%

Intel says New Chip Technology is Six Months Behind, Shares drop 9% - Appy Pie

Intel Corp said on Thursday its new seven-nanometer chip technology was six months behind schedule. This sent the company’s shares down 9 percent in extended trading. The new delays are a blow for the company which struggled with years of delay for its 10-nanometer chip. The company also said it would consider farming out more work to outside semiconductor foundries, eroding a founding principle that manufacturing is key to its success. Shares of AMD also rose by 6% in extended trading.

The setbacks will have little effect in the next few quarters but will cause a years-long domino effect, delaying chips meant to counter the rise of rivals Advanced Micro Devices Inc. (AMD.O) and Nvidia Corp (NVDA.O) until late 2021 or even 2023.

Bob Swan, Chief Executive, said on a call with investors, “We’re going to be pretty pragmatic about it and when we should be making stuff inside or making outside, and making sure that we have the optionality to build internally, mix and match inside and outside, or go outside in its entirety if we need to.”

Intel’s 7nm delays extend the lead in the smaller, faster chip technology held by Taiwan Semiconductor Manufacturing Co Ltd (2330.TW), which is now expected to remain at least one generation of technology ahead for years to come. They will likely benefit rivals AMD and Nvidia, which outsource their manufacturing to TSMC.

Bob Swan further told investors that Intel’s “Ponte Vecchio,” a graphics chip meant to compete with Nvidia, will not be released until late 2021 or early 2022 and could use outside chip factories. He said Intel’s first 7nm chip, meant for personal computers, will not arrive until late 2022 or early 2023. Its first 7nm data center processor will not ship until the first half of 2023.

While Intel is the top supplier for processors for PCs and data centers, Nvidia and TSMC are challenging the logic of Intel’s business model as both a designer and manufacturer of its chips. In recent years, Intel has relied on booming growth in data centers that power cloud computing as PC sales declined, though both segments have expanded as the pandemic forced increased technology spending to facilitate working from home.

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