Intel 'really is not an AI player and that's where they're really being punished': Strategist
Summary
TLDRThe script discusses the current state of the chip industry, highlighting that hardware and infrastructure providers are likely to lead for the next five years. It points out Intel's challenges, including lagging behind TSMC in process technology and not being a significant player in AI, despite claims. The speaker notes Intel's missed opportunities in transitioning from 14nm to 10nm and then to 7nm, which has allowed competitors like AMD, with access to TSMC's advanced technology, to compete effectively. The analysis predicts a tough period for Intel, possibly lasting two to three years, before they can hope to catch up with TSMC's growth in process technology.
Takeaways
- 🌟 The speaker predicts that hardware and infrastructure providers will be the winners in the tech industry for the next five years.
- 💡 Major tech companies like AWS, Microsoft, and Meta are increasing their capital expenditures (capex), especially in cloud infrastructure, which is driving AI-specific hardware demand.
- 🚫 Intel is not considered a significant player in the AI market, despite their claims, and this perception is negatively affecting their market position.
- 📉 Intel's data center revenue has decreased by 3%, which is a significant setback given the expectations for growth in the sector.
- 🏭 The U.S. government's plan to bolster domestic chip manufacturing and design has not been well-executed by Intel, who were expected to be a key beneficiary.
- 🔬 Intel missed a critical transition in process technology from 14 nanometers to 10 nanometers in 2016, which has had lasting impacts on their competitiveness.
- 📉 Intel's failure to keep pace with process technology advancements has put them almost two generations behind TSMC, a leading semiconductor foundry.
- 🛠️ TSMC's flawless execution in advancing their process technology has given competitors like AMD a significant advantage over Intel.
- 🆚 AMD, with access to TSMC's advanced process technology, is now on equal footing with Intel, eroding Intel's historical performance lead.
- 📉 Intel's market share is continuously declining due to their inability to maintain a technological edge in the industry.
- 🔮 The speaker foresees that Intel's challenges will persist for another two to three years before they can hope to catch up with TSMC's growth in process technology.
Q & A
What is the current trend in the hardware and infrastructure sector according to the speaker?
-The speaker suggests that providers of hardware and infrastructure are expected to be the winners in the next five years, driven by increased capital expenditures in cloud computing by major companies like AWS, Microsoft, and Meta.
Why is Intel not considered a significant player in the AI market despite their claims?
-Intel is not seen as a major AI player because, although they make server chips used for some simple tasks before handing off to graphics processors like those from Nvidia, they have not been able to establish a strong presence in the AI-specific market.
What has been the impact on Intel's data center revenues due to their position in the AI market?
-Intel's data center revenues have been negatively affected, with a reported decrease of 3%, which was unexpected given the context of increased investments in chip manufacturing and design.
What historical mistake did Intel make that has continued to impact them?
-Intel missed the transition in process technology from 14 nanometers to 10 nanometers in 2016, and then from 10 nanometers to 7 nanometers, which has left them almost two generations behind TSMC.
How has TSMC's execution in process technology affected Intel's competitive position?
-TSMC's perfect execution in advancing their process technology has put Intel at a disadvantage, as Intel's designs, while good, are no longer significantly better than AMD's, especially now that AMD has access to TSMC's more advanced process technology.
What is the 'moat' that Intel is losing in the market, as mentioned in the script?
-The 'moat' refers to Intel's competitive advantage, which they are losing due to their inability to maintain a lead in process technology, allowing competitors like AMD to compete on equal footing.
What is the government's role in the chip manufacturing and design industry, and how has Intel responded to it?
-The government has a plan to double down on supporting chip manufacturing and design in the US, but Intel has unfortunately not performed well in this context, failing to capitalize on the opportunity.
How does the speaker predict Intel's position in the market for the next few years?
-The speaker predicts that Intel will continue to struggle for at least the next two to three years before they can start to grow their process technology faster than TSMC, although they will still be behind.
What does the speaker mean by 'ancient history' in the context of Intel's situation?
-The term 'ancient history' refers to past decisions and events that are no longer relevant but have had a lasting impact on Intel's current predicament, such as missing the transition in process technology.
What is the significance of capex in the context of the script?
-Capex, or capital expenditures, is significant in the script as it indicates the investments made by companies like AWS, Microsoft, and Meta in cloud infrastructure, which is driving demand for AI-specific hardware.
Why is the speaker critical of Intel's strategy regarding process technology investments?
-The speaker criticizes Intel's strategy because instead of investing heavily in advancing process technology, they chose to squeeze margins, which led to them falling behind competitors like TSMC and AMD.
Outlines
🚀 AI Hardware and Infrastructure Growth
The speaker agrees with a previous guest's assessment, predicting that hardware and infrastructure providers will lead the market for at least the next five years. They highlight that companies like AWS, Microsoft, and Meta are increasing their capital expenditures (capex) in cloud infrastructure, which will drive AI-specific hardware purchases. The speaker notes that Intel is struggling to be recognized as an AI player, despite their claims, due to their lack of focus on AI-specific chips and their lagging process technology compared to competitors like TSMC and AMD.
Mindmap
Keywords
💡Hardware providers
💡Infrastructure
💡CapEx
💡AI
💡Intel
💡Process technology
💡TSMC
💡AMD
💡Data center revenues
💡Government plan
💡Moat
Highlights
Hardware and infrastructure providers are expected to be the winners in the next five years.
Increased capex in cloud infrastructure by companies like AWS, Microsoft, and Meta is driving AI-specific buying.
Intel is not considered a significant player in the AI market despite their claims.
Intel's server chips are used for simple tasks before handing off to Nvidia's graphics processors.
Intel's data center revenues were down 3%, which was unexpected given the government's support for domestic chip manufacturing.
Intel missed the transition in process technology from 14 nanometers to 10 nanometers in 2016.
Intel's decision to focus on margins over investing in process technology led to further delays.
Intel is now almost two generations behind TSMC in process technology.
TSMC's execution has been flawless, putting pressure on Intel.
Intel's designs are good but not significantly better than AMD's, and their process technology advantage is gone.
AMD's access to TSMC's advanced process technology allows it to compete equally with Intel.
Intel is losing market share and lacks a competitive edge in its business.
The impact of Intel's past decisions will likely continue for the next two to three years.
Intel's future growth in process technology will need to outpace TSMC's, although still lagging behind.
The importance of investing in process technology for maintaining a competitive edge in the chip industry.
The government's support for domestic chip manufacturing has not yielded the expected results for Intel.
The significance of TSMC's advanced process technology in shaping the competitive landscape of the chip industry.
Transcripts
well I I agree with your previous guest
Raj's assessment in the sense that at
least for the next five years probably
the providers of the hardware and the
infrastructure are going to be the
winners here and that's why you see most
of the the chip analysts like us looking
at what's going on at AWS where they're
increasing capex what's going on at uh
Microsoft where they're increasing Cloud
capex what's going on at meta where
they're increasing Cloud capex so this
is actually going to driving all the AI
specific buying the problem for Intel is
they're not really an AI play no matter
how much they keep screaming that
they're an AI play they do make server
chips and they are used a little bit to
handle some of the simple tasks in order
to hand off to the graphics processors
that Nvidia makes but Intel really is
not an AI player and that's where
they're really being punished if you
look at their data center revenues they
were down 3% they should be up Eric yeah
but they were intel was supposed to be
the poster CH child sorry was supposed
to be the poster child of all
that the government plan to do in terms
of doubling down on Shoring chip
manufacturing and design in the
US and and they have unfortunately done
a terrible job at it I mean the truth is
is that nobody wants to hear ancient
history but the truth is this is what's
impacting Intel they missed the
transition for process technology from
14 nanometers to 10 nanometers in 2016
and then that because they decided to
kind of lean into that and squeeze
margins instead of investing more
heavily in process technology they then
missed the 10 nanometer to 7 nanometer
and now they're kind of almost two
generations behind tsmc and tsmc is
executed perfectly and the problem for
that is that Intel's designs have always
been pretty good but not that much
better than AMD but they always were
able to squeeze out a lot more
performance with their process
technology but now that AMD has access
to T smc's more advanced process
technology AMD is equally competing with
Intel and there there's really no moat
that Intel has anywhere in it in its
business that's why they keep losing
share and that's why they're in the
position that they're in so ancient Tech
ancient history yes but this is going to
continue probably for the next at least
two or three years before they really
start to jump ahead of tsmc and I don't
mean jump ahead I mean be able to grow
their process technology faster than
csmc is growing their process technology
even though they'll still be behind
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