Sweet Time . . .

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You know, you’d think Intel would be hellbent on cutting out the old stuff and ramping up the new stuff as fast as possible.

That isn’t happening.

Right now, the projections on the cavalry desktop C2Ds looks like this:

3Q: 10%
4Q: 20%
1Q: 35% (down from the original estimate of 40%
and, the latest estimate:

2Q: “almost 50%”

While the speed of the ramp is not without precedent (Willamette went at about the same pace); it is somewhat slower than usual, and now isn’t exactly the time to be slower than usual.

More importantly, the estimates Intel has made estimating C2D production for particular future quarters haven’t been going up, but stayed steady or even a bit downward.

As we’ve said many times before, when somebody does something that doesn’t make a lot of sense, it’s because they can’t do the thing that makes sense.

Everybody knows that Intel has a lot of old inventory, and that alone might be reason for the relatively slow ramp.

However, if you have a ton of stuff gathering dust, one would think that the best thing to do is to stop making tons more of it. There’s no indication Intel has done that, yes, layoffs have happened, and more are are coming, but that’s a matter of downsizing the organization overall, not laying off primarily production workers. It’s not at all clear Intel has done that.

Practically all the processors Intel is making are 65nm parts, so it’s not a matter of the fabs in question having nothing to do if they stop making chips; they can convert to making C2Ds more quickly. That would be better than continuing to make PIVs (quite possibly at a loss).

Perhaps Intel is having problems making C2Ds, but that’s pretty unlikely since all the C2Ds being overclocked are doing quite well, and it doesn’t seem to be a yield problem since that would serve to reduce Intel’s overproduction.

What seem more likely (though hardly a given) is that Intel can’t convert any faster for either technical or financial reasons. By “financial reasons” I don’t mean Intel doesn’t have the money, but instead Intel might not want to incur extra expenses when those extra expenses might mean a financial loss for the quarter.

(I do not find it at all inconceivable Intel could show a loss in one of the next few quarters. They almost certainly will if they end up writing off a big chunk of their inventory. I suspect Intel (well, the new head of Intel) will try to do almost anything to avoid that, but I suspect it’s going to eventually happen. Unfortunately,
that’s likely to give a disproportionate shock to the financial world).

In all honesty, there’s too little evidence for anything more than fairly feeble speculation, but there seems to be something screwy going on at Intel.

Perhaps we’ll get a better idea in mid-October, when the financial results come out. The financial analysts will certainly be focused on the inventory figures, and wondering why Intel isn’t making more of the good stuff.

Ed


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