Industry Expert Blogs

It was a year ago that Paul Otellini made his surprise announcement that he was stepping down as CEO of Intel. Soon after, I wrote an article asserting that the only correct choice for his replacement was Nvidia’s CEO Jen Hsun Huang. I went beck to reread what I wrote and I can scarcely say I would change anything I put in the article assuming Intel intends to continue down the path of trying to win mobile with Atom and limiting the Foundry prospects to non-compete fabless players like Cisco and Altera. Andy Bryant’s confession of missing the tablet market aside, the company though moves closer to a split due to financial gravity that is trying to shake Intel’s Board and Executives to the reality that the Fabs are more valuable than mobile Atom where x86 is valued at next to nil.

Intel is evolving into two companies and now the Fab side of the house represented by Andy Bryant and newly minted CEO Brian Krzanich have the reigns. They know that the company is still well funded with the awesome Data Center Group and traditional x86 PC client group that has been able to execute a slow retreat by aggressively moving into the higher ASP ultrabook market, where AMD and nVidia do not play well for cost, space and power reasons. Intel charges a premium with its ULV processors, but this may not last over the long run as mobile processors are undercutting the premium by as much as several hundred dollars. The other side is the Foundry that demands $11B of capex each year to keep them running with bigger bills on the 450mm horizon. Mobile atom is the worst of times in the famous Dickens novel. It is on track to lose $2.4B on $4B in sales this year.

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