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Semiconductors and Components

Intel Delays 14-nm Broadwell, Posts Mixed Q3

15 October 2013

Intel Corp. will delay the introduction of its Broadwell PC processor chip, implemented in a 14-nm FinFET logic process, by one quarter due to yield issues, CEO Brian Krzanich said Tuesday (Oct. 15) after Intel reported third quarter sales in line with previous estimates.

"We continue to make progress with the industry's first 14 -nanometer manufacturing process and our second-generation 3-D transistors," Krzanich said in a conference call with analysts following the third quarter report. "Broadwell, the first product on 14 nanometers is up and running as we demonstrated at the Intel Developer Forum last month. While we are comfortable with where we are at with yields, from a timing standpoint, we are about a quarter behind our projections. As a result, we are now planning to begin production in the first quarter of next year."

While Intel's sales total, $13.5 billion, was in line with previous guidance, the third quarter results revealed a mixed picture with the sales into the PC market increasing sequentially but declining 3.5 percent year-over-year. The outlook for the fourth quarter was also modest, with sales projected to be between $13.2 billion and $13.7 billion.

Even if Intel's fourth quarter sales come in at the top of the guided range, $13.7 billion, 2013 would mark the second straight year of flat to declining sales for the world's largest semiconductor company. This is largely due to a stall in the sales of PCs.

Nonetheless, Intel continues to be profitable. The company posted a net income of $3 billion for the third quarter, up nearly 50 percent from net incomes of $2 billion in both the previous and year-ago quarters.

"The third quarter came in as expected, with modest growth in a tough environment," said Krzanich, in a statement.

Intel's PC Client group produced $8.4 billion of Intel's quarterly revenue. The Data Center Group reported revenue of $2.9 billion, up 6.2 percent sequentially and 12.2 percent year-over-year.

Intel also trimmed its full-year capital expenditure to between $10.3 billion and $11.1 billion, down from the previously stated range of $10.5 billion to $11.5 billion.

When asked on the conference call whether the quarter delay for the introduction of Broadwell was due to excessive inventory in the predecessor processors Ivy Bridge and Haswell, Krzanich said it was not a market issue but a technical one. "It was simply a defect density issue," he said.

Krzanich explained that preparing a processor for production involves grouping sets of fixes together in a wafer run and expecting to see yield improvements as a result. Sometimes the yield doesn't respond and other changes must also be made. Krzanich said that the procedure is back on track but delayed by a quarter. "This is a small blip in schedule and we will continue on from here," he said.

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