Intel Corporation Reiterates Its Plan to Keep Skylake on Schedule

By Markets Fool.com

On Intel 's most recent earnings call, management reiterated its intention to transition to its next-generation Skylake processors -- or "sixth generation Core" for those who like branding -- during the second half of the year. In particular, when pressed about whether Intel would delay Skylake in order to give the recently launched Broadwell chips more time, both CEO Brian Krzanich and CFO Stacy Smith indicated that this isn't the plan.

Continue Reading Below

It's worth digging deeper into that dialogue between the analyst asking that question and the Intel executives on the call in order to understand why Intel plans to move full-steam ahead on Skylake despite seemingly shortening the life of the just-released Broadwell.

What's the plan, again?
Intel has been quite clear that Skylake will go into production and launch during the second half of the year. Indeed, according to Intel's Kirk Skaugen, Intel plans to have "very robust" ramps of both notebook and desktop Skylake parts during the second half of 2015 for a "complete holiday kind of situation."

Now, where it gets really interesting is when we take a look at the following snippet from the most recent Intel earnings call with respect to Broadwell and Skylake launch schedules:

We think we've managed between the SKUs of what SKUs we are bringing out on Broadwell to really refresh the 2-in-1 devices, the Chromebooks. We wanted to bring Core M out which I think in the first part of this year with Chinese New Year, the back-to-school season, having the super-thin and light devices is going to be critical.

So missing that by doing something else with Broadwell would have been a mistake. And I think getting that volume is a good thing.

In other words, if I'm reading this correctly, Skylake would not have been in production and ready to go for PC refreshes in the Chinese New Year time frame (February 2015) as well as the back to school shopping season (systems on shelves in the July/August time frame, according to Krzanich).

Continue Reading Below

So it seems that Intel is rolling out Broadwell chips in order to capture the demand during these critical periods, and then plans to roll out Skylake more for the holiday season. In fact, the head of Intel's PC Client Group, Kirk Skaugen, stated at Intel's investor meeting in November 2014 that Skylake would ramp in both laptops and desktops during the second half of 2015 for "a complete holiday kind of situation."

They're both 14-nanometer products
A common argument that I have seen to suggest that Intel is likely to delay Skylake essentially boils down to: "Intel needs to get the return on its Broadwell development costs before launching Skylake."

However, the key to note is that the R&D costs of Broadwell (and Skylake) are sunk. Broadwell was held back, according to Intel, due to manufacturing problems. So, if the Broadwell delay didn't impact the development timeline of Skylake, the Skylake design should be completed and ready to go into production for the second half of 2015 as planned -- just as Intel is claiming.

If it has the Skylake design done,it doesn't actually cost Intel anything to stop producing Broadwell early and get Skylake in production. But it could cost Intel future sales if it intentionally stagnates its technology roll outs.

In fact, here's what Krzanich had to say:

But remember they are on the same technology, the same piece of silicon, it's the same factory. All we do is change the piece of glass in the scanner to get a different product. So there is not a change or revamp of our factories that needs to occur for this.

CFO Stacy Smith also added the following supporting commentary:

Yeah. That last point is important both for 14-nanometer products for us. So it doesn't change our factory profile. And just generally the faster we bring out new features and cool stuff to the market, the better off we are. So we are not planning to slow down Skylake if that was at the heart of your question.

It's good to see that Intel is willing to get Skylake out the door as quickly as possible in order to keep giving customers a reason to buy new PCs. Given that PCs were stagnant for the last couple of years and have only recently returned to growth, Intel would do well to push out as much "cool stuff" into the market as possible.

The article Intel Corporation Reiterates Its Plan to Keep Skylake on Schedule originally appeared on Fool.com.

Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.