Intel Corporation Executive Wants to Rename Its Next Big Manufacturing Jump

By Ashraf Eassa Markets Fool.com

At the J.P. Morgan 15th Annual Tech Forum, Intel (NASDAQ: INTC)client computing group (CCG) chief Navin Shenoy offered up some insights about his business unit, the company's largest by revenue.

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Image source: Intel.

Near the end of his presentation, Shenoy talked about Intel's chip manufacturing strategy, exuding confidence that the company's manufacturing technology is the "best in the world."

As part of this discussion, he took the time to explain how the technology that Intel calls 14 nanometers is more like what its competitors -- Samsung (NASDAQOTH: SSNLF) and Taiwan Semiconductor Manufacturing Co.(NYSE: TSM) -- call 10 nanometers (smaller is generally believed to be better).

He then offered the following commentary with respect to its upcoming 10-nanometer technology (emphasis mine): "I'm confident that when 10 nanometer -- our 10 nanometer -- comes out, and this is something that maybe we should rename it, I don't know, we'll think about that, but when our 10 nanometer comes out, we will have a clear density advantage, and a clear performance and power advantage versus what others in the industry have."

I agree, and evensuggested that Intel do just that back in October.

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Since this is something that Intel seems to be considering now, it would be wise to just do it. Here's why.

Lots of benefit, little risk/effort

In the past, when Intel had a full-generation lead in manufacturing technology over its peers, it was easy for the company to stick to its own naming schemes, even if it served to undersell the characteristics of the underlying technology.

For example, Intel's 14-nanometer technology was generally ahead of what its competitors were calling 14/16-nanometer technologies. The chipmaker may have been able to score some additional marketing points by rebranding its technology as 10-nanometer to make this superiority clear, but -- at the time -- that naming methodology didn't create the perception that Intel is a generation behind.

If Intel could get to market with future technologies (10 nanometer, 7 nanometer, etc.) at the same time as its competitors got to their respective technologies going forward, then Intel could leave its naming scheme unchanged -- again, short-changing itself, but not giving competitors opportunities to say that they are ahead.

But that's not going to be the case going forward. Intel's 14-nanometer technology will be the company's only production-worthy technology over the next year. Its competitors, on the other hand, will ramp up their respective 10-nanometer technologies in 2017, and Taiwan Semiconductor plans to ramp up its 7-nanometer technology beginning in early 2018, right around when we will see Intel bring its 10-nanometer technology to market.

Intel will then go from squandering a potential marketing point, but at least appearing competitive, to flat-out looking as though it is a generation behind. Intel's competitors will surely use this against the chipmaker as they craft their own marketing messages, which are likely to be carried far and wide by the tech press.

The easiest argument for renaming

Intel's marketing/PR team will have two basic options for how to educate people about how the company isn't actually a full generation behind what its chip manufacturing peers (and their customers -- Intel's direct competitors) are fielding.

  1. Intel can rename its technologies to accurately reflect their competitiveness.
  2. Intel can spend undue time and energy arguing that its technologies are competitive despite being branded in such a way as to suggest that they are behind the curve.

One of these options is a very easy solution to the problem that has virtually no downside. The other is much more complicated, has the potential to come off as damage control, and might not even work (Intel's attempts to explain why its 14-nanometer technology is superior to competing 14/16-nanometer technologies have often fallen on deaf ears in the tech community).

If Intel loses a single chip sale because it refused to do something as simple as renaming its manufacturing technologies, then that would be a wholly unnecessary destruction of shareholder value.

Do the right thing, Intel: Rename your future manufacturing technologies, beginning with your next-generation 10-nanometer technology.

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Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.