Intel Corporation Claims 3-Year Manufacturing Tech Lead

By Ashraf Eassa Markets Fool.com

At Intel's (NASDAQ: INTC) Feb. 9 investor meeting, the company talked a little bit about chip manufacturing -- arguably, the company's core competency. Though the company didn't dedicate a whole presentation to chip-manufacturing technology as it has in recent years -- apparently, the company will be doing an entirely separate presentation sometime in the first half of this year -- Intel executive Murthy Renduchintala did take the opportunity to highlight that the company has a three-year lead over competing chip manufacturers.

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In this column, I'd like to put that claim under the microscope and see if it checks out.

Intel's claims

Check out the following slide from Intel:

Intel logic-cell area competitive comparison. Image source: Intel.

The focus of this presentation was on a metric that Intel calls "effective logic cell area" -- essentially, the lower the number, the better.

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The company claims that its 14-nanometer technology, which went into high-volume production in the first half of 2014, will have had clear leadership in this metric until Intel's competition -- Samsung (NASDAQOTH: SSNLF) and Taiwan Semiconductor Manufacturing Company (NYSE: TSM) -- release their 10-nanometer technologies in the first half of this year.Intel's chart seems to suggest that those 10-nanometer technologies will offer comparable logic-cell areas to Intel's 14-nanometer technology -- though the chart indicates that Intel's 14-nanometer technology will be slightly behind on this metric.

During his presentation, Renduchintala also indicated that he expects that Intel will "continue to maintain a three-year lead, even after [Intel's] competitors release their 10-nanometer plans during the course of this year."

Challenging that claim

Intel has made a reasonable case for why its 14-nanometer technology is more comparable to competing 10-nanometer technologies than to competing 14/16-nanometer technologies -- at least when it comes to logic-cell area.Intel has also done a good job explaining why its 10-nanometer technology should give the company a significant logic-cell area lead over competing 10-nanometer technologies. Intel's chart also indicates, quite honestly, that its 10-nanometer technology will go into production a few quarters later than competing 10-nanometer technologies.

What the chart is missing, however, is information regarding competing 7-nanometer technologies. It's not clear when Samsung intends to go into mass production on its 7-nanometer technology, but TSMC has said that it intends to go into mass production on its 7-nanometer technology in the first half of 2018.Presumably, this technology will be shipping in very high volumes in support of Apple's 2018 iPhone.

TSMC is claiming a significant area reduction for its 7-nanometer technology relative to its 10-nanometer technology -- EETimes reports a 1.63 times increase in routed gate density for TSMC's 7-nanometer tech compared to its 10-nanometer tech -- so it seems likely that Intel will have far less of a lead during its 10-nanometer generation than it did during its 14-nanometer generation.

More clarity needed

At this point, I'm struggling to see how Intel can justify its claim that, in terms of logic-cell density, it will be able to maintain a three-year lead over TSMC, as it looks as though Intel's lead will shrink generation over generation.

Intel is expected to do a full day's worth of presentations related to chip-manufacturing technology at some point in the first half of this year. I hope the company will provide more detail about its future technology plans -- both 10-nanometer and 7-nanometer -- as well as, perhaps, a more detailed and comprehensive competitive comparison.

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