Intel Corp.'s 8-Core Gaming Chip Might Not Be Ice Lake-Based After All

A few days ago, gaming PC vendor Eurocom appeared to leak some information about an upcoming Intel (NASDAQ: INTC) processor targeted at the enthusiast and gaming community.

Per Eurocom, Intel is planning to launch a gaming chip with eight cores in the second half of 2018. I had originally assumed that this eight-core part was based on the company's upcoming Ice Lake architecture and manufactured using the company's 10nm+ technology.

However, BenchLife.info appears to have come across some information that indicates that the eight-core chip referenced by Eurocom isn't based on the Ice Lake architecture, but instead on the same Coffee Lake architecture that underlies Intel's upcoming six-core processors.

A sensible option

Intel's upcoming Coffee Lake architecture chips are expected to be manufactured in the company's third-generation 14-nanometer technology, known as 14nm++.

14nm++, per Intel, offers either 26% better transistor performance than its original 14-nanometer technology introduced back in 2014 at similar power consumption, or 52% lower power consumption at the same performance level.

In fact, 14nm++ is so good, at least according to Intel, that in terms of transistor performance, it's better than both Intel's first-generation 10-nanometer technology and its second-generation 10-nanometer technology, known as 10nm+.

From a cost perspective, Intel says that the cost per transistor of its newer 10-nanometer technology should be lower than that of its 14-nanometer technology and performance-enhanced derivatives. However, those claims are normalized for manufacturing yields.

The reality is that Intel's 14-nanometer technology has been in mass production since mid-2014, and by the time this rumored eight-core Coffee Lake chip should launch, the technology should be extremely mature. In contrast, Intel's issues in ramping its 10-nanometer technology are well-known, and low yield rates on the technology probably mean that the die cost of an eight-core Ice Lake chip built with 10nm+ is higher than the die cost of the rumored eight-core Coffee Lake chip using 14nm++.

Moreover, yield rates don't just affect product cost -- they can affect supply, too. Lower yield rates mean that for a given amount of silicon wafer production capacity, fewer salable processors can be produced. Such supply issues can negatively impact a company's ability to meet demand for its products, hurting its financial results and souring relationships with customers.

A company can theoretically just put much more capacity into place to try to compensate for low yield rates, but as yield rates improve, such a strategy would ultimately lead to excess manufacturing capacity -- something that can very negatively impact company profits.

So, if Intel's 10-nanometer technology isn't in great shape, Intel's management may have decided to take a more pragmatic approach by just building an improved, relatively low-risk product using its mature 14-nanometer technology rather than try to push 10-nanometer/10nm+ products out the door when those products simply can't be manufactured at reasonable costs or in the desired quantities.

10 stocks we like better than IntelWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Intel wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of September 5, 2017

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