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PART #2
AS PART OF Intel's statement why it has dropped 4GHz Pentium 4s and will release CPUs in the 66x series with 2MB of L2 cache early next year, it said it will contact its OEM customers to describe its notebook. Below we explain how see the chip cookie crumbling.
What's new, pussycat? Woe, oh oh oh?
We anticipate that Intel will not be competitive until the next core architectures are released - the mobile Merom and the desktopified Conroe. By all accounts, these chips are going to be designed for growth and not for for marketing. Both are 12-13 pipe, four issue wide cores designed for the maximum possible work. They will also have two cores.
Intel's official cancellation of the 4.0GHz Pentium 4 is only the beginning of the problem. The 65nm variant called Cedar Mill, if it ever comes out, is only expected to clock to 4.4GHz, a piddling increase.
By the time it's released in Q4 of 2005, it won't be competitive. AMD is going to launch its 4000+ part in a few days and it will not stop there. The FX-55 is already a faster part, and the next speed bump would put AMD at the same speed as Intel was planning to be at in the second half of 2006. We don't think Cedar Mill has any more future than Tejas had.
If you can't ramp the clock, how do you increase performance? There are several ways and the most obvious and immediate is a bus speed increase. The problem is that Prescott is not yielding parts that run at 1066MHz FSB. The chipsets have been ready for months, but there is nothing to run on them. The 1066 parts were pushed back and pushed back, and now they are to become a boutique part, the EE line.
The mainstream 1066 FSB parts are now set for mid-year 2005, and that goal is not looking good either. The current plan is to have 3.46GHz EE parts soon and 3.73GHz parts before the end of the year. There was an internal call for 4.0/1066 parts if possible in Q1, but that now won't happen.
So, if you can't increase the performance through clock or bus speeds, how do you compete? Cache. Intel has no peer in putting out cutting edge silicon in volume. If anyone can add cache on a whim, Intel can. It has already increased the cache from 512KB to 1MB from Northwood to Prescott, and now it is going to double it again. It has the capacity, and will be using it to the fullest extent possible.
The problem with this is not in the manufacturing, but in the cost. That extra 1MB of cache is worth about one single speed grade in performance. A 2MB 3.6GHz part would be about as fast as a 3.8GHz chip, or perhaps a little more. Manufacturing it will cost more than the equivalent 3.8GHz chip though.
Die size directly affects costs. If a wafer costs $1000 to manufacture and you get ten chips from it, each chip costs $100. If you get 100 chips, each costs $10. Die size determines how many chips you get per wafer, and thus directly affects the cost. Twice the size, twice the cost, more or less.
So Intel raising the cache size is a weapon of last resort. If 1MB of cache bumps up the die size by 50%, it increases the cost of making that chip by a little less than 50%. This directly affects Intel's margins, and therefore its bottom line.
Brave New Dual Core World
Dual core is an obvious future step. AMD claims it had this move planned from day one for the K8 core, with The foundations already there. Intel did not plan for dual cores as early and its first generation is a kneejerk reaction to AMD's plans.
Paxville, the first core, is that reaction. A full discussion of the problems can be found here. Dempsey is the first major redesign of the core, and it will be architected as a dual core chip, not two single cores one piece of silicon.
Dempsey will be the first with redesigned PLLs, and the first to climb out of the 2005 Intel morass. Along with the Blackford chip it's coupled with, and if they reach the expected 1333MHz FSB, it could well turn Intel's fortunes round.
In the near future Paxville could deliver between 2.8-3.2GHz, and only the lower rated CPUs will be in the thermal envelope of the current chips. The higher end parts will probably be at the 130 Watt level, making them not a drop in upgrade. This is bad for Intel because it means new architectures, new hardware, and lower rack density. AMD does not have any of these problems.
For 2005 and at least the first half of 2006, Intel is just not in the game, and there is little they can do to get back into it. Conroe seems a long way off right now.
Are you being Servered?
The most serious problem for Intel is not in desktops but in the server market. Its chips are hot, slow and expensive to make. Even thought it has a massive cost advantage, it will be eaten by the enormous die size of the 2MB parts, not to mention the 2MB dual core parts. With desktop chips, people don't really care about power that much
CPU sales form a rather lop-sided bell curve by speed grade, and sales of the top speed grade don't matter that much. They may be high margin, but there are few of them, so they don't add that much to the financial honey pot. Intel could probably lose the sales of the top bins and not notice at all.
It could even lose the next speed grade and get by with a wince and a footnote in the quarterly report, but no stockholders gathering with pitchforks and torches. In fact, with the paper launches of the 3.4 and 3.6 parts, Intel effectively gave away the top speed grade sales, and the quarterly reports were not bad at all.
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