Alongside Intel’s weak Q2 2024 earnings report and the announcement of $10 billion in spending cuts and layoffs for 2025, the corporate can be relaying one different piece of unhealthy information concerning its present chip deliveries. A quick report, posted on X by analyst Patrick Moorhead and citing a dialog with Intel CEO Pat Gelsinger, revealed that Intel has been coping with a yield challenge on Meteor Lake, with the difficulty being important sufficient to drive intel to take extraordinary steps to ship the required chips.
It was a really tough Q2 for $INTC. And that information… Thanks, @Pgelsinger, for the time to debate.
It seems that there have been yield/throughput points on Meteor Lake, negatively impacting gross margins. When it’s important to get the product to your clients, and you’ve got wafers to… pic.twitter.com/pHU66xvFe7
— Patrick Moorhead (@PatrickMoorhead) August 1, 2024
–Patrick Moorhead
Decoding Moorhead’s dense tweet, the largest revelation right here is that Intel has been affected by yield points on Meteor Lake. The first chip from the corporate to include Intel’s EUV-augmented Intel four course of, Meteor Lake was not anticipated to be notably excessive yielding initially (no lead chip for a brand new course of node ever is). However, with out citing particular figures, Moorhead’s report implies that Intel’s yield – and ensuing Meteor Lake chip throughput – have been worse than even the modest expectations that include a brand new node.
Most fascinating of all right here is the declare that Intel has been working manufacturing “hot lots” of Meteor Lake – excessive precedence wafer batches that get moved to the entrance of the road as a way to be processed as quickly as potential (or as moderately shut as is sensible). Hot heaps are sometimes used to get highly-demanded chips produced rapidly, getting them by a fab ahead of the traditional course of would take. As a enterprise device, scorching heaps are a reality of lifetime of chip manufacturing, however they’re undesirable as a result of typically they trigger disruptions to different wafers which are ready their flip to be processed.
The scenario with Meteor Lake is considerably specific, because the Intel four course of used for Meteor Lake’s compute tile (the one lively tile made at Intel) will not be provided to exterior foundry clients, and even utilized by different Intel CPUs (Xeon 6s all use Intel 3). As a outcome, Intel’s capability is all their very own, therefore Moorhead’s touch upon having “wafers to burn”. In quick, it appears Intel slammed by numerous wafers – yields be damned – as a way to produce extra Meteor Lake chips to fulfill OEMs.
And the tactic appears to have labored. Intel reported of their Q2 earnings that they’ve shipped 15 million “AI PC” chips since Meteor Lake’s launch, which continues to be a major variety of chips. So no matter Meteor Lake’s yields are, they don’t seem to be so dire that Intel is struggling to get any chips out; solely that they weren’t getting sufficient chips out. In this case, in keeping with Moorhead, OEMs would have taken extra chips in the event that they have been out there.
As for the overall prices to Intel for working Meteor Lake scorching heaps and never having the ability to ship sufficient chips, these are mirrored each with regard to Intel’s shopper chip income, and their gross margins. Revenue is pretty easy: Intel may have bought extra chips if that they had them. As for gross margins, the corporate cited decrease gross…
