Intel's 7nm products delayed; first 7nm client CPU expected in late 2022 or 2023

Intel announced the shift in its product roadmap, as it reported its second-quarter financial results, which beat market expectations with another quarter of solid business from cloud service providers.
Written by Stephanie Condon, Senior Writer

Intel on Thursday said that it is adjusting its product roadmap, shifting its 7nm-based CPU product timing approximately six months back and ramping up its 10nm product transition.  

Intel's first 7nm product, a client CPU, is now expected to start shipping in late 2022 or early 2023, CEO Bob Swan said on a conference call Thursday. The company expects the initial production shipments of its first 7nm data center CPU design in the first half of 2023.

Intel is pushing back its 7nm product roadmap after identifying a defect mode in its 7nm process that resulted in yield degradation, Swan said. The yield of Intel's 7nm process is now trending approximately 12 months behind the company's internal target.

"We've root caused the issue, and believe there are no fundamental roadblocks," Swan said. "But we've also invested in contingency plans to hedge against further schedule uncertainty. We've mitigated the impact of the process delay on our product schedule by leveraging improvements in design methodology, such as die disaggregation and advanced packaging."

The news of the delay caused Intel shares to sink in after-hours trading. The delay comes in the context of Intel's challenges to transition to 10nm products, with its product roadmap repeatedly delayed. 

"We've seen this movie before," Swan acknowledged Thursday. "We have learned from the challenges in our 10nm transition, and we have a milestone-driven approach to ensure our product competitiveness is not impacted by our process technology roadmap."

If necessary, Intel will tap external foundries to keep its products on track. 

"What's different" this time, Swan said, is "we're going to be pretty pragmatic about if and when we should be making stuff inside or outside, and making sure we have optionality to build internally, mix and match... or go outside entirely if we need to."

In the meantime, Intel is focusing on its growing portfolio of 10nm-based Intel Core processors, with "Tiger Lake" launching soon and the first 10nm-based server CPU "Ice Lake" planned for the end of the year. 

In the second half of 2021, Intel expects to deliver a new line of client CPUs (code-named "Alder Lake"). This will include its first 10nm-based desktop CPU and a new 10nm-based server CPU (code-named "Sapphire Rapids"). 

Intel announced this transition as it reported its second quarter financial results, which beat market expectations with another quarter of solid business from cloud service providers. 

The chipmaker's Q2 non-GAAP earnings per share came to $1.23 on revenue of $19.7 billion, up 20 percent year-over-year.

Analysts were expecting earnings of $1.11 per share on revenue of $18.55 billion. 

"It was an excellent quarter, well above our expectations on the continued strong demand for computing performance to support cloud-delivered services, a work- and learn-at-home environment, and the build-out of 5G networks," CEO Bob Swan said in a statement. "In our increasingly digital world, Intel technology is essential to nearly every industry on this planet."

Intel's "data-centric revenue" grew 34 percent year-over-year, accounting for 52 percent of total revenue. PC-centric revenue grew 7 percent.


Intel's "data-centric" businesses include the Data Center Group, the IOT Group, Mobileye, the Non-Volatile Memory Solutions Group (NSG) and the Programmable Solutions Group (PSG).  That's effectively everything outside of its PC business. 

The strong data-centric results were led by growth in Intel's Data Center Group (DCG), with revenue reaching $7.1 billion, up 43 percent year-over-year. The DCG segment includes cloud service provider revenue, which grew 47 percent year-over-year. 

Intel's memory business (NSG) set a new revenue record in the quarter with $1.7 billion in sales, up 76 percent year-over-year. 

The Internet of Things Group brought in sales of $670 million, down 32 percent over the year prior. 

Intel's PSG (programmable solutions group) brought in $501 million, up 2 percent.

Mobileye revenue was $146 million, down 27 percent. 
Meanwhile, the Client Computing Group (Intel's PC business) brought in revenues of $9.5 billion, up 7 percent year-over-year. The growth was driven by notebook sales, thanks in part to the continued work- and learn-at-home dynamics of the COVID-19 pandemic. That dynamic also contributed to a volume decline in desktop form factors as demand shifted to notebooks.

For the third quarter, Intel is expecting revenue of approximately $18.2 billion with an approximate non-GAAP EPS of $1.10. 

Market expectations are a Q3 EPS of $1.14 on revenue of $17.9 billion.  

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