Intel released its fourth quarter 2014 results yesterday afternoon with income jumping 39 percent on improved demand for personal computer and server system chips. The company allowed that it is expecting a somewhat flat first quarter for 2015 which led shares 1.9% lower in after-hours trading. The PC Client Group’s earnings improved by three percent while the Data Centre Group’s earnings improved by 25 percent. Overall revenue increased by six percent year-on-year and gross profit margin exceeded 65 percent.
Analysts polled by Thomson Reuters expected per-share earnings of 66 cents and revenue of $14.71 billion.
For the current first quarter, Intel projected revenue between $13.2 billion and $14.2 billion and gross margin of 60 percent, plus or minus a couple percentage points. Analysts, on average, were expecting revenue of $13.76 billion and gross margin of 61.2 percent, according to Reuters.
For the year, Intel projected revenue to rise by a mid-single digits percentage rate and achieve a gross margin of 62% of revenue, plus or minus a couple percentage points. Analysts, on average, were expecting revenue to rise 4% and gross margin of 63.4%, according to Reuters.
PC Client Group Improves
Intel’s integral attachment to the PC market greatly affected earnings as the PC market growth slowed and consumer market demand was satisfied with less costly tablets and high capacity smartphones. The uptick in PC demand last spring has had a positive effect on earnings and aided in the company’s turnaround effort to become “the” dominant supplier in the mobile market. With Intel’s 14 nm manufacturing muscle Brian Krzanich is now “loaded for ARM” vowing to place 40 million Intel chips into tablets now dominated by ARM Holdings PLC.
3D 256 Gb NAND-Flash Bundling?
No mention was made by Intel of its recently announced 3D 256 Gb NAND-Flash devices. Intel has what can only be called an obsession with its ability to control the memory side of the sales equation without owning any of the fixed assets to produce it.
Analysts have been wondering why Micron was not more upbeat on the announcement; it is, after all the controlling partner in Intel-Micron Flash Technologies, Inc. (IMFT). Sources indicate that Intel will most likely begin bundling Processors and Memory kits with Intel claiming the lion’s share of margin leaving Micron to its own pursuits with its share of output.
Last but Not Least
The Data Centre Group is rumoured to be the earnings darling of the coming quarters with sources indicating market moving announcements over the first half of 2015. Those announcements concern Intel’s SDN for Cloud Computing efforts…
The price of NAND flash is flat or showing a slight fall, and prices are expected to drop significantly in 2015.
Trendforce reported that manufacturers are overstocked and that means prices will stay flat until the end of this year.
But prices are expeted to drop because sales of PCs, smartphones and tablets will fall by 10 percent in the first quarter.
These price drops will apply to the contract market rather than the spot market – the contract market is largely made up of manufacturers who commit themselves to volume amounts rather than scrabble around in the spot market.
And that means that in order to cut costs and reduce losses, the buyers of contract NAND will adopt more conservative buying strategies.
That, in turn, will mean the US and Asian manufacturers of NAND flash will keep prices down or even reduce them in the first quarter of next year.
Rob Crooke, VP & GM of Intel’s Non-Volatile Memory (NVM) Solutions Group was last up in the company’s day long Investor Meeting today in Santa Clara.
Though last, he had the most newsworthy announcement about the company’s future memory intentions.
Intel announced it is back in the memory business – 3D NAND-Flash that is (mass production in-house is conditional though).
Crookes’ revelation ends any rumination on Intel-Micron Flash Technologies 3D Flash development – it also includes SK Hynix when the device goes into production 2Q 2015. Evidently those who have been nice have early sample devices according to sources.
- 4G hole array 32 layers deep | (216 x 216)(Array) x 25(Layers) x 2(MLC) = 256 Gbits
- 1TB in 2 mm package
- SSDs: 10TB and up planned
- Production 2H 2015 – IMFT (Lehi, Utah facility mentioned) & SK Hynix
- Intel can also produce internally
- Replacement of HDD with SSD in all PC and Mobile devices
Crooke allowed that the devices will not use Intel’s cutting edge 14nm technology but a slightly relaxed geometry – Micron is on record at 16nm geometries for 3D NAND. The openly known fact that prevaricating about Flash Geometries may hold sway – a hefty dose of caveat emptor is recommended.
The announcement coincides with reports that Intel and Micron are involved in a project with EMC2-DSSD – an effort to produce the first NAND-Flash In-Memory Database appliance. The proffered memory type may be a custom type expressly tailored for the application and may be produced in-house by Intel – more on this as roll-out time nears.
Barron’s claims that DRAM demand and a lack of producers will drive Micron’s share price to over $50 in their October 6th issue. They cite business PC replacement and Big Data as the market drivers behind the price climb and the fact that there are only three major producers remaining.
The simple deduction is that the DRAM market will be capacity limited for the foreseeable future. Of course this doesn’t factor in splits between Flash and DRAM demand confusing the production mix – end result is a higher price for both.
An interesting nuance to Barron’s forecast for Micron is the introduction of a next generation non-volatile memory that reduces the price of storing very large database images.
Glimpses of HP’s version in “The Machine” using Memristor based memory is scheduled for launch in 2018 – implying that the first production devices will need to be extant by early next year. HP’s record on the Memristor Project has missed each and every promised milestone so the success expectation probability is low.
Tell Tales Out of School
An intriguing story making the underground rounds in the Valley concerns the existence of an extremely secretive program involving a new, high speed, non-volatile memory coupled with DRAM. No it’s not the Diablo Technologies, Inc. Memory Channel Storage (MCS) – though somewhat similar it couples extremely dense non-volatile storage with low-latency parallel caching loads of high-speed low-power DRAM main storage.
The membership is limited to an exclusive set of players on both the supplier and user sides.
This is in step with a major effort to move from SATA serial interface non-volatile memory (SSD) to a high performance parallel interface. The discussion centers on whether the transition will include NAND-Flash or will begin a fresh start with the next generation replacement.
The idea has begun to percolate through the JEDEC Standards Committee. Sources predict that this will be accelerated through the standards process by an influential member group at JEDEC.
Killer Elite Application
What is the application – the one that motivates the factory to produce massive amounts of these devices. My contact looked me straight in the eye with that “you idiot look” and exclaimed, “Everything”. That’s when I got it…,