Intel reported revenues this past quarter of $10.3 billion, with a net income of $2.4 billion. This is compared to Q4’s $10.6 billion revenue, and $2.3 billion net. Oddly enough, gross margin did decrease a few percentage points, down to 63% compared to 65% in Q4. When we compare these numbers to Q1 2009, we see exactly how much the market has improved since then. In Q1 2009 Intel reported $7.1 billion in revenue and a “measly” $647 million net income. After a year+ of corporations and consumers tightening their belts, people are starting to spend money again at a pretty respectable rate when it comes to computing goods.
Intel is further pushed ahead by a very strong desktop and laptop lineup, now dominated by the i3, i5, and i7 families of processors. Atom on the other hand has dropped in terms of both revenue and importance. While inexpensive netbooks were the rage a year ago, people quickly tired of having poor performance combined with poor feature sets. When we consider a netbook was selling between $200 to $300, and we compare these products to thin and lights that are perhaps $100 more, then the idea of an Atom based netbook with limited graphics, expandability, memory, and performance has soured for many people. I guess this is one area that AMD had right, in that they didn’t go diving into the netbook market and instead worked on getting a fully fledged notebook into the ultra-thin and light category.
This 22 nm based wafer is the future of integrated circuits. Intel will undoubtedly get there first, and they will have the process advantage to make their processors more powerful and more cost effective than before.
As further proof of this step away from netbooks the strongest growth that Intel saw in its portfolio are its traditional notebook processors and chipsets. Other processors such as servers, desktops, etc. seemed fairly flat. With Microsoft stopping development in their future OS for Itanium, we can expect to see that business start to shut down. Itanium no longer makes much sense now that it is competing with quad core and higher X86 parts that are cheaper to develop and produce as compared to the massive and complex Itanium chips. The recent Nehalem based Xeon processors should also help to hasten the demise of the Itanium business unit.
This was certainly good news for Intel, but it also foreshadows what we can expect to see from other players. AMD is of course the first to come to mind. With a healthy business environment, it is likely that AMD will mostly reflect the positive reports from Intel. On the desktop side AMD has a very healthy processor and chipset lineup. The Athlon II chips are the majority of budget parts shipped, and they feature significantly smaller die sizes than the more powerful Phenom II processors. The Athlon II X2 has been exceptionally popular due to its low power draw and heat production, as well as being able to be matched to an inexpensive, but feature-rich AMD 780G based integrated graphics chipset. The notebook side has also benefitted from the Athlon II X2 and X4 designs, which when clocked down into the 2.0 to 2.4 GHz range offer competitive performance and battery life to what Intel offers, as well as the ability to be paired with an AMD integrated chipset.
On the server side AMD has been briskly selling their Istanbul based 6 core processors, and still have strong product portfolios with their quad core Shanghai based parts. Certainly Intel is putting the hurt on AMD when it comes again to the Nehalem based Xeons, but the introduction of the AMD 6 core parts is holding the mighty Intel at bay.
AMD keeps telling us the “Future is Fusion” and this is the living proof. While the CPU portion is based off of the Phenom II architecture, the addition of a robust DX11 graphics portion may give AMD the ability to fight Intel on near equal terms in overall desktop and notebook performance. If AMD can help to foster a robust stream computing environment, the number crunching potential of this chip could be impressive.
The final thought to give here is that with demand being so strong in Q1, we can expect the graphics portion of AMD to be quite healthy, as well as its primary rival in that market. NVIDIA will likely show fair graphics shipments, but their key growth point looks to be the Tegra and Tegra II products. Unfortunately for AMD, their DX11 shipments are still being constrained by TSMC’s 40 nm process. When we add into the equation that NVIDIA is buying lots of 40 nm wafer starts that yield very poorly, it further exacerbates the situation (and likely making the executives at AMD very mad due to the tremendous waste).
Q1 has been surprising for Intel, and likely it will be surprising for both AMD and NVIDIA as well. The Street has certainly responded positively to Intel’s results, and further results down the road look to show a much healthier marketplace than what we have experience through the past year.