Intel expects to improve the yield rate on its 14 nanometer chips by the first half of next yearIntel Corporation ( INTC) has been working on its Broadwell technology for some time, and the company held a webcast to update investors this week. Analysts generally view the new information as a positive, although they still have questions about whether Intel will be able to reignite growth through Broadwell. The chip maker reported in its webcast that its 14 nanometer yield is now at a “healthy range, qualified, and in volume production.” The company said its Broadwell chips will see a 25% reduction in board area compared to the previous Haswell technology. It will be 59% smaller in XY and 39% smaller in Z. In addition, Intell improved the graphics and media architectures by adding 20% more computes and a 50% increase in sampler / media sampler throughput. Will Intel’s Broadwell become a growth driver? In a report dated Aug. 11, 2014, RBC Capital Markets analyst Doug Freedman and associates Earl Hege and Jeriel Ong said the webcast left them with a lot of questions about Broadwell. They wonder if Intel’s new technology will help it grow revenue from servers and PCs as average selling prices may decline. They do say that it’s possible that Broadwell will help Intel expand its market. They say it could be a positive for the overall tablet market because lower price points become more possible. On the other hand, they say Intel is still missing the bigger smartphone market because of its weak offerings in baseband. They add that the 50% decline in XY is “impressive” but say that higher packaging costs and higher wafer costs could offset the potential improvement in gross margins. Intel admits some weakness During the webcast, Intel did say that its transistors aren’t the smallest on any node, and the RBC team found this “interesting.” They noted that when competitors get to the same node as Intel but at a later date, they have smaller transistors.
Intel added that its wafer costs are higher than they are for the competition, which the analysts say could simply be because the company is first in the technology. On the other hand, they say if the company is catching up in the size of its transistors, then its wafer costs could also rise faster, offsetting the positive news to some degree. The RBC team does like Intel’s admission of weakness, however, saying that it differs from the company’s past approach of “chest pounding” and saying that it will win because it has “the best core technology.”The RBC analysts have a Sector Perform rating and $34 per share price target on Intel.