INTEL's chest beating shows lack of confidence

FAB Tech analysed INTEL CEO Paul Otellini's recent declaration that: "Intel is committed to widening its lead in advanced semiconductor manufacturing,", that "Our manufacturing network is a strategic asset of unmatched scope and scale that gives Intel the ability to provide customers with leading-edge products inhigh volume. Today's announcement of a second 45nm high volume factory reaffirms that Intel platforms will contain the most advanced and innovative technology in the world for years to come."

On the surface, Paul is upbeat. Under the surface, we see signs of weakness.

INTEL is not fundamentally a manufacturing company. CPUs win by design and architecture. Right now, AMD64's Direct Connect Architecture is years ahead, INTEL won't have it until 2009. AMD is also working on Direct Connect Architecture 2.0, which will take it to the next high ground in 2007. INTEL, on the other hand, is basically going back to Pentium III.

Both INTEL and AMD buy the same kind of FAB equipment from companies like Applied Materials, KLA-Tencor, etc. INTEL has more money to spend on more cutting edge and unproven FAB technology, AMD plays safe. But AMD is usually only 6 months late in buying the newest tools.

The difference between INTEL and AMD is the silicon wafer and the process. INTEL uses bulk silion wafer and does strained silicon (SS). AMD uses expensive SOI wafer and does Dual Stress Linear Strained Silicon On Insulator (DSLSSOI), a technology jointly developed by AMD and IBM to improve performance and reduce heat. In terms of software, AMD's APM 2.0 is years ahead of the industry, it can control the process down to single transistor on each wafer. That's why AMD's yield is so high and why AMD can competete against INTEL's five 300mm FABs with only one 200mm FAB (FAB30). Many big FABs are starting to license AMD's APM software.

Moving to 65nm then 45nm will reduce feature length, however, due to INTEL's outdated FSB architecture, INTEL has to keep doubling cache sizes to get reasonable performance, the result is that INTEL did not get any die size reduction when going to 90nm or 65nm. In contrast, AMD CPUs, with Direct Connect Architecture, do not need big caches, consequently, AMD CPUs have reduced die size when moving to 90nm, allowing AMD to make more CPUs off the same wafer.