How Intel will rip up its current roadmaps

AS PART OF Intel's statement why it has dropped 4GHz Pentium 4s and will release CPUs in the 66x series with 2MB of L2 cache early next year, it said it will contact its OEM customers to describe its notebook. Below we explain how see the chip cookie crumbling.

What's new, pussycat? Woe, oh oh oh?
We anticipate that Intel will not be competitive until the next core architectures are released - the mobile Merom and the desktopified Conroe. By all accounts, these chips are going to be designed for growth and not for for marketing. Both are 12-13 pipe, four issue wide cores designed for the maximum possible work. They will also have two cores.

Intel's official cancellation of the 4.0GHz Pentium 4 is only the beginning of the problem. The 65nm variant called Cedar Mill, if it ever comes out, is only expected to clock to 4.4GHz, a piddling increase.

By the time it's released in Q4 of 2005, it won't be competitive. AMD is going to launch its 4000+ part in a few days and it will not stop there. The FX-55 is already a faster part, and the next speed bump would put AMD at the same speed as Intel was planning to be at in the second half of 2006. We don't think Cedar Mill has any more future than Tejas had.

If you can't ramp the clock, how do you increase performance? There are several ways and the most obvious and immediate is a bus speed increase. The problem is that Prescott is not yielding parts that run at 1066MHz FSB. The chipsets have been ready for months, but there is nothing to run on them. The 1066 parts were pushed back and pushed back, and now they are to become a boutique part, the EE line.

The mainstream 1066 FSB parts are now set for mid-year 2005, and that goal is not looking good either. The current plan is to have 3.46GHz EE parts soon and 3.73GHz parts before the end of the year. There was an internal call for 4.0/1066 parts if possible in Q1, but that now won't happen.

So, if you can't increase the performance through clock or bus speeds, how do you compete? Cache. Intel has no peer in putting out cutting edge silicon in volume. If anyone can add cache on a whim, Intel can. It has already increased the cache from 512KB to 1MB from Northwood to Prescott, and now it is going to double it again. It has the capacity, and will be using it to the fullest extent possible.

The problem with this is not in the manufacturing, but in the cost. That extra 1MB of cache is worth about one single speed grade in performance. A 2MB 3.6GHz part would be about as fast as a 3.8GHz chip, or perhaps a little more. Manufacturing it will cost more than the equivalent 3.8GHz chip though.

Die size directly affects costs. If a wafer costs $1000 to manufacture and you get ten chips from it, each chip costs $100. If you get 100 chips, each costs $10. Die size determines how many chips you get per wafer, and thus directly affects the cost. Twice the size, twice the cost, more or less.

So Intel raising the cache size is a weapon of last resort. If 1MB of cache bumps up the die size by 50%, it increases the cost of making that chip by a little less than 50%. This directly affects Intel's margins, and therefore its bottom line.

Brave New Dual Core World

Dual core is an obvious future step. AMD claims it had this move planned from day one for the K8 core, with The foundations already there. Intel did not plan for dual cores as early and its first generation is a kneejerk reaction to AMD's plans.

Paxville, the first core, is that reaction. A full discussion of the problems can be found here. Dempsey is the first major redesign of the core, and it will be architected as a dual core chip, not two single cores one piece of silicon.

Dempsey will be the first with redesigned PLLs, and the first to climb out of the 2005 Intel morass. Along with the Blackford chip it's coupled with, and if they reach the expected 1333MHz FSB, it could well turn Intel's fortunes round.

In the near future Paxville could deliver between 2.8-3.2GHz, and only the lower rated CPUs will be in the thermal envelope of the current chips. The higher end parts will probably be at the 130 Watt level, making them not a drop in upgrade. This is bad for Intel because it means new architectures, new hardware, and lower rack density. AMD does not have any of these problems.

For 2005 and at least the first half of 2006, Intel is just not in the game, and there is little they can do to get back into it. Conroe seems a long way off right now.

Are you being Servered?
The most serious problem for Intel is not in desktops but in the server market. Its chips are hot, slow and expensive to make. Even thought it has a massive cost advantage, it will be eaten by the enormous die size of the 2MB parts, not to mention the 2MB dual core parts. With desktop chips, people don't really care about power that much

CPU sales form a rather lop-sided bell curve by speed grade, and sales of the top speed grade don't matter that much. They may be high margin, but there are few of them, so they don't add that much to the financial honey pot. Intel could probably lose the sales of the top bins and not notice at all.

It could even lose the next speed grade and get by with a wince and a footnote in the quarterly report, but no stockholders gathering with pitchforks and torches. In fact, with the paper launches of the 3.4 and 3.6 parts, Intel effectively gave away the top speed grade sales, and the quarterly reports were not bad at all.

But the real hit for Intel is in the Xeon line. It makes a lot of money from these and each sold allows the firm to sell cheaper Celerons. A $3,000 large cache Xeon MP will make up for a lot of $89 Celerons, and give Intel a lot of wiggle room to hit AMD with the pricing hammer.

AMD's Opteron is a faster more scalable chip that is ramping in clock speeds. Intel's Xeon MP - a chip wih a large cache, low bus speeds, and a big price tag finds itself against a much lower price part than AMD with the Opteron 8xx line, but that's generally perceived as lacking the credibility to compete in the high end server market.

Building Reputation, not System Building
AMD has spent the last two years building its reputation in the server market, inch by inch. Anecdotal evidence suggests this is finally starting to pay off, and it is being asked to tender against Intel, even it if doesn't end up winning very often.

Intel has a hotter, slower chip, so will have to do one of two things, either price accordingly, or sell into markets where power is not a problem.

Intel has a strong server reputation and can ride this out for some time. But Potomac, an MP version due in Q1 2005, is already rumoured to have vastly underwhelming performance, reputation alone may not carry Intel for that long.

Abandoning dense racks and power conscious markets isn't an option either. So it will have to compete on price and cache size. Price reductions lower revenues, and in turn lowering profits, but can boost sales and marketshare. Bigger cache sizes increase performance to a point.

While Intel will probably take the extra cache route, that may not be enough to keep performance competitive past the middle of next year.

Server Jewels in the Crown
Again, AMD has a more compelling dual core product with higher performance and taking less power. Until Intel's Dempsey/Blackford, there is little hope for Xeons, but the RAS features that these bring could be a strong differentiator.

There are two backup plans Intel has, based on the Itanium and the Pentium M. Itanium is in severe retrenchment mode right now. The cancellation of the Bayshore chipset was a knife in the heart of Itanium ambitions until the next major revision to the architecture, called Tukwila, in 2007.

Intel has repeatedly signalled that the Itanium is not ready for mainstream use, or even low end server use. Software is sparse, and even Microsoft has stopped making desktop OSes for the chip. Some software vendors have ended supporting the chips, and its wider adoption is a very long shot. The wagons are circled here, and each shot in the press release war seems to decrease the radius.

This leaves the Pentium M. Ironically, the cancellation of Bayshore was a choice between unspecified Pentium M based projects and Bayshore. Intel put the money and people on the Pentium M and that's the right decision. But what about the desktop?

Buyers have been clamoring for desktop PM boards for years, and Intel has steadfastly refused. Now it has no choice, and the mainstream user will benefit. For a corporate desktop, the Pentium M is a wonderful chip with fast integer performance, low power, quiet and cool.

Home users see the same thing as corporate users, good enough performance with no fan whine. Gamers will likely not like it much, as certain aspects of the chip, most notably floating point (FP) performance are not up to par, especially compared to the Opteron.

Also, the chip lacks hyperthreading, a highly touted feature by Intel, but one most users would not miss one bit. The lack of 64-bit functionality will become a sales problem in the near future. When Win64 arrives, however, this may be a very real sore point.

Floating point is also a major selling point for servers, but its absence is not as big a problem as the lack of 64-bit support. Large memory spaces are what servers thrive on, and the Pentium M line won't be there until Merom arrives. It's due to tape out in Q2 or Q3 2005. Until then, the Pentium M line is down on raw computational ability, and lacks any semblance of multi-processing capability.

For 2005 and 2006, the future is Opteron and Xeon just can not play in the same league any more. The impact will be minimal for Intel, a little lower profit and slightly decreased margins. But if Wall Street catches on, the effects will punish to Intel stock. By then, Merom will have taped out, and if all goes well, will ship in Q3 2006. Between now and there, there is rather a vast empty desert with nary a cricket to chirp out soothing melodies for Intel. It may well be a very long two years for the company.

Every cloud has a silver lining. The first is that AMD could commit a self-inflicted wound, something it has a long track record in. The major pitfalls for AMD are the dual core introduction, the 90nm move and the introduction of technology at 65 nanometres. The dual core move should bring little danger, it's been long in the planning. AMD seems to be moving to 90 nanometres reasonably smoothly.

However, the move to 65 nanometres is more difficult. On the up side, AMD is working closely with IBM. On the down side, this is a far harder move than the shrink to 90 nanometres.

Even if everything goes perfectly for AMD during this time, Intel is far from dead. AMD can provide about 30% of the market demand for X86 CPUs, so even if Intel came out with nothing from now to Merom, AMD would only double its market share. At the far ends of the relevant period, Fab 36 is set to come on line with a 65nm process. Then, and only then, will AMD have a chance to take more than half of the market.

But by then, everything will have changed. Up until late 2006, there is little Intel can do. 2006/2007 brings us Merom/Conroe, 65nm, CSI and the K10. We'll be starting from square one then. An Intel with something to prove versus a resurgent AMD should be great fun to watch. µ

See Also
Part I: Intel faces performance struggle for two hard years