Intel Aims Both High And LowIntel Aims Both High And Low

At Intel's spring analyst Meeting in New York on May 3, CEO Paul Otellini provided detailed insight into the chip company's plans. Along with an intense focus on cost-cutting, Intel intends to go full bore with new technologies, including the debut of an advanced 45-nanometer manufacturing process and an ambitious attempt to jump-start the use of handheld Internet devices.

Handheld Web Browsers Intel is calling the downsized device it sees as the next big thing the MID, for Mobile Internet Device, basically a smartphone with beefed-up capabilities for Web browsing. "In the next couple of years, we'll see the beginnings of these mobile Internet devices," said Otellini. "They're around now, but not in great volume."

Intel launched its first MID-class processor in the form of a chip called McCaslin, which is used in the Apple TV. A more powerful version, code-named Menlow, will be ready in the first half of next year.

More Core For Intel, the word "core" means two things: It's the name of the microarchitecture that powers Intel's newest processors, and it refers to the dual- and quad-core processors that constitute Intel's most profitable chips.

The Core architecture is characterized by a performance-enhancing feature called "wide-dynamic execution," and it operates at lower power than the Netburst architecture that powered the Pentium 4. "We're moving very aggressively to replace all the products, even down in the Pentium space and Celeron space, with variants of [Core], over the course of this year," Otellini said.

Quad-core processors will become increasingly important. Intel offers several quad-core desktop chips as part of its Core 2 Quad and Core 2 Extreme lines; on the server side, Intel ships no less than nine quad Xeons. On tap for the second half of 2007 are two new quads based on Intel's latest 45-nanometer chip technology: Yorkfield for desktops, and Harpertown for servers.

The Shift To 45-Nanometer The next advance in chip manufacturing is called 45-nanometer--the size of the features etched into the chip. Intel is readying four of its factories to crank out 45-nanometer chips; rival Advanced Micro Devices likely won't ship processors that size until late next year. "Penryn and its first-generation products on 45-nanometer come in the second half of this year," said Otellini.

Shrinking the die size allows Intel to add more features onto the chip, and an inherent benefit of the tinier features on a 45-nanometer chip is lower power operation. Intel will use the extra space afforded by the chips to begin integrating graphics handling into the processor itself. The technology also will be used to build processors with more than eight cores. One such design, code-named Larrabee, already is on the drawing board. Larrabee will address "very high-performance graphics and high-performance computing needs," Otellini said.

Eight Is Enough Intel is working hard to fend off the upcoming challenge from Barcelona, AMD's soon-to-be-released quad-core server chip, which it's positioning as the industry's first native quad-core, designed from the ground up to fit four processors onto a single piece of silicon. In contrast, AMD points out that Intel's existing quad chips cram two dual-core devices into a single package. (Otellini has famously remarked: "You'd be misreading the market if you think people care about the packaging.")

Right now, Intel's head start in quad core is reaping benefits. Otellini said the quad-core Xeons are being snapped up, particularly in a configuration known as DP, for dual processor, which refers not to the internal configuration of the chip but to the number of sockets in the server. So, if there are two sockets on a server motherboard and each socket houses a quad-core processor, the result is a powerful eight-processor server.

"Think of it as a very cost-effective eight-way machine," Otellini said. "Two processors, each of which has four processors on it."

Cutting BackCFO Andy Bryant's presentation encapsulated Intel's finances this way: "Good progress, more to do." His handouts noted that Intel will cut more than $250 million in capital spending, approximately 5%, this year compared to last. Overall, capital spending is still a hefty $5.5 billion.

Intel must focus on execution as it rolls out so much new technology, because building processors isn't getting any cheaper. "The cost to bring a leading-[edge] product family to market is about $3 billion," Bryant said. In April, Intel reported it had reached its goal of reducing its workforce from 103,000 employees to 92,000. "That will continue to drop," Otellini said.

Emerging Markets To take advantage of strong overseas demand, Intel is offering a sometimes confusing amalgam of notebook, PC, and lighter-weight mobile platforms. In what seems like a response to MIT's $100 One Laptop Per Child, Intel has designed the $300 Classmate PC. It's a laptop with a Celeron processor, 2-Gbyte flash drive, and a 7-inch screen.

Notable Notebooks Intel sees notebook sales growing in the United States, where current penetration, according to Intel, is less than "half a notebook per household." On May 6, Intel introduced its fourth-generation Centrino processor, which features the new Merom technology along with 802.11n wireless capability, integrated graphics, and Intel's new turbo memory. Otellini said he expects it will constitute a majority of Intel's notebook shipments in fairly short order.

The Montevina laptop platform will follow next year. Equipped with a 45-nanometer, dual-core processor, it's notable for its mix-and-match wireless capability--both Wi-Fi and WiMax.

System On A Chip With two future projects, Tolapai and Silverthorne, Intel is embarking on a new process (for Intel): system on a chip, which isn't a product so much as a collection of intellectual property for building a chip. When an OEM wants a customized chip, the semiconductor vendor pulls the blocks it needs off its virtual shelf--CPU, logic, RAM, graphics engine--puts them together, burns a mask, and sends the whole thing to its fab plant. Voilà!: a customized chip.

Intel says the Tolapai product is expected to reduce the chip footprint size by up to 45% and power consumption by approximately 20% compared with a standard four-chip design, while improving throughput performance and processor efficiency. In contrast to the enterprise-oriented Tolapai, Silverthorne is intended for use in ultramobile-class handhelds and will be offered as an off-the-shelf product as well.