Monday, January 29, 2007

Color on news: Intel (NASDAQ:INTC)

Several firms are commenting on Intel (NASDAQ:INTC) after the co announced a major breakthrough in transistor technology that has important ramifications for both the co itself and its competitors:

- Banc of America notes that in recent yrs, Intel's ability to increase the raw performance of its processors (via increasing the clock frequency) at a breakneck rate was significantly hindered by heat dissipation issues, as processors became increasingly 'hot' at higher frequencies. Consequently, Intel was forced to forgo clock speed (measured in GHz) as a way to increase performance; it instead had to drive performance via the use of multiple cores - with each core serving as a relatively independent processor - that collectively consumed less power.

The breakthrough announced last Friday allows Intel, via the use of new dielectric materials (the only one disclosed was Hafnium) and a metal gate in its 45nm manufacturing process, to demonstrate a 20% improvement in transistor performance, while simultaneously driving a 10x reduction in gate oxide leakage power (previously the dominant source of excess power issipation).The importance of this advancement, in firm's view, cannot be underestimated Intel will have the ability to introduce processors with much higher performance that consume significantly less power. This not only helps Intel move its PC processor roadmap along in an aggressive fashion, but also potentially allows the company to leverage its ultra low power processors in markets yet unexplored.

They note that while Intel has traditionally led AMD from a manufacturing technology perspective by 1-1.5 yrs (witness AMD's 65nm ramp- a full 5 qtrs behind Intel's), the announcement from Intel on Friday likely puts even more distance between AMD & Intel.

- First Albany believes Intel is using ASM International's (NASDAQ:ASMI) Atomic Layer Deposition (ALD) product for the high-K gate deposition step. While there are other ALD suppliers, they believe that ASMI was the only vendor working on the gate application, while most other ALD systems were targeted for DRAM capacitor applications or Barrier/Seed layers for inter-metal dielectric application. There are literally hundreds of metal and high-K material choices. Firm thinks it will be take a competitor years to find the right combination. In fact, Intel announced a working high-K/metal gate in late 2003 and, at the time, we thought it would be implemented in the 65nm process, but it took an additional 3 years to perfect the technology.

The only other company that looks to be close to Intel is IBM (IBM). IBM expects to use a high-k/metal gate at the 45nm node as well, but this will be introduced in the "2008 time frame."

Intel also announced that it has working microprocessors (Penryn) on its new 45nm process. In addition, the company has been able to boot several operating systems on its silicon. The company expects to ramp two 45nm in the second half of 2007 and a third in 2008.

Notablecalls: The news is probably not enough to move INTC stock but I suspect there will be some buy interest in ASMI following speculation by First Albany.

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