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From stockholders point of view, this is still just a big glitch that is possible to fix and recover. Intel total revenue grew 14.9% in 20182Q, competition gr

From stockholders point of view, this is still just a big glitch that is possible to fix and recover. Intel total revenue grew 14.9% in 20182Q, competition grew 18.08% in the same quarter, so Intel is slowly losing ground and there is potential for trouble. The real competitive moat is Intel's profit margin relative to the competition. Intel has been undisputed king in the profit margins and still continues to be. 60% Gross margin (20% above TSMC). Intel has been beaten technologically before. AMD did it years ago. Intel responded by lowering prices, and removing profits from AMD's technological triumph. When AMD was financially in the ropes, Intel increased its profit margins again. As long as Intel maintains 10-15% margin over competition it can cut into margins and compete with low price. Only after Intel loses the margins it will become just another chip maker.

kllrnohj 8y ago
> Intel has been beaten technologically before. AMD did it years ago. Intel responded by lowering prices, and removing profits from AMD's technological triumph. And, you know, with illegal anti-competitive practices ( https://www.extremetech.com/computing/184323-intel-stuck-with-1-45-billion-fine-in-europe-for-unfair-and-damaging-practices-against-amd https://www.extremetech.com/computing/184323-intel-stuck-wit... in the EU and https://www.nytimes.com/2010/08/05/technology/05chip.html https://www.nytimes.com/2010/08/05/technology/05chip.html in the US) So assuming they don't try that stunt again they're going to be in a tougher spot competitively than they were last time.
- Nokinside 8y ago
  You are mixing two things Intel does with low prices. One is legal and one is not. Intel used both Against AMD during the Opteron and the Athlon 64 era. Intel is absolutely allowed to compete with low prices and cutting into profit margins. Intel is not allowed to to pay rebates in exchange of being single supplier, or attempting to restrict access from the competitors. The difference is between “aggressive competition” and “antitrust abuse” as the source you provide clarifies. Intel has the margins that allow it to compete aggressively and legally.
  - loeg 8y ago
    I think the "And" at the beginning of OP's comment shows they are cognizant that they are pointing out the second mechanism, not contradicting the first mechanism.
  - Nomentatus 8y ago
    Actually, low prices can be illegal, too. It's illegal to lowball prices to cost or below (dumping) either - and the rebates are part of what determines cost, not just a possible offense themselves.
    - loeg 8y ago
      Do you have more information on that claim? It seems difficult to believe given the plethora of VC-funded companies selling products below cost in order to grow market share.
      - bradknowles 8y ago
        Private companies have much more freedom to do as they wish with regards to price dumping in their local markets, as compared to public companies.
        loeg 8y ago
        Can you point to a specific law here? Thanks.
      - Nomentatus 8y ago
        If you have no market power, then you can sell at below cost, true. Intel had immense market power.
        loeg 8y ago
        Again, looking for a specific law or more detail here.
valarauca1 8y ago
>Intel has been beaten technologically before. AMD did it years ago. Intel responded by lowering prices, and removing profits from AMD's technological triumph. When AMD was financially in the ropes, Intel increased its profit margins again. Yet this time their prices continue to spiral ever higher. And while news of new production spin up hints this won't continue, for the short term future (at least 1-2 quarters) it appear it will.
stcredzero 8y ago
Intel has been beaten technologically before. AMD did it years ago. Intel responded by lowering prices, and removing profits from AMD's technological triumph. The problem is that AMD's current technical attack directly undermines Intel's margins. https://www.youtube.com/watch?v=ucMQermB9wQ https://www.youtube.com/watch?v=ucMQermB9wQ That said, such a tactical advantage is only temporary.
nickik 8y ago
But the development pace is way lower, it takes longer to switch to the next level. So they can not simply do better the next time around as they did before. Or maybe they can but it will take longer until that happens.
petra 8y ago
You can't compare Intel's margins to TSMC Because Intel also does chip design, consumer marketing,etc and have to pay for all of that.
rbanffy 8y ago
> From stockholders point of view, this is still just a big glitch that is possible to fix and recover. Not only that. TSMC is just a similar mistake away from the same glitch at the next node size. They are not objectively smarter than Intel - they got lucky Intel got unlucky and that's it. We shouldn't read too much into it.
nullnilvoid 8y ago
This time is quite different. When AMD beat Intel technologically, Intel still had the lead in process technology while AMD had better chip designs. Now, time has changed. TSMC leads Intel in process technology while AMD contracts TSMC to make chips. AMD will have both the advantages in chip design and process technology. It is more likely that Intel will fall further behind TSMC, as TSMC has been investing heavily (more than even Samsung).

kllrnohj 8y ago

> Intel has been beaten technologically before. AMD did it years ago. Intel responded by lowering prices, and removing profits from AMD's technological triumph. And, you know, with illegal anti-competitive practices ( https://www.extremetech.com/computing/184323-intel-stuck-with-1-45-billion-fine-in-europe-for-unfair-and-damaging-practices-against-amd https://www.extremetech.com/computing/184323-intel-stuck-wit... in the EU and https://www.nytimes.com/2010/08/05/technology/05chip.html https://www.nytimes.com/2010/08/05/technology/05chip.html in the US) So assuming they don't try that stunt again they're going to be in a tougher spot competitively than they were last time.

Nokinside 8y ago
You are mixing two things Intel does with low prices. One is legal and one is not. Intel used both Against AMD during the Opteron and the Athlon 64 era. Intel is absolutely allowed to compete with low prices and cutting into profit margins. Intel is not allowed to to pay rebates in exchange of being single supplier, or attempting to restrict access from the competitors. The difference is between “aggressive competition” and “antitrust abuse” as the source you provide clarifies. Intel has the margins that allow it to compete aggressively and legally.
- loeg 8y ago
  I think the "And" at the beginning of OP's comment shows they are cognizant that they are pointing out the second mechanism, not contradicting the first mechanism.
- Nomentatus 8y ago
  Actually, low prices can be illegal, too. It's illegal to lowball prices to cost or below (dumping) either - and the rebates are part of what determines cost, not just a possible offense themselves.
  - loeg 8y ago
    Do you have more information on that claim? It seems difficult to believe given the plethora of VC-funded companies selling products below cost in order to grow market share.
    - bradknowles 8y ago
      Private companies have much more freedom to do as they wish with regards to price dumping in their local markets, as compared to public companies.
      - loeg 8y ago
        Can you point to a specific law here? Thanks.
    - Nomentatus 8y ago
      If you have no market power, then you can sell at below cost, true. Intel had immense market power.
      - loeg 8y ago
        Again, looking for a specific law or more detail here.

valarauca1 8y ago

>Intel has been beaten technologically before. AMD did it years ago. Intel responded by lowering prices, and removing profits from AMD's technological triumph. When AMD was financially in the ropes, Intel increased its profit margins again. Yet this time their prices continue to spiral ever higher. And while news of new production spin up hints this won't continue, for the short term future (at least 1-2 quarters) it appear it will.

stcredzero 8y ago

Intel has been beaten technologically before. AMD did it years ago. Intel responded by lowering prices, and removing profits from AMD's technological triumph. The problem is that AMD's current technical attack directly undermines Intel's margins. https://www.youtube.com/watch?v=ucMQermB9wQ https://www.youtube.com/watch?v=ucMQermB9wQ That said, such a tactical advantage is only temporary.

nickik 8y ago

But the development pace is way lower, it takes longer to switch to the next level. So they can not simply do better the next time around as they did before. Or maybe they can but it will take longer until that happens.

petra 8y ago

You can't compare Intel's margins to TSMC Because Intel also does chip design, consumer marketing,etc and have to pay for all of that.

rbanffy 8y ago

> From stockholders point of view, this is still just a big glitch that is possible to fix and recover. Not only that. TSMC is just a similar mistake away from the same glitch at the next node size. They are not objectively smarter than Intel - they got lucky Intel got unlucky and that's it. We shouldn't read too much into it.

nullnilvoid 8y ago

This time is quite different. When AMD beat Intel technologically, Intel still had the lead in process technology while AMD had better chip designs. Now, time has changed. TSMC leads Intel in process technology while AMD contracts TSMC to make chips. AMD will have both the advantages in chip design and process technology. It is more likely that Intel will fall further behind TSMC, as TSMC has been investing heavily (more than even Samsung).