Intel Had Record-Breaking 2019, but Optane Refresh Could Slip to 2021

Between Intels recently-filed annual report and its full-year 2019 results, some interesting information has dropped recently about the company. Intel had a record-breaking 2019, with $72B in yearly revenue across its various product segments.

Data center (servers) and client PC (desktop, mobile) tend to be where we focus at ET, so well check the big picture first. Data center revenue rose 19 percent year-on-year to $7.2B. Operating income rose in absolute terms though margin slipped slightly, from 50 percent to 48 percent.


Meanwhile, in client, revenue ticked up very slightly, from $9.8B to $10B in the past quarter. We can see some mixed impact from Intels CPU shortage and from AMDs increased sales landing here. Notebook ASPs have stayed steady but desktop ASPs dropped 4 percent. Overall, Intel has acknowledged that it faces some downward pressure on ASPs from increased competition from AMD these days.

Intels 2020 results reflect $3.8B in AI-based revenue (full-year) and the company believes this market will be worth $25B by 2024. According to Intel, the reason the CPU shortage roared back to life after showing signs of easing is increased customer demand for data center hardware.

Second-Gen Optane May Have Slipped Into 2021

One note buried in Intels Annual Report (tip of the hat to THG for seeing it) is that its second-generation Optane, originally expected in 2020, may not appear until 2021. The company writes:

The 2nd generation Intel Optane SSDs for data centers are scheduled to start shipping samples in 2020, and are designed to deliver three times the throughput while reducing application latency by four times. In addition, the second generation Intel Optane DC persistent memory is expected to achieve PRQ in 2020, and is designed for use with our future Intel Xeon CPUs.

Previously, Intel had indicated that Barlow Pass (Optane DC Persistent Memory) and Alder Stream (Optane SSDs) would ship in 2020. Both appear to have slipped, with Barlow Stream slipping more. PRQ is defined as the milestone when costs to manufacture a product are included in inventory valuation. Shipping for samples is a later point in the production process than PRQ.

Optane and NAND are the one area where Intel saw declines last year, but the collapse of flash pricing entirely accounts for it. Its impossible to make any determinations about OptaneSEEAMAZON_ET_135 See Amazon ET commerce popularity when the price of NAND has tumbled the way it has. According to Intel, however, the hit has all been on the NAND side of the equation and that does make sense given how much prices fell this year. Other tidbits from the annual report include the fact that Intel expects to ship 7nm CPUs by 2022, in addition to the 7nm GPU shipments its planned for 2021. The company is also talking up Tiger Lake and 10nm+ shipments, though theres still no word on 10nm+ CPUs for desktop, specifically.

The hit on Optane shipments isnt going to have a material impact on Intels revenue and its probably better to take the time to ramp the product correctly. Intel has promised that next-generation Optane will offer higher density than current chips and teased the idea of improved performance as well. Both could help the manufacturer position its own memory standard as a potential DRAM replacement in a greater variety of scenarios.

Intel did note that its hit one major milestone in terms of its own revenue goals. The company has grown its data center business until DCG made up ~50 percent of total Intel revenue in 2019, with client computing accounting for much of the rest.

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