Markets | 1 year ago

Intel Corporation (NASDAQ:INTC) Optimistic About Pushing 14-Nanometer Chip Technology production Even Further

Intel Corporation (NASDAQ:INTC) believes that it can still push its 14-nanometer chip technology to harness more capacity.

Intel started mass producing the 14-nanometer chip technology about three years ago after facing some issues. The chipsets were initially scheduled to be mass produced by late 2013 but the company ended up pushing the mass production to Q2 of 2014 due to manufacturing yield issues. The manufacturing yield is the percentage of usable microprocessors made on a silicon wafer. The company is convinced that pushing for higher yields is a good idea because higher yields translate to lower chip manufacturing costs since wafer costs are fixed.

“Manufacturing yield refers to the percentage of chips that Intel produces on a silicon wafer that are usable (functional and meet performance/power specifications),”

Intel claims raising the margin will be good for the books

Intel claims that the fixed silicon wafer cost provide more flexibility to widen the production scope without having to worry about extra costs. The principle also means that the firm will incur higher chip manufacturing costs for effective chip manufacturing costs. Low manufacturing yields in 2015 resulted in poor gross profit margins for the firm. However, this can be attributed to the fact that the company was shifting from the 22-nanometer technology to the more advanced 14-nanometer microchip technology.

“The improvement in platform unit costs here, then, is seemingly thanks to an improvement in the company’s manufacturing yields (and thus cost structure) of its 14-nanometer technology — better late than never,” an Intel report noted.

Manufacturing yields improved in 2016

The chip manufacturer reported better numbers in 2016 with a$1.25 billion improvement in its operating profit. Part of this improvement was the fact that the firm had already completed the transition, thus diverting the focus to the 14-nanometer chip technology. This improvement will definitely translate into positive expectation from Nasdaq stock news meaning stock performance will most likely have a positive outlook.

Intel stock closed the latest trading session at $36.48.

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