While the lineup of Intel Core i-series 3000 "Ivy Bridge" microprocessor is not yet very broad, thanks to rapid ramp up of chip production at 22nm tri-gate process technology, they now account for a quarter of Intel's client central processing units (CPUs) shipments. In fact, the company believes that the ramp up of Ivy Bridge is the fastest in the company's history.
"Our technology and manufacturing group once again delivered fantastic results. Our 22nm process health is ahead of where out 32nm [process health] was at the same point in its ramp, and ahead of our own plans. That enabled us to ramp up Ivy Bridge to nearly a quarter of our PC volume, our fastest ramp ever," said Paul Otellini, chief executive officer of Intel, during the quarterly conference call with financial analysts.
It is not a secret that Intel has had a aggressive plan to transit five of its fabs to 22nm process technology in 2011 - 2012 timeframe. In particular, the company has either upgraded or is about to do so its D1D (Oregon), D1C (Oregon), Fab 13 (Arizona), Fab 32 (Arizona) and Fab 28 (Israel) production facilities to the new manufacturing process. As a result, it was relatively easy for Intel to quickly ramp up production using leading-edge manufacturing technology quicker than in cases of 32nm or 45nm, where the company only had two or three advanced fabs that made products using latest technologies.
According to the world's largest chipmaker, with Core i "Ivy Bridge" accounting for around 25% of central processing units for desktops and laptops [in Q2] and with "less than half of its inventory" being Ivy Bridge chips, it is likely that the market share of 22nm chips will increase significantly in the third quarter. In fact, Intel expects to double the volume of Core i 3000-series "Ivy Bridge" products in its shipments in Q3 2012.
It is important to note that since products that come from factories at early stages of ramp up typically cost more to make than products that are manufacturer at later stages. Therefore, in the third quarter Intel will enjoy both higher volumes of Ivy Bridge as well as lower costs. On the one hand, this will boost profit margins for Intel, on the other hand it will allow the chipmaker to be more flexible in terms of pricing.
"As we move into Q3, we have the phenomenon where cost comes down rapidly on Ivy Bridge, which was about a quarter of our volume in Q2 and we are going to more or less double that volume in Q3. [Hence, keeping in mind] this phenomenon where cost come down, but the volume doubles, I see some cost good news in Q3, it is between half a point to a point, and then I get more cost good news in Q4, as that ramp starts to flatten out a bit," said Stacy Smith, chief financial officer of Intel.