A Realistic Assessment of the PC's Future

All around us, the evidence is overwhelming that the PC world is changing rapidly and in numerous ways -- use, sales, share of the electronics/IT equipment market, application development, and, very importantly, the surrounding supply chain.

Certainly, the PC has a future in our homes and businesses, but don't let anyone convince you they know exactly how that future will look or where things will remain the same over the next five years. Within a few years, the PC market will lose its title as the dominant consumer of semiconductors -- if it hasn't already. In the near future, the leading destination for many components used in traditional PCs will be tablet and smartphone plants.

The supply chain, especially the procurement and production elements, must be focused on accelerating that transition. I don't believe that's the case today, though the trends have been apparent for quite a few quarters. As consumers have migrated toward mobile devices, especially smartphones, the consequences for PC vendors and their component suppliers have become obvious. But apparently, they aren't obvious enough.

Intel Corp., the company with the most to lose as this shift has accelerated, has worked to establish a beachhead in the smartphone market. Nevertheless, many well-meaning analysts and industry observers have continued to spout the misleading view that the PC sector is unshakeable. The general opinion for a while was that tablets and smartphones would serve as complementary products to the traditional PCs, rather than cannibalizing the market. Think again.

Paul Otellini, Intel's president and CEO, had this to say about the changes in his company's market during a fourth-quarter earnings conference call.

From a product perspective, 2012 was a year of significant transitions in our markets and a year of important milestones for Intel...
At CES last week, I was struck by our industry's renewed inventiveness. PC manufacturers are embracing innovation as we are in the midst of a radical transformation of the computing experience with the blurring of from factors and the adoption of new user interfaces.
It's no longer necessary to choose between a PC and a tablet.

Let's turn to an IDC report released Monday for further explanation. The research firm said it sees PC innovation accelerating over the next few years as OEMs struggle to stem their losses and blunt the impact of smart phones on the market. PC OEMs and chip vendors can no longer afford to be complacent, IDC said; they must compete on all levels with tablets and Smartphone manufacturers to demonstrate the continued relevance of their products.

This view implies that PC vendors and their suppliers have been satisfied with the status quo until now. That would be putting it mildly. Until Apple Inc. rolled out the iPhone and positioned it as an alternative platform for accessing the Internet, many OEMs didn't see smartphones as competing devices. IDC said in its report:

Complacency and a lack of innovation among OEM vendors and other parts of the PC ecosystem has occurred over the past five years. As a result, PC market growth flattened in 2012 and may stagnate in 2013 as users continue gravitating to ever more powerful smartphones and tablets.

Ouch. Some in the industry still believe tablets and smartphones aren't an arrow aimed at the PC market. I don't see tablets and smartphones replacing PCs in all situations, but they will encroach enough on that territory to leave a visible mark. That's why PC vendors, semiconductor suppliers, and manufacturers of other components need to develop a strategy that embraces the smaller form factors of tablets and smartphones and leverage their advantages over traditional computing platforms to create market-winning products.

Mario Morales, program vice president for semiconductors and EMS at IDC, said in a press release, "The key challenge will not be what form factor to support or what app to enable, but how will the computing industry come together to truly define the market's transformation around a transparent computing experience."

That conversation is a couple of years late, but it's welcome nonetheless.

IHS iSuppli: IC inventories hit record levels in Q3

hip inventories reached record highs near the end of 2012, and according to IHS iSuppli, semiconductor revenue will decline in Q1, prompting new concerns about the state of the market.

Overall semiconductor revenue is expected to slide three percent between January and March 2013, on top of a 0.7 percent decline in Q4 2012. What's more, inventory reached record levels in Q3 2012, amounting to 49.3 percent of revenue, more than at any point since Q1 2006. IHS iSuppli believes the uncomfortably high level of inventory points to the failure of key demand drivers to materialize.

The PC market remains slow and hopes of a Windows 8 renaissance have turned into a nightmare. Bellwether Intel saw its revenue drop three percent in Q4, with profit tumbling 27 percent, and the trend is set to continue. AMD is expected to announce its earnings Tuesday afternoon and more gloom is expected across the board. The only bright spot in an otherwise weak market is TSMC, which quickly rebounded after posting the lowest revenues in two years a year ago. TSMC now expects to see huge demand for 28nm products in 2013 and many observers point to a possible deal with Apple.

In addition, TSMC plans to invest $9 billion in capital expenditure in 2013, and it will likely spend even more in 2014, as it moves to ramp up 20nm production. However, Intel's plans to increase capital spending to $13 billion, up $2 billion over 2012 levels, have not been welcomed by analysts and investors. Unlike TSMC, Intel is not investing to increase capacity in the short term, it is making a strategic bet on 450mm wafer technology, which promises to deliver significantly cheaper chips compared to existing 300mm wafers. However, 450mm plants are still years away.

TSMC's apparent success has a lot to do with high demand for Smartphone's and tablets, which are slowly eating into the traditional PC market. Semiconductor shipments for the wireless segment were expected to climb around four percent in 2012 and positive trends were visible in analog, logic and NAND components. However, the mobile boom can't last forever, and we are already hearing talk of "Smartphone fatigue" and "peak Apple".

IHS iSuppli estimates the first quarter of 2013 will see growth in industrial and automotive electronics and other semiconductor markets will eventually overcome the seasonal decline, so a rebound is expected in the second and third quarters.

Semiconductor revenue could grow by four percent in the second, and nine percent in the third quarter. However, the assumptions are based on a wider economic recovery, which is anything but certain at this point. If demand evaporates, semiconductor suppliers could find themselves hit by an oversupply situation, leading to more inventory write-downs throughout the year.

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SEMI Industry spending $32.4B this year on IC gear

Fab equipment spending saw a drastic dip in 2H12 and 1Q13 is expected to be even lower, says SEMI, which reckons that the projected number of facilities equipping will drop from 212 in 2012 to 182 in 2013.

Spending on fab equipment for System LSI is expected to drop in 2013. Spending for Flash declined rapidly in 2H12 (by over 40 %) but is expected to pick up by 2H13. The foundry sector is expected to increase spending in 2013, led by major player TSMC, as well as Samsung and Global foundries.

Fab construction:
While fab construction spending slowed in 2012, at -15%,  SEMI  projects an increase of 3.7 % in 2013 (from $5.6bn in 2012 to $5.8bn  in 2013).

The report tracks 34 fab construction projects for 2013 (down from 51 in 2012).  An additional 10 new construction projects with various probabilities may start in 2013. The largest increase for construction spending in 2013 is expected to be for dedicated foundries and Flash related facilities.

Many device manufacturers are hesitating to add capacity due to declining average selling prices and high inventories.

However SEMI reckons flash capacity will grow 6%  by mid-2013, with nearly 6 % growth, adding over 70,000wpm.

SEMI also foresees a rapid increase of installed capacity for new technology nodes, not only for 28nm but also from 24nm to 18nm and first ramps for 17nm to 13nm in 2013.

SEMI cautiously forecasts  fab equipment spending in 2013 to range from minus 5 to plus 3.

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Comparison Of Intel and AMD Processors

An overview of notebook and desktop processors offered by Intel and AMD.

What’s the big deal about choosing a processor?

The processor (also called CPU, short for Central Processing Unit) is the "engine" of a computer. It is the most important component in determining how fast or 'snappy' the system will operate across applications both now and in the near future.  Like the engine of an automobile, a processor can be fast, slow, power hungry or power efficient subject to the kind of work the computer is being considered for. It is important to round out what kind of things you will be doing on the system to best select a computer with a CPU most suitable to your needs.

Unlike other components of a notebook computer, the CPU is -- with rare exception -- a fixed component. This is in contrast to RAM and hard disk storage which can typically be upgraded. Therefore, another consideration is the fact that (important as the CPU is) the CPU you choose will be the same throughout the life of the system. This implies that as programs become more sophisticated, the computer's ability to handle such programs will be directly affected by the decision made at purchase all that time ago. This choice may mean the difference between a system that is useful for another year or two versus one that isn't -- much sooner. As a final consideration in choosing a CPU is the suggested or minimum requirements of either the programs that is planning on being run, or academic department recommendations as a guide as to the relative kind of performance required for a particular field of study.

The product line comparisons hierarchy 

Currently, the two largest manufacturers of CPUs in the world are Intel and AMD. The following provides a short profile of the companies and the current state of their products.

Intel

The current performance and market leader at the time of this writing is Intel.  Intel is currently the sole supplier of processors for all recent Apple computers (Macbook, Macbook Pro, Mini, iMac etc.) and are found in virtually all major computer manufacturer's product lineups. Intel's most current crop of CPUs are the Core iX-series processors which include the i3, i5 and i7; as of January 2011, these series of processors entered their 2nd generation (codenamed "Sandy Bridge" where the 1st generation was codenamed "Nehalem", differences explained under the special features section).  

AMD

AMD is the second largest supplier of processors for personal computers.  Many of their products are found in both high-performance and budget-oriented notebooks as well as low-cost, enthusiast-oriented desktop builds.  The Phenom II and Fusion platforms comprise AMD's most popular and mainstream offerings at the time of this writing.

Beneath, we provide a chart which compares the relative performance between competing product lines within Intel's and AMD's offerings. These are organized by the following three classes: high-end, mid-range and economy.  It is important to note that though this comparison offers a reference of relative performance within each brand, it does not necessarily indicate absolute rankings between competing Intel and AMD products (for instance, the Core i7 is in the same row and category as the Phenom II series but offers superior general performance). Further, the Core iX Mobile series only indicate relative performance for notebook platforms -- that is, it is generally not useful to compare them to desktop processors such as the Intel Core i7 or the Phenom II series.

High End Processors : Intensive Statistical Analysis, Professional Video/Audio Creation, Advanced 3D Graphics

(2nd generation "Sandy Bridge")

Intel Core i7 As Intel's flagship processor, the i7 is a 64-bit processor offering either 2, 4, or 6 cores of the highest levels of general performance available.  The i7 combines Hyper Threading and Turbo Boost technologies for the most demanding and advanced of applications.

Intel Core i7 Mobile Intel's Core i7 Mobile features unparalleled performance on notebooks, incorporating significant power savings while implementing the same features as the non-mobile i7, Hyper Threading and Turbo Boost. The i7 Mobile is available on notebooks with 2 or 4 cores; currently the 4 core version offers higher performance in some respects but heat and battery life are concerns.

AMD Phenom II X6 AMD's Phenom II X6 represents the industry's first consumer class six-core processor. The X6 offers the highest levels of performance ideal for the most intensive of tasks - bolstered by AMD's new Turbo Core technology, the X6 is able to optimize performance in a variety of situations.

(2nd generation "Sandy Bridge")

Intel Core i5 Based upon the same architecture as the i7, the i5 is also a 64-bit processor that features 2 or 4 cores at a similar class of performance of the i7 processor at a lower cost. The i5 features Turbo Boost and Hyper-Threading technology but do not possess as much cache memory as the i7.

Intel Core i5 Mobile The Intel Core i5 Mobile while also featuring Hyper Threading and Turbo Boost possesses a similar but lesser class of performance than the Core i7 Mobile with less cache and available in notebooks only with 2 cores. The Core i5 Mobile is a high performance processor with low energy requirements.

AMD Phenom II X4 AMD's latest generation of consumer class 4 core processors, the quad-core Phenom II X4 chips are designed to deliver performance ideal for all kinds of multimedia as well as in the most demanding of applications such as virtualization.

(2nd generation "Sandy Bridge")

Intel Core i3 Derived from the same architecture as the higher end i5 and i7, the i3 is available strictly as a dual core processor. Though Hyper Threading is available, it does not feature TurboBoost. The Core i3 processor presents higher levels of performance than the Core 2 at a smaller cost.

Intel Core i3 Mobile The Intel Core i3 Mobile descends similarly from the i3, presenting a fast, 64-bit computing experience with the intelligent architecture of the i5 Mobile and i7 Mobile. The i3 Mobile features 2 cores and Hyper Threading but does not include Turbo Boost technology

AMD Phenom II X3 & X2 AMD's Phenom X3 and X2 processors boast 3 or 2 cores that offer excellent performance value; great for all around usage on a small budget all while utilizing AMD's latest architecture technology seen in the Phenom II X4 series

Intel Core 2 Quad The Core 2 Quad features 4 processing cores to optimize gaming, video, and image processing. Built on the same architecture as the Core 2 Duo, this processor excels on multi-tasking with performance hungry applications.

Intel Core 2 Extreme Available in both 2 and 4 core versions, distinguishing features of the Extreme series include higher bus speeds than the non-extreme versions, and an unlocked clock multiplier for further customization of your computing performance.

Mid Range Processors : Speed & Multi-tasking, Adobe Creative Suit, All-Around Use, Basic 3D Graphics

Intel Core 2 Duo Contains two processing cores to optimize gaming, video, and image processing. Laptops with this chip tend to be thinner and and more energy-efficient.

AMD Phenom I X3 & Phenom I X4 AMD's first generation of consumer class processors featuring quad and triple core performance found in desktop builds. Features 64-bit computing performance as well as AMD's HyperTransport bus technology.

Intel Pentium Dual Core Dual core processor based on the Core microarchitecture. A class beneath the Core 2 Duo and Core Duo of Intel's processor offerings, the Pentium Dual Core is available in current desktops and laptops.

AMD Turion II Ultra / AMD Turion II The Turion II and Turion II Ultra are AMD's mainstream mobile processor platform; they provide excellent all-around performance for multimedia such as high definition video. As these are often paired with AMD/ATI graphics, budget configurations containing these processors are also sufficient for basic 3D graphics and gaming.

Intel Core Duo / Intel Core Solo The Intel Core Duo and Core Solo are dual and single core processors based on the Core microarchitecture. The Core Duo and Core Solo offers modest performance for office and limited multimedia oriented tasks.

AMD Athlon II X2 The AMD Athlon II X2 is a 2 core desktop processor that is 80% faster than it's single core counterpart. Great for multitasking and multimedia consumption on a budget.

Economy Processors : Internet Browsing, E-mail, Microsoft Office, Simple Graphics and Games

Intel Centrino/Centrino Duo A mobile-oriented processor based upon Pentium M or Core Duo architectures; the Centrino also integrates wireless networking technology allowing for smaller sized laptops. Offers slight performance boost over simply choosing a core duo and dell wireless card (which is typically less expensive.)

AMD Sempron The AMD Sempron is a budget class processor seen in low cost notebooks and desktops and are considered a class above netbook/nettop processors such as the Intel Atom or the AMD Neo platforms.

Intel Atom Primarily found in netbooks and nettops, this processor has been designed with price and power consumption in mind. As a result, it offers much less processing power than other current Intel alternatives. This processor is available in 1 or 2 cores, with the single core option being far more prevalent.

AMD Athlon Neo / Neo X2 The Athlon Neo and Neo X2 are single and dual core processors seen in ultra-mobile platforms such as netbook and nettops. They are featured with ATI integrated graphics for reasonable multimedia playback performance.

Intel Celeron Intel's economy model processor. It is the most basic, and thus the slowest. It has less cache than other Intel processors, so even if it has the same Ghz rating as another processor, it will be slower. We usually do not recommend this processor because it offers the least in terms of longevity.

 

Benchmarks

This is not meant to be a comprehensive list, but rather a way to identify different branches in processors. To see a more comprehensive comparison of specific processor types, follow the benchmark links below. Benchmark websites rank processors within and between series. The highest rated processors are typically used for server applications and for simplicity, those products are omitted in the set of rankings above (eg. Intel Xeon and AMD Opteron); rather the processors that are found in desktops and notebooks are included.

It is further important to recognize that general processor speed is not solely atttributed by its frequency -- these are the Mhz and Ghz numbers often seen -- of the processor when comparing between different product lines as is the common misconception. For instance, an Intel Pentium 4 3.8 Ghz processor is slower than an Intel Core Duo or AMD Phenom. The primary reasons for this is a function of the architecture and the associated features therein (particulrly additional physical cores, advancing of bus technology, etc). It is thus, only applicable comparing frequency ratings to ascertain relative performance within exact product lines (eg. Core 2 Duo vs. Core 2 Duo). The chart beneath will give a rough idea of the hierarchy of performance expected in faring against competing product lines at the time of this writing. It may also be helpful to understand that versions of processors found in desktops tend to be higher in performance than their notebook counterparts of the same product line; this is done to maintain thermal requirements, battery life and minimize size at the cost of speed.

Benchmark Links:

http://www.cpubenchmark.net/

Desktop CPU Benchmarks:

http://www.tomshardware.com/charts/desktop-cpu-charts-q3-2008/benchmarks,31.html

Mobile CPU Benchmarks:

http://www.tomshardware.com/charts/mobile-cpu-charts/benchmarks,19.html

Product Information from Manufacturers:

Intel's Processor site:

http://www.intel.com/products/processor/index.htm

AMD's Processor site:

http://www.amd.com/us-en/Processors/ProductInformation/0,,30_118,00.html

 

Special Features Explained

In this section, we breakdown the practical meaning of some important technical features included in the various processors available. Please not that this is not a comprehensive listing and what is described are the most common/relevant features offered.

Special Features	Explanation	Processors Using Feature
Intel Features
Hyper Threading	The operating system treats the processor as two processors instead of one. This increases the speed of the computer.	Pentium 4, Core i7, Core i5, Core i3
Turbo Boost	Allows the processor to intelligently overclock themselves so long as thermal and electrical requirements are still met.	Core i7, Core i5
Intel QuickPath Interconnect (QPI)	A new Intel technology which replaced Front Side Bus (FSB) -- similar in purpose to AMD's competing HyperTransport technology.	Implemented in some fashion in all Intel core iX series processors
Execute Disable Bit	Prevents certain viruses from infecting the system by labeling some data "executable."	Current Intel processors
vPro	Best for IT people trying to maintain several workstations. It is able to detect systems, even in powered-off states. Synchronizes remote desktop, security, and other multi-station support features. Decreases desk-side maintenance visits.	Core Duo, Core 2 Duo
ViiV technology	Intel's bundle for enhancing multimedia. Supports HD resolutions 720p up to 1080i.	Pentium D, Extreme, Core Duo, Core 2: Duo, Extreme, Quad.
AMD Features
Hyper Transport	Feature that allows for faster processing speed and better energy efficiency.	Current AMD processors
Cool'n'Quiet	Reduces heat and noise of processors allowing for increased energy efficiency.	Phenom I & II, Athlon, Sempron (with exceptions)
Turbo Core	Turbo Core allows for contextual overclocking of the processor to optimize performance subject to electrical and thermal requirements/specifications.	Phenom II X6
CoolCore	Limits unused elements of the processor such that power is conserved -- allows for increased notebook battery life on a single charge.	Phenom I & II, Turion
Dynamic Power Management	Allows for dynamic power management to optimize energy consumption while maintaining performance levels.	Phenom I & II, Turion