Intel Engineering Chief Departs Following 7nm Delays

The News: Intel Corp’s (INTC.O) Chief Engineering Officer Murthy Renduchintala is departing, part of a move in which a key technology unit will be separated into five teams, the chipmaker said on Monday.

Intel said it is reorganizing its technology, systems architecture and client group. Its new leaders will report directly to Chief Executive Officer Bob Swan. Read the full news piece on Reuters.

Also: Read the full Press Release from Intel on the changes and reporting structure here:

Analyst Take: Last week’s earnings from Intel were very good. At first blush it was a fantastic quarter, but it was a case where the financial results simply didn’t matter to the street. With the company announcing another significant delay to the release of its 7nm chips, analysts immediately started pushing back, which was the dominant topic throughout the company’s earnings call.

The problem wasn’t the new timeline itself, it has been the trend of delays that took place with the 10nm solutions and now seems to be creeping into the 7nm. Meanwhile, Intel competitors, most notably AMD has been shipping its 7nm for some time. All of this to say, a delay like this and a double digit fall in the company’s stock price following a really solid earnings result unsurprisingly required a leadership change. In this case, it was the top engineering executive Murthy Renduchintala.

The reorganization means that CEO, Bob Swan, is going to take a more active role in oversight for the 7nm solutions to make sure that new timelines are met. I’ve said this and will continue to say it, the company HAS TO meet its updated timelines in order to regain the trust of the street. Further, the company has overall been successful in competing and maintaining market share with its 14nm products versus AMD. However, with AMD making small nibbles into the market share, Intel’s board and investors have to be nervous that continued delays could start to become more impactful with customers.

As I see it, the delays will likely cost a small sliver of market share, but Intel has the benefit of history and a diverse product portfolio to maintain a stickiness with its customers. If the company can use this reorganization as a spring board to meet or exceed its timeline to 7nm and can concurrently lean into its 10nm products which are now shipping, I think the most significant fall out can be prevented.

However, make no mistake. This is absolutely an example of fall out after investor disappointment. Intel will come back though. It’s track record speaks for itself and despite a tough few years of process delays, this will drive the company to do better–at least that is what I believe the market can expect.

Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice.

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Image Credit: Intel

The original version of this article was first published on Futurum Research.