The new generation of chip production difficulties

During Krzanich's tenure as CEO, Intel missed expectations on new chip production. In April, they had to declare that too little production had left the company in trouble. As Intel struggles with production, its biggest chip rival, Taiwan Semiconductor Manufacturing Co, has announced that it will introduce new chips this year.

According to some technical and financial analysts, both companies will carry more tiny transistor in the chip, which means that the chip overall performance will be more powerful, and the volume and power consumption compared to previous generation products will reduce a lot. Notably, although the two companies use transistors of similar size, Intel won't officially launch its new generation of chips until 2019.

The Wall Street journal reported on Friday, analysts said, in the history of Intel, this is the first time there are other chip manufacturer beyond the Intel on the production technology, its monopoly in the computer and server markets could be hit.

Handel, head of International Business Strategies Inc., Jones said, if Intel does not improve over the next 12 months chip production progress, its pricing power in the market will drop by 10-15%, also will be down about 5% market share.

In addition, AMD and qualcomm have also developed rapidly in the chip field in recent years, gradually eroding Intel's pricing power.

Intel, however, is optimistic. The company said it was the intense product competition that kept Intel performing well in terms of product performance and its ability to optimize current production processes and assembly technologies.

As things stand, Intel does have that cushion. In its second-quarter financial forecast, released Thursday, the company forecast revenue of $16.9 billion, beating market expectations. Non-gaap earnings per share were 99 cents, up 38 per cent from a year earlier.

How much will the new generation of chips cost?

Every time Intel develops a new generation of chips, it often spends billions of dollars to build factories and upgrade equipment.

According to Intel expects the company capital spending this year of about $14.5 billion, up 23% from a year earlier, the roughly two-thirds will be used in the manufacture of processors, however, Intel has refused to disclose the specific spending on the new product.

However, company executives told the Wall Street journal that the cost of producing the new product had dragged down the PC division's first-quarter operating profit by 4%. Industry consultants put the cost of developing new chips at about $5bn. In addition, new equipment plants cost $6 billion to $10 billion per plant.

Wall Street stories mentioned, on Thursday, Intel's board of directors of the company to accept the resignation and former director of 58 CEO Brian Krzanich, CFO Robert Swan will take over as interim CEO immediately and at the same time open the program to search the next CEO. It is reported, Krzanich was critical in the "before" and an Intel employees had agreed "romance", in violation of the company it is forbidden to managers and employees reporting directly or indirectly to fall in love.

Krzanich was a veteran of the work in Intel for more than 30 years, in 1982 joined the company as an engineer, then has promoted, became CEO in 2013 and joined the board of directors, and also drive the Intel from computer centered transition into a data-centric strategy. Possibly to "hedge" against the fallout from the unexpected resignation of its chief executive, Intel also raised its second-quarter revenue and earnings forecasts in a statement on Thursday.