We can expect an aggressive Dell rollout over Labor Day, followed by large-scale manufacture and distribution of Microsoft-sold tablets. The newest is the Microssoft Go, currently available only on preorder, at $399/$549 in 4GB+64GB/8GB+128GB DRAM+SD configs with Intel's Kaby Lake (dual hyperthreaded P4 core with 2MB shared first-level instruction/cache). Higher performance models should be available by year's end that improve on the basic single-threaded, shared DRAM for video and main memory.

Far End of Moore's Law in 2018
Far End of Moore's Law in 2018

1. Introduction

Intel is the largest semiconductor company in the USA, and Microsoft's internal economy is now double that of Spain's. Two decades ago, it seemed remarkable that Microsoft's economy was larger than that of Spain. In 2018, Microsoft's $118B annual revenue is more than double the Spanish government's annual spending of $55B. Apple's revenue is now twice that of Microsoft. Simultaneously, with the vast increases in manufacturing foundry costs for modern semiconductors, only two microprocessor architectures dominate virtually the entire tech market: Intel's long x86 legacy, manufactured in one 'superfab' in the USA; and the newer ARM architecture, manufactured in the only competing semiconductor foundry worldwide, in Taiwan, called TSMC.

Costs of smaller-geometry semiconductor processes are now so immense that semiconductors no longer double in speed every two years. That doubling of speed, often referred to as 'Moore's law,' empowered the tech sector for the first three decades of its growth. Since then, architectural enhancements in the digital design of microprocessors made it appear that Moore's law was still in operation, but even those have mostly run their course. The future is no longer so determined by technological advance, and increasingly determined by business factors.

2. Intel Business Outlook

As such, the most significant leading indicator for the U.S. tech sector is, currently, Intel's quarterly earnings report. Pseudo-political drama also surrounds Intel this month, because it's CEO Brian Krzanich just departed under the auspices of "violations of the company’s non-fraternization policy" (Intel CEO Brian Krzanich Resigns Over Relationship with Employee,Verge, June 21 2018). But from a business perspective, BrianK has met corporate expectations to the max, maintaining exactly a 50.1% share in semiconductor revenue while expanding in board manufacturing and services. That's anticipated as necessary for Intel's long-term survival, as the long bull run on Moore's law draws to a close, so new SoCs (Systems on Chips) less frequently spark any persisting market flurries.

Also, satirically, BrianK is leaving right at the topmost peak of peaks in the best sales fields ever. Hence, obviously,this Web pundit at 'MarketWatch dot com' had no idea what he was saying just prior to the earnings release. It's just more of the usual confusion of opinion with fact that is so popular in the current Spice-Girl generation.

Intel's second-quarter earnings report focuses on total YoY revenue (Year over Year) rather than earnings since the last quarter. That deserves closer analysis to see how much QoQ (Quarter over Quarter) revenue has changed. Due to all Trump's tax law changes, Intel has serious work to do on its 'non-GAAP' business outlook (Intel's business opinion, not 'Governed by Acceptable Accountancy Practices') before it will be endorsed by the ('GAAP') internal auditors, by year's end (Intel 2018 Q2 Earnings).

According to current non-GAAP numbers, Intel claims quarterly revenue increase from $16.1B to $17B (22% SGR) for the second quarter, yielding a $900M increase in earnings (Intel Financial data). That's an improvement from the down-trend first quarter, for which a $300M drop was reported. Hence, less satirically, one may expect a drop in the tech sector as Intel's balance sheets yoyo down for the third quarter as usual. The yoyo will bite deeper as the departing CEO can only have rigged as much as possible in his favor. It remains indeterminate, as yet. how much the revenue will affect stock prices.

3. Microsoft Business Outlook

The $900M increase in Intel's revenue last quarter was probably for manufacture of theMicrosoft Surface GO. So we can expect an aggressive Dell rollout in 30 days, which will be accompanied by manufacture of Microsoft-sold tablets, currently available only as Microsoft preorder, at $399/$549 in 4GB+64GB/8GB+128GB DRAM+SD configs with Intel's Kaby Lake (dual hyperthreaded P4 core with 2MB shared first-level instruction/cache.

In the Skylake-based CPU and 615 GPU deployed to all Surface Go tablets, each cache line is 8bytes, so per hyperthread, that's 32Kwords of instructions and data each. Large apps may need to be recompiled using a 'tiny' memory model to maximize cache hits, and note, the P4 is only pipelined, and like the i5 equivalent, does not implement OOOIE (out-of-order instruction execution) like the ARM-based Pentium emulation in AMD's Bulldozer.

As 1.6+GHz ICs are binned out during the Surface GO rollout, we may then expect higher graphics performance in Microsoft GO from superior, dual port 1866+MHz DDR3 over shared single-channel LPDDR3, which, as it's not obviously specified, is one of the first places Microsoft probably cost-optimizes its own tablets (4415Y SOC Specs).

Performance wise, it's still difficult to justify an upgrade from the last year of Mac Mini manufacture (2.66GHz i5 with 3MB L2 cache and GeForce 320M with 2GB+500GB single-port DDR3+HD ). Feature-wise, the GO adds a 10" 1800x1200 touch display and a USB Type-C microport. Business-wise, Intel has again changed the USB standard, and while the company maintains its tradition of 'backwards compatibility at the system level, its new, smaller USB connectors are designed to bring in the extra 10% for peripheral cording on which consumer outlets make larger margins.

4. Conclusion

Overall, BrianK's departure appears similar to Sculley's departure from Apple. Just as in Sculley's time, Intel is stuck with maintaining revenue from its semiconductor business at a larger share than its systems and services (for Apple it was maintaining old Macs while shifting to the PowerPc and handhelds). Otherwise Intel has to change its primary business from integrated circuits to printed circuit boards, to which end, it would have to manage an enormous change in stock-market expectations.

For the tech sector in general, the consolidation to two semiconductor superfabs (at Intel, in the USA, and at TSMC in Taiwan) has worked far better than expected. Nonetheless unexpected advances in X-ray lithography are finally reaching their end, a decade later than expected. Intel has already made clear its own microprocessor families are here to stay, with no plans to update Xeon-based server architectures at all.

In parallel the shift to consumer-driven sales and devaluation of the Sun and Motorola value-added reseller (VAR) markets has pretty much proceeded on schedule. Sun Microsystems; Scott McNealy also announced his own retirement, without any overshadowing news hype, now that the Oracle divestiture of Sun's assets is complete, and the old 'SunTel' alliance has completely dissolved in face of Microsoft's massive move into tablet hardware.