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Here's Why Intel Corporation Built This Controversial Product

On May 30, microprocessor giant Intel (NASDAQ: INTC) announced its Core X series of processors and the accompanying X299 platform for high-end desktop personal computers.

The lineup consists of two distinct families of processors. The first is Skylake-X, which comes in configurations with as few as six processor cores and as many as 18 processor cores (though the 18-core models are slated to become available later).

Intel executive Gregory Bryant. Image source: Intel.

The second is Kaby Lake-X, which includes a four-core/four-thread chip in the form of the Core i5-7640X and a four-core/eight-thread chip in the form of the Core i7-7740X.

The Kaby Lake-X chips are quite controversial among many in the technology community because they are merely the same Core i5-7600 and Core i7-7700K chips the launched back in January, respectively, but repackaged to work in the more expensive X299 motherboards, rather than the lower-cost Z270 motherboards.

Here's why I think Intel chose to release these chips.

The entry-level X299 parts

Intel clearly wanted to have "entry level" parts for its high-end desktop platform, and there are certainly good reasons to want them.

For example, an individual building a computer around the X299 platform might want a computer now, but may not have enough money for the higher core count part that they may eventually want. So, a reasonable option for that customer would be to build the system with a relatively low-cost "stop gap" part and then, at some point down the line, upgrade to something better.

Image source: Intel.

Alternatively, customers might simply want the features/capabilities that the Core i5-7600K/Core i7-7700K offer, but would like to pair them with more feature-packed motherboards. Buying a 7640X or a 7740X and pairing it with an X299 motherboard (high-end desktop motherboards tend to be more feature-rich on average than mainstream desktop motherboards) would be a good solution for such a potential buyer.

Now, you might be thinking that it might make more sense for Intel to simply offer quad-core versions of the Skylake-X chips than to do the work to bring the mainstream Kaby Lake-S chips over to the X299 platform. But it doesn't.

Two big reasons

The first reason that Intel likely didn't simply offer a quad-core Skylake-X part as the entry-level chip for X299 is economics.

The Skylake-X parts are based on two silicon die: the first is Intel's LCC chip, which has 10 cores, and the second is the company's HCC chip, which has 18 cores on the die. Per InstLatX64 on

, the chip size of the LCC Skylake-X is north of 300 square millimeters.

Intel would have to disable a substantial portion of this large, expensive-to-manufacture chip if it wanted to use it to offer quad-core parts on the X299 platform.

That's not good for Intel's product margins, particularly as it's unlikely that its manufacturing yields on its 14-nanometer+ technology are bad enough that it produces many parts with six defective cores. 

By contrast, Intel's quad-core Kaby Lake die measures in at around 126 square millimeters in the same 14-nanometer+ technology that the Skylake-X parts are manufactured in. Now, much of that die area is taken up by a graphics processor that's disabled, but even with that part of the chip turned off, the chip is still small enough to begin with, and sells for a hefty enough sum, that Kaby Lake-X represents a financial "win" for Intel.

And one more thing

A final reason that the Kaby Lake-X processors make more sense than a heavily disabled Skylake-X part is Intel's segmentation strategy. The Kaby Lake-X chips only have 16 PCI Express lanes on the silicon die, while the lowest-end six-core Skylake-X has 28 of its 44 (usable) lanes enabled.

So, Intel's sales pitch to customers, then, is that they can have 50% more cores and 12 more PCI Express lanes for about $40-$50 more than the top Kaby Lake-X part. This, Intel probably hopes, will encourage upsell to the six-core part, ultimately enriching its product mix.

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Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.