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Intel Corporation Starts Shipping Kaby Lake Processors

Back at Computex 2016, Intel (NASDAQ: INTC) Client Computing Group's general manager, Navin Shenoy, said that the company would begin shipping its next-generation 14-nanometer processor family, known as Kaby Lake, during the second quarter of 2016.

On the company's most recent earnings call, CEO Brian Krzanich confirmed that Intel had begun shipping Kaby Lake to customers, right on cue.

What is Kaby Lake?

Intel has yet to formally reveal the technical details of Kaby Lake (and the chipmaker doesn't appear to have a session dedicated to the product at its upcoming developer forum), but Krzanich offered a fair bit of insight into the product on the call.

"One of the things we've learned on 14-nanometers is how to make meaningful performance improvements both in the silicon and then with the silicon combined with the architecture," Krzanich began.

He went on to say that with Kaby Lake the company is seeing performance gains "across all of the various [stock-keeping units] of Kaby Lake relative to Skylake."

Interestingly, it doesn't look as though Intel has made extensive architectural changes with Kaby Lake. In fact, Krzanich outright said that Kaby Lake is "built off a Skylake core." This, the executive pointed out, means that the size of the Kaby Lake chips relative to their Skylake counterparts won't "significantly grow."

Margin implications

Since the die sizes of the Kaby Lake products apparently won't be much larger than their Skylake counterparts, Krzanich claims that "there's no driver in the silicon itself to shift the margin structure" of these products.

"We're able to get the performance and feature enhancements with relatively small silicon increases but good improvement on the raw silicon technology itself," Krzanich said.

CFO Stacy Smith also chimed in, noting that Kaby Lake will be built on a "process technology that's mature with healthy yields and a healthy cost structure." This, he explains, delivers a "nice performance boost at a good cost structure."

A solid strategy

It's encouraging to see that the company has been successful in wrapping up Kaby Lake and getting the product into the hands of its customers. The strategy seems to be working.

Last year, when Intel first confirmed the existence of Kaby Lake, Krzanich indicated that this product was driven by customers wanting the company to be "predictable."

In other words, Intel is producing a third generation of 14-nanometer products so that customers don't have to worry about show-stopping yield issues on the 10-nanometer manufacturing technology holding up their own product launches.

The lingering Coffee Lake question

Before Intel released its results, PC Watch came out with a report claiming that the chip giant has a fourth generation of 14-nanometer products, known as Coffee Lake, in store for consumers.

The interesting thing about Coffee Lake is that it isn't intended for all segments of the PC market (the low-power Ultrabook/2-in-1 convertible market will apparently get 10-nanometer chips in late 2017), but just for higher-performance segments. Think high performance laptops and, presumably, mainstream desktop computers.

But from an investor's perspective, it'd be nice for Intel to go into a little more depth around its PC processor road map and product strategy to address different market segments.

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Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.