Fueled by the rapid shift to remote work and learning, Intel posted strong second-quarter earnings this week. But while the company continues to perform well financially, the writing is on the wall for many analysts concerned by Intel's slipping deadlines and growing competition.

On the company's second-quarter 2020 earnings call Thursday, CEO Bob Swan revealed Intel's next-generation 7-nanometer process had been delayed.

"We are seeing an approximate six-month shift in our 7-nanometer-based CPU product timing relative to prior expectations," said Swan, according to a transcript. "The yield of our 7-nanometer process, which based on recent data, is now trending approximately 12 months behind our initial target."

According to Swan, a defect in the process resulted in degraded yields.

"We've root-caused the issue and believe there are no fundamental roadblocks, but we have also invested in contingency plans to hedge against further schedule uncertainty," he said. "We now expect to see initial product shipments of our first Intel-based 7-nanometer product, a client CPU, in late 2022 or early 2023."

Intel is unique among major chipmakers in that it operates its own fabrication facilities. Most chipmakers rely on third-party chip fabs, like Taiwan Semiconductor Manufacturing Co. (TSMC). This has allowed Intel's competition to bring 7-nanometer chips to market as early as 2018, and 5-nanometer chips are expected to arrive this fall, followed by 3-nanometer chips in late 2022.

However, this dynamic could change if Intel continues to experience low yields from its fabs.

Pressing Swan on the company's delays, Bank of America analyst Vivek Arya questioned how the chipmaker would overcome lost ground.

"On the competitive side, by the time you come up with 7 [nanometer], TSMC is planning to be on the 3-nanometer [process]," Arya said, questioning whether the chipmaker was considering outsourcing to external foundries.

Outsourcing to external fabs wouldn't be new for Intel. The company is already using a combination of internal and external fabs for its upcoming data center GPU, which is slated for release next year.

While Swan expressed confidence the company would be able to eke out performance gains from its 10-nanometer chips the same way the company has done with its 14-nanometer products, he admitted external fabs were under consideration, but still a contingency plan.

The company's third-generation Xeon Scalable chips, announced in June, are still using Intel's now six-year-old 14-nanometer manufacturing process.  Despite Intel's 10-nanometer chips having been on the market for a while now, Intel has faced challenges bringing the chips to the data center. According to Swan, Intel's 10-nanometer Xeon Scalable chips won't arrive until next year.

It should be noted that while Intel is often measured against its CPUs, the company has diversified its portfolio in recent years.

"In this new world, our opportunity set becomes more than just the CPU; it's more and more Intel Silicon inside more and more computers, so we can have a larger impact on our customers' success," said Swan. "While process technology is very important, it is only one of six technology pillars of innovation that drive differentiation in our products."

These pillars include process, packaging, architecture, memory, interconnect, security and software.

According to CFO George Davis, this diversity served Intel well during Q2.

"The atypical seasonal effects of COVID-related demand for mobility products and data center infrastructure continued in Q2, resulting in record Q2 revenue for CCG [Client Computing Group], DCG, and memory," he said. "Revenue came in at $19.7 billion, up 20% year on year and $1.2 billion higher than guidance."

Data Center Group (DCG) revenues continued to be Intel's strongest revenue generator during the quarter, up 43% year on year, and representing 52% of the company's total revenues.

Intel's memory business also saw strong gains during the quarter, up 14% year over year. Meanwhile, the company's client computing group grew 7% year over year driven by the pivot to remote work.

However, what would have otherwise been a stellar quarter was overshadowed by delays, which drove the company's stock price down nearly 16% at the time of publication.

Deutsche Bank, Roth Capital, and Bank of America all downgraded the company to hold, while Northland, Bernstein, Exane, Barclays, and Raymond James have downgraded Intel to a sell.

The mixed quarter comes just weeks after Nvidia dethroned Intel as the top U.S. chipmaker.

In fact, Intel is facing increased competition across the board as rivals encroach on the company's strongholds.

In late June, Apple announced it was abandoning Intel CPUs in favor of its own silicon — a trend that has been gaining steam among hyperscalers and cloud providers for years now. Microsoft Azure, Amazon Web Services, and Oracle Gen2 Cloud have all begun deploying Arm-based processors in their cloud data centers.

Meanwhile AMD's EPYC processors, which are built on TSMC's 7-nanometer process continue to displace Intel's chips in cloud data centers as well. Earlier this month, Google Cloud rolled out a confidential computing service using AMD's second-generation EPYC processors.