AMD’ Opportunity & Intel’s loss | Intel’s Serious CPU shortage to last beyond Q1 2019

AMD shares seems to be falling after Intel says it can make enough chips to meet its guidance

  • AMD shares are falling after its main competitor reassured investors about its chip supply capacity.
  • Intel’s interim CEO, Bob Swan, says the chipmaker has enough supply to meet its full-year revenue outlook in a letter posted on the company’s website Friday.

The shortage has now exploded into the public eyes and now several of Intel’s partners have publicly outlined the impacts on their businesses. Some processors are becoming scarce, while prices are simultaneously rising, particularly in regions outside of the U.S., like EMEA (Europe, the Middle East and Africa) and APAC (Asia-Pacific).

Intel’s CFO and interim CEO Bob Swan penned an open letter to its customers and partners today outlining the steps it is taking to address a persistent and worsening shortage of 14nm processors. Intel concedes that “supply is undoubtedly tight, particularly in the entry-level of the PC market” but doesn’t provide a firm timeline for when the processors will become fully available.  Intel further detailed:

Capex outlook: Our initial 2018 Gross Capex outlook was $14B (source: Jan earnings presentation). In April, 2018 Gross Capex outlook increased to $14.5B (source: April earnings presentation), in July 2018 Gross Capex outlook increased to $15B (source: July earnings presentation). So, $1B total capex increase between Jan – July (going towards increasing our 14 nm capacity as Bob’s letter explains).

Intel’s statement comes on the heels of speculation from several industry behemoths that the shortage could last well into next year.

You can read the full release below:

An Open Letter from Bob Swan, Intel CFO and Interim CEO

To our customers and partners,

The first half of this year showed remarkable growth for our industry. I want to take a moment to recap where we’ve been, offer our sincere thanks and acknowledge the work underway to support you with performance-leading Intel products to help you innovate.

First, the situation … The continued explosion of data and the need to process, store, analyze and share it is driving industry innovation and incredible demand for compute performance in the cloud, the network and the enterprise. In fact, our data-centric businesses grew 25 percent through June, and cloud revenue grew a whopping 43 percent in the first six months. The performance of our PC-centric business has been even more surprising. Together as an industry, our products are convincing buyers it’s time to upgrade to a new PC. For example, second-quarter PC shipments grew globally for the first time in six years, according to Gartner. We now expect modest growth in the PC total addressable market (TAM) this year for the first time since 2011, driven by strong demand for gaming as well as commercial systems – a segment where you and your customers trust and count on Intel.

We are thrilled that in an increasingly competitive market, you keep choosing Intel. Thank you.

Now for the challenge… The surprising return to PC TAM growth has put pressure on our factory network. We’re prioritizing the production of Intel Xeon and Intel Core™ processors so that collectively we can serve the high-performance segments of the market. That said, supply is undoubtedly tight, particularly at the entry-level of the PC market. We continue to believe we will have at least the supply to meet the full-year revenue outlook we announced in July, which was $4.5 billion higher than our January expectations.

To address this challenge, we’re taking the following actions:

  • We are investing a record $15 billion in capital expenditures in 2018, up approximately $1 billion from the beginning of the year. We’re putting that $1 billion into our 14nm manufacturing sites in Oregon, Arizona, Ireland and Israel. This capital along with other efficiencies is increasing our supply to respond to your increased demand.
  • We’re making progress with 10nm. Yields are improving and we continue to expect volume production in 2019.
  • We are taking a customer-first approach. We’re working with your teams to align demand with available supply. You can expect us to stay close, listen, partner and keep you informed.

The actions we are taking have put us on a path of continuous improvement. At the end of the day, we want to help you make great products and deliver strong business results. Many of you have been longtime Intel customers and partners, and you have seen us at our best when we are solving problems.

Sincerely,

Bob Swan
Intel Corporation CFO and Interim CEO

 

Earlier reported……..

Intel is trying to avoid CPU shortage and “assure a continuous supply”

Intel has just published a document that says the expansion of testing capabilities for 14nm processors to “assure a continuous supply” of its CPUs in shortage of manufacturing capacity. It somehow indicates that the 14nm production capacity may stem from the availability of the company’s chip-testing facilities.  Intel’s 14nm CPU shortage impacts nearly every aspect of its cpu market, including its desktop, server, and laptop processors. The shortages, which Intel self-reported during a recent earnings call, have exploded into the mainstream eye as OEM customers have revealed the impact to their businesses. 

Recent reports suggest Intel’s biggest challenges may lie in testing capacity of the chips, and offloading some testing, even for older seventh-gen processors built on 14nm, could help alleviate some of the strain. A recent report from CRN reinforces the impact, which Intel purportedly outlined during a presentation to its partners:

The company also attributed the shortage to additional factory and assembly test capacity required for higher-end 14nm processors from the latest families of Core client and Xeon products that are seeing fast adoption from customers, said the source, who spoke on the condition of anonymity because the person wasn’t authorized to speak publicly about the matter.

And in a question and answer session, Mehrotra indicated that the shortage could last beyond Q1 of next year:

And I would just add that the CPU shortages, we expect it to be short-term; it’s possible that it goes beyond Q1 as well.

Categories: AMD, Gaming hardware, Gaming News, Technology

Tags: , , , , , , , , , 

Mohsen Daemi
Latest posts by Mohsen Daemi (see all)