Intel blames production shortfall on strong demand

October 02, 2018 // By Peter Clarke
Intel's CFO and interim CEO Bob Swan has issued an open letter to customers that emphasizes strong growth in the market for servers in the data center, network and enterprise and announcing that Intel has increased its capital expenditure budget for 2018 by $1 billion to $15 billion.

The additional billion dollars of capex will be spent at 14nm manufacturing sites in Oregon, Arizona, Ireland and Israel.

The letter acknowledges "the challenge" of supplying processors for personal computers but puts it down to a "surprising return to PC TAM growth." It also states that Intel is prioritizing the high-performance part of the market and accepts that at the entry-level "supply is undoubtedly tight." Swan adds that Intel is still on track to meet full-year revenue expectations.

There are reports that Intel's inability to supply is providing an opportunity to rival Advance Micro Devices (see AMD takes 65% of desktop CPU market ).

The open letter did not discuss whether Intel has gone to TSMC to seek additional processor production as has been reported (see Report: Intel to outsource 14nm chip production to TSMC ). Intel does use TSMC for some production but usually for mobile circuits and legacy production that comes with some acquisitions and not for core PC processors.

Swan does mention the 10nm manufacturing process that many observers have seen as being late to come to market and as part of a more general malaise at Intel.

"We’re making progress with 10nm. Yields are improving and we continue to expect volume production in 2019," Swan said.

Related links and articles:

www.intel.com

News articles :

Report: Intel to outsource 14nm chip production to TSMC

Report: Intel production shortfall could limit PC market

Memory prices set to fall due to Intel processor shortage

AMD takes 65% of desktop CPU market

Intel CEO resigns over past relationship


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