Intel CEO Addresses CPU Supply Constraints in Open Letter

Intel CEO Bob Swan has claimed that cloud data centre demand and an unexpected uptick in PC sales and CPU upgrades are to blame for the ongoing shortage of Intel processors. Prices of Intel CPUs are increasing amid the supply constraints, which analysts predict could cause a downturn in the PC market. In an open letter addressing the issues, Swan wrote:

“OurBob Swan 01 copy data-centric businesses grew 25% through June, and cloud revenue grew a whopping 43% in the first six months. The performance of our PC-centric business has been even more surprising. 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 expect modest growth in the PC market this year, for the first time since 2011, driven by strong demand for gaming and commercial systems

Supply is undoubtedly tight, particularly at the entry-level end of the PC market. We continue to believe we will have supply to at least meet the full-year revenue outlook we announced in July, which was $4.5 billion higher than our January expectations”.

To that end, Intel is investing $15 billion in capital expenditures in 2018, up approximately $1 billion from the beginning of the year, and funnelling the extra $1 billion into its 14nm manufacturing sites in an attempt to increase supply to meet the increased demand. The company also says it is making progress with the development of its 10nm chips as yields improve, adding that volume production is on track to commence in 2019.

Market watchers have made various predictions of the outcome of this problem; some estimate that the company will have sorted out its processor supply by the first quarter of 2019, while others think the issue will run into the second half of 2019.