Intel CEO Robert Swan has been forced to break the news to investors that shortages of Intel CPUs will continue through until at least Q3 2019.
Team Blue has long been beset with supply issues for its 14nm chips, even more so for 10nm production which, according to leaked roadmaps, may not be ready for commercial release until 2022.
Keeping things a little closer to the here and now though, and supply constraints will continue to affect Intel’s bottom line from now through until the third quarter of 2019. Production capacity has been improved but it’s Swan’s belief that this still won’t be enough to meet customer demand.
Talking to investors, Swan said "Our supply constraints have had a disruptive impact on our customers and ecosystem. We've committed never again to be a constraint on our customers' growth. We've increased the capacity to improve our position in the second half, although product mix will continue to be a challenge in the third quarter as our teams align available supply with customer demand".
On the surface, this could seem like a good problem to have. However, with AMD hot on Intel’s heels in terms of market share growth, and 7nm Zen 2 right around the corner, Intel cannot afford to simply not manufacture enough CPUs to meet demand. Any supply demand will be gladly hoovered up by AMD, which is the de facto alternative for anyone purchasing a CPU or pre-built system.
There were reports of a false dawn when Microsoft claimed Intel’s CPU supply issues were no longer an issue, but Swan admitted during the conference call that this was due to Intel prioritisng supplies of Xeon and top-end Core i7 and i9 processors specifically designed for Microsoft’s enterprise customers. Microsoft’s take on the shortage was therefore skewed.
“Microsoft said Intel's CPU shortages aren't a big deal anymore, after stating in January that the shortages were affecting Windows sales,” continued Swan. “However, Microsoft may not be as affected in part because Intel prioritized the production of Xeon and Core i7/i9 processors that would normally be destined for systems that Microsoft's enterprise customers would use. Additionally, some OEMs have started switching to AMD processors, which is certainly one way to end the 'CPU shortages'."
For investors, and Intel, that last statement is paramount. Customers and OEMs are switching to AMD CPUs in great numbers, and this could prove immensely damaging to Intel in the long term.