Recent reports from media outlet Digitimes have stated that Intel’s high demand issue, and its inability to fully supply that demand, will continue into Q4. The report states that Intel’s OEM partners and the supply chain are still short of the supply they are requesting from Intel and its distribution network. We reached out to Intel for comments.

Intel’s high demand has been of particular note since mid-2018. Since the discovery of hardware vulnerabilities such as Spectre and Meltdown, and the fixes that reduced overall performance of a large number of the installed server base, many of Intel customers have been increasing the size of their server deployments in order to re-match their original capacity. This issue caused a sharp up-tick in demand of Intel processors, and Intel has driven newer architectures that try to minimise those performance deficits (with an overall performance uplift when the new architecture is factored in). As a result, Intel moved some of its fabrication capacity away from its future 10nm process and back onto its 14nm in order to meet demand.

The consequence of this is record revenues for Intel – the company shifted a lot of production into its high core count and high-cost parts. The CEO of Intel, Bob Swan, addressed the issue in its recent financial update:

“We're also making steady progress increasing CPU supply. Through our investments, focused execution and tighter customer collaboration, we expect our PC CPU supply will be up mid single-digits this year while we expect the PC TAM to grow slightly. We'll continue to work with our customers to meet their required product mix and ramp additional capacity to ensure we are not a constraint on their growth. [] We lost a little bit of share in the second quarter, particularly in CSG at the lower end small core primarily due to supply constraints. So -- and our expectation is that we'll begin to work our way back in the second half of the year given the capacity we've put in place to have more supply and meet our customers' demands.”

The recent report from Digitimes seems to put some cold water on Intel being able to meet all of its 14nm CPU demand by the end of 2019. With the recent launch of Comet Lake in the mobile space, Cascade Lake in the enterprise and workstation space, and the future launches of similar product lines, users and Intel’s partners are expecting a strong supply  of CPUs with the generational update.

We reached out to Intel to see if there was any update to Digitimes’ commentary. An Intel spokesperson stated:

“We continue working to improve the supply-demand balance for our PC customers. In the first half of 2019, we saw PC customer demand that exceeded our expectations and surpassed third-party forecasts. We have added 14nm output capacity and are ramping volume on 10nm with systems on shelf for holiday. While our output capacity is increasing, we remain in a challenging supply-demand environment in our PC-centric business. We are actively working to address this challenge, and we continue to prioritize available output toward the newest generation Intel® Core™ i5, i7 and i9 products that support our customers’ high-growth segments.”

This essentially partially confirms Digitimes’ report. While Intel is increasing its output capacity, with a focus on 10nm as well (Intel reports two fabs on 10nm at this time), the focus on 14nm will be on high-growth segments, which for Q4 is likely to remain the high-end processors. Partners looking at Core i3 and lower performance cores might have to extend their lead-times for CPU supply yet again. It will be interesting to see when Intel will be able to re-reach parity between demand and supply.

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  • beginner99 - Thursday, September 26, 2019 - link

    Demand didn't increase but die sizes did. Intel never planned to release consumer 8-core chips or 4-core laptop-u chips and accordingly planned their fab capacity which now is too low because the chips are near double the die size. Not to mention xeons...It's not increased demand, it's that every chips is much bigger than in the 4-core only era. Reply
  • andykins - Thursday, September 26, 2019 - link

    You've hit the nail on the head. Reply
  • Mugur - Tuesday, October 1, 2019 - link

    Exactly! Reply
  • lemans24 - Thursday, September 26, 2019 - link

    How does Intel have a monopoly position?? Anyone can design an x86 processor, they just have to do that with encroaching on any patents that Intel hold.
    There are many millions of processors on the market that are non-x86 so I really do not see how Intel has a monopoly on a specfic ISA. You can use many other ISA's but they just will not run any x86 code which is another matter....
    Reply
  • shabby - Thursday, September 26, 2019 - link

    Lol "high demand" the spinmasters are at work I see. Why can't they just admit they screwed up and put all their eggs in the wrong 10nm basket? Reply
  • lemans24 - Thursday, September 26, 2019 - link

    They did admit it and the market is punishing them every time when they sell huge quantities of 14nm chips by giving them larger revenue!!! Terrible problem for Intel... Reply
  • JTBM_real - Thursday, September 26, 2019 - link

    Demand is simple higher as expected. The 10nm issue has little to do with it.
    There are always multiple factors. Christmas is coming and demand will be even higher later on.
    I believe if you need a new CPU get it now.
    If you want a cheap CPU you need to wait until mid next year and there is no guarantee about the cheap price...
    Reply
  • Ian Cutress - Thursday, September 26, 2019 - link

    How many fabs get turned from 14nm to 10nm is important. It shows how Intel is predicting future demand of the processors on these processes and success of process itself. Does Intel try and satisfy demand now and then stand on low supply 10nm for a while, or does it jump into 10nm and tell all its 14nm customers to wait? It's an interesting dynamic. Reply
  • Piotrek54321 - Thursday, September 26, 2019 - link

    Investors don't like such a language. Reply
  • anemusek - Thursday, September 26, 2019 - link

    Hehehe, its only intels wet dream and maby fake news. In first half year volumen of intels sels was 10% less than in 2018. Trade war with China and ryzen 2 will not promise greater for the second half. Simply Intel try incrase his margin and has bought marketing action in press.
    https://www.intc.com/investor-relations/investor-e...
    Reply

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