In a move that I don’t believe has precedence within the x86 CPU industry, Intel this afternoon has publicly published a letter to its customers and partners apologizing for ongoing CPU shipment delays. The letter, from Intel’s EVP and GM of Sales, Marketing and Communications, Michelle Johnston Holthaus, addresses the ongoing supply shortage, with Intel acknowledging the difficulties it has created for its customers (e.g. OEMs and hyperscalers), as well as updating customers on their efforts to boost chip production. None the less, it’s also a sobering letter, with Intel informing customers that the current supply shortages still haven’t been resolved, and not offering any further guidance on when Intel might finally catch up to demand.

For more than a year now, we’ve been covering the ongoing story of Intel’s efforts to supply enough CPUs to meet customer demands. In a process that has been exacerbated by their 10nm delay – with 10nm chips just now shipping in high volume – as well as Spectre/Meltdown having the unexpected side effect of driving the major hyperscalers to buy additional/replacement hardware, Intel has had its hands full trying to keep up with demand. Even after bringing online additional 14nm fab capacity and shifting some ancillary 14nm products to 22nm, boosting overall 14nm capacity by 25%, Intel still hasn’t been able to produce as many CPUs as it could otherwise sell.

This of course is not a bad problem for a business to have, at least in small doses. Having demand exceed supply means that Intel’s CPUs are still highly coveted, and that the overall volume of chips shipped along with the prices Intel can fetch for those in-demand chips have driven them to record revenues, particularly in the datacenter business. Very rarely can a semiconductor manufacturer run multiple high-volume fabs at maximum production and still have demand outpace them. None the less, with the problem going on for over a year now, customers who rely on Intel’s chips are growing increasingly weary of being unable to acquire all the chips they need in a timely manner, and the resulting impacts it’s having on their own businesses.

Of particular interest in the letter (published below) is a section talking about particularly recent CPU shipment delays. As outlined in the letter, the high demand means that Intel has little-to-no buffer for variations in fab output, which means its customers are more directly feeling these variations. While we previously haven’t been aware of any specific Intel supply issues (other than the general, ongoing supply shortage), the letter confirms that Intel has experienced “production variability” this quarter, and as a result there have been new CPU shipment delays. It’s these delays in particular that Intel is apologizing for.

While I won’t hazard a guess as to precisely what has happened for Intel, the company has spent the last year trying to maximize the output of its 14nm fabs, while also ramping up 10nm. This includes significant new orders for equipment and other capital expenditures to boost fab production. Based on the tone of the letter, it sounds like these efforts haven’t gone quite as well as what Intel was planning for – perhaps indicating that chip yields have taken an unexpected hit or that Intel hasn’t been able to run as many wafers as they intended. Though whatever the issue, Intel has also confirmed that they aren’t changing their Q4 revenue guidance; so it would seem the company still believes it can ship all the processors it planned for this quarter.

Either way, I cannot recall Intel (or any other x86 vendor) ever publicly publishing a letter in this fashion. Normally these kinds of interactions take place in the back room between chip suppliers and their customers, so the fact that it’s significant enough to warrant a public letter – presumably for legal reasons – is remarkable. Unfortunately it also means that it doesn’t look like Intel is going to be able to meet demand for its chips any time soon, something that I’m sure Intel’s competitors are happy to hear.

To our customers and partners,

I’d like to acknowledge and sincerely apologize for the impact recent PC CPU shipment delays are having on your business and to thank you for your continued partnership. I also want to update you on our actions and investments to improve supply-demand balance and support you with performance-leading Intel products. Despite our best efforts, we have not yet resolved this challenge.

In response to continued strong demand, we have invested record levels of Capex increasing our 14nm wafer capacity this year while also ramping 10nm production. In addition to expanding Intel’s own manufacturing capability, we are increasing our use of foundries to enable Intel’s differentiated manufacturing to produce more Intel CPU products.

The added capacity allowed us to increase our second-half PC CPU supply by double digits compared with the first half of this year. However, sustained market growth in 2019 has outpaced our efforts and exceeded third-party forecasts. Supply remains extremely tight in our PC business where we are operating with limited inventory buffers. This makes us less able to absorb the impact of any production variability, which we have experienced in the quarter. This has resulted in the shipment delays you are experiencing, which we appreciate is creating significant challenges for your business. Because the impact and revised shipment schedules vary, Intel representatives are reaching out with additional information and to answer your questions.

We will continue working tirelessly to provide you with Intel products to support your innovation and growth.

Sincerely,
Michelle Johnston Holthaus
Executive Vice President
General Manager, Sales, Marketing and Communications Group

Source: Intel

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  • eva02langley - Wednesday, November 20, 2019 - link

    "Dear friends, please don't buy AMD, they don't understand the real wonder of 4 cores like we do. Be sure that we are there to support you in buying the most overpriced CPU that are not justifying the performances in any ways. We would make sure that our army of fanatic trolls do the necessary for preventing the truth from getting out, that we are screwed. Please, support us so we can continu to screw you.

    SIgned, Intel CEO"
    Reply
  • Bulat Ziganshin - Wednesday, November 20, 2019 - link

    yeah, smart customers could buy true 8-cores as long as 2011, thanks to true technology leader Reply
  • Dragonstongue - Wednesday, November 20, 2019 - link

    <3 AMD but to say they had the first TRUE 8 core circa 2011 is NOT true, part of the reason they got nailed with lawsuit and chose to pay up vs fighting it (after a bit of time) though they settled prior to actually going to court

    if you reference someone else, please enlighten the rest of us.

    True would mean "similar to everyone else" not that Intel nor others "to my knowledge" went out of their way to call their product other than what it was i.e only having 4 slow cores 2 fast cores and calling a 6 core...not even Intel was "foolish" to be doing this.

    IMO "first 8 core processor" would have been 8 identical CORES even if something like less cache instead of cloning every bit and piece of the design (some things not needed to clone every part for many reasons.

    Anyways....Tech leader, no, wicked designers since the day they opened shop, absolutely (my mom uses my old E8400 EO still running strong to this day) myself, Phenom II 955 (old system) current Ryzen 3600 performance wise it gives me between 3700x and 3800x (in many things, not everything)

    .............

    Good on Intel for saying "something" however, even if was keeping some very key details out such as backdoors which were/are the cause of much of their potential nasty security gaping holes, and the current 10nm is nowhere CLOSE to what original would have been (they had to do something otherwise would have never likely released anytime soon, seeing as they were talking/saying would have been out sometime during 2013-14 time frame.

    ^.^
    Reply
  • Smartcom5 - Thursday, November 21, 2019 - link

    Just so you know, no judge has ruled anything, since they came to an agreement beforehand – and that's precisely what a settlement is for: By come to an agreement for eventually settling the case altogether, without any sentence or court ruling involved being needed in the first place.

    That wasn't done since AMD was 'guilty as charged' like you put it, but since it was a process AMD settled for by agreeing to compensate buyers nonetheless, despite the claim is highly questionable if not outright fraudulent – for if they wouldn't've, the law-suit could easily have lasted half a decade and counting without coming to any greater consensus while even could've needed to have summoned all major CPU-manufactures like IBM, Intel, Motorola (Freescale), ARM and alike to court to testify before the judge on what's a core and what exactly isn't.

    It's a legal loophole some lawyers saw fit to exploit and fill their pockets with by going after AMD.

     › part of the reason they got nailed with lawsuit and chose to pay up vs fighting it (after a bit of time) though they settled prior to actually going to court

    AMD couldn't have been (allegedly) falsely advertised – as no-one has ever defined what exactly a core actually legally would be/is defined by nor what a CPU's function-units has to be consisting/assembled of to legally being classifiable as being a true core.

    You only can agree or disagree over something being some untrue statement upon something what's defined to be. A core isn't yet, so AMD wisely tossed the nonsense before it became rather costy throughout time.
    Reply
  • WaltC - Thursday, November 21, 2019 - link

    Translated: "We had no idea AMD was going to beat us technically again--just jump out there and leapfrog us *again*, you know--I mean what are the odds, right? We were just puttering along, running the industry and raking in the dough, and here comes the upstart *again!* We're so durn tired of competition that some of us think it would be easier to just quit, you know? We didn't think we had a need for new architectures, and you can roll a tank over our 14nm CPUs and not hurt them! What's all the fuss about "security," anyway? We've patched almost all the holes, except the new ones that seem to come out of the woodwork weekly. So WTF? If you can't wait on us to produce more second-rate products, well, go and buy AMD then--yeah, that'll learn ya'!" Reply
  • milkywayer - Wednesday, November 20, 2019 - link

    When is Intel apologizing for milking their 4 core CPUs for several years. Selling two core mobile CPUs as i7 and all that BS until AMD came out with ryzen and miraculously Intel then had 6core mainstream cpus ready in a quarter.

    Ah the fruits of competition.

    Eat Dirt, Shittel.
    Reply
  • imaheadcase - Thursday, November 21, 2019 - link

    milkywayer sure has lots of hate for something he doesn't understand about. Reply
  • milkywayer - Thursday, November 21, 2019 - link

    Enlighten us, 'imaheadcase'. Reply
  • Qasar - Thursday, November 21, 2019 - link

    milkywayer, i wish he would too.... Reply
  • Smell This - Thursday, November 21, 2019 - link


    Not a big surprise, but another talking-point Fail has bit the dust.

    An over-clocked AMD FX-83xx 'Vishera 8-core' is 7- to 10% +/- faster in multi-threaded benchmarks than the stock AMD (Zen) Ryzen 5 1400 4C/8T processor. Even with an OC, the Zen can't quite reach the FX ...

    Yeah ... the FX pushes 2x+ the watts and runs DDR3, but as far as I am concerned, AMD fans can take the pre-paid lawsuit card, attach it to a brick, and mail it back to:

    AMD CPU Settlement
    1650 Arch Street, Suite 2210
    Philadelphia, PA 19103-9996

    Thank you, Dr Su, for putting-up with this lawsuit nuisance. If you want to put me under NDA, I'd be more than happy to test-drive Big Navi for you. HA!

    ;-)
    Reply

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