Apple, AMD and Intel shift priorities as chip shortages continue

The infamous chip shortages of 2021 aren’t just affecting automakers. In a post-profit conference call Tuesday, Apple CEO Tim Cook said, “We will do everything possible to alleviate the circumstances we are facing” – a statement that likely means the company will ration its chip supplies, giving priority to the most profitable. and in-demand items such as iPhones and AirPods, at the expense of less profitable and less-in-demand items.

CFRA analyst Angelo Zino told Reuters that Cook’s somewhat cryptic statement “largely reflected the timing of new product releases,” especially new iPhone releases in September. Counterpoint chief researcher Jeff Fieldhack speculates on the flip side, saying the company will likely direct the “pain” in the supply chain to its less lucrative products. “Assuming Apple prioritizes the iPhone 12 family, it likely affects older iPads, Macs, and iPhones more,” Fieldhack said.

Processor maker AMD has also carefully managed its supply chain in response to pandemic-induced shortages. With flagship products that ultimately surpass those of Intel, AMD is focusing on the most profitable high-end on the market while leaving the economy segment – until a few years ago, its top performer – to Intel. “We are focusing on the most strategic segments of the PC market,” CEO Lisa Su told investors on a conference call.

Apple and AMD are two of the TSMC semiconductor foundry’s biggest customers, but the problem is not confined to TSMC. Intel, which operates its own foundries, recognizes its own supply issues. Intel CEO Pat Gelsinger told the BBC that shortages will worsen in the second half of 2021 and it will be “a year or two” before supplies return to normal.

Gelsinger stressed the importance of building new foundries, as Intel is currently doing in Arizona. But he warns that smelters will take time to upgrade and start easing shortages, forecasting “a year to two years until we return to a reasonable supply-demand balance.” This news comes just after a delay announced by Intel this week for its upcoming 7nm process, which is now not expected until 2022.

In some ways, Intel may actually benefit in the long run from supply chain shortages associated with the pandemic. Although Intel lags behind rivals AMD and Apple in terms of performance and energy efficiency, the market can only go so far without supply.

With all vendors selling virtually any processor they can build, Intel’s long-standing ability to produce 80% of the world’s x86 desktop processors and 90% of x86 datacenter processors solidifies its place in the market. – for now – despite the fact that it cedes performance crowns to its rivals.