Intel has chips to meet its revenue targets, but supplies for unexpected demand will be tight

Intel has struggled to switch from 14 nanometer manufacturing to 10 nanometer manufacturing, and we've been talking about it for a year now. But Acting CEO Bob Swan reassured customers and partners today: the world's largest PC chip maker has the capacity and the supply to meet its revenue targets for the future. 'year.

Following the announcement, Intel's share price has risen 3% and is currently trading at $ 47.29 per share, worth $ 218 billion.

In July, Intel's Swan, who is also chief financial officer and took over after CEO Brian Krzanich resigned in June, said Intel was forecasting non-GAAP revenue of $ 69.5 billion. dollars. In a letter to customers and partners on Friday, Swan said that "data-centric" activities had increased by 25 percent in June and cloud revenues had increased by 43 percent.

"As an industry, our products convinced buyers that it was time to switch to a new PC. For example, according to Gartner, PC shipments in the second quarter increased for the first time in six years, "said Swan. "We are now expecting a modest growth in the total addressable market (TAM) of PCs this year for the first time since 2011, driven by strong demand for games and trading systems – a segment where you and your customers have confidence and relies on Intel.

But the problem is that the factory network is now questioned.

Above: the latest chips from Intel.

Image credit: Intel

"We are prioritizing the production of Intel Xeon and Intel Core processors so that we can collectively serve the high-performance segments of the market. That said, the supply is undoubtedly limited, especially at the PC market level, "said Mr. Swan. "We continue to believe that we will at least have the offer to meet the full-year sales outlook we announced in July, $ 4.5 billion higher than our January expectations."

Intel invests a record $ 15 billion in revenue in 2018, up about $ 1 billion from the beginning of the year.

"We are investing $ 1 billion in our 14-nanometer manufacturing facilities in Oregon, Arizona, Ireland and Israel. This capital and other efficiencies increase our offering to meet your increased demand, "said Swan. "We are progressing with 10 nm. Yields are improving and we continue to expect volume production in 2019.
We take a customer-centric approach. We work with your teams to align the demand with the available supply. You can expect us to stay close, listen, collaborate and keep you informed. "

"I'm not surprised to have heard rumors in the supply chain," said Patrick Moorhead, an analyst at Moor Insights & Strategy. "Although I'm certain that Intel would like to have 10nm online now, most of today's challenges come from rising demand for 14-nanometer parts. Every market is up, even PCs, putting pressure on 14 nanometers. Moving parts of two- to four-core notebooks has certainly contributed to the challenges on the rise, but not to the main reason.

Moorhead thinks the good news is that Intel has the ability to meet its financial obligations, but with all the growth in the industry, it will likely struggle to meet the "upward demand".

"So that's good news, bad news," he said in a message to VentureBeat. "The price of PCs is likely to increase, but I think that will largely depend on AMD's ability to meet this demand. I can see Intel pushing the industry to consume coins that maximize profit per slice. "