Intel admits "tight" supply of cheap PC chips and focuses on high-end

An open letter from Bob Swan, Chief Financial Officer of Intel and Interim CEO
To our customers and partners,

The first half of this year has seen remarkable growth for our sector. I want to take a moment to remember where we are, offer our sincere thanks and recognize the work in progress to help you with Intel's cutting-edge performance products to help you innovate.

First of all, the situation … The continuous explosion of data and the need to process, store, analyze and share them stimulate innovation and the incredible demand for computing performance in the cloud, the network and the company. In fact, our data-driven business grew by 25% in June, and cloud revenue grew by 43% in the first six months. The performance of our PC business was even more surprising. Together, as an industry, our products convince buyers that it's 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. We now expect modest total addressable market (TAM) growth for PCs this year for the first time since 2011, driven by strong demand for games and business systems – a segment in which you and your customers have confidence and confidence. relies on Intel.

We are delighted that in an increasingly competitive market, you continue to choose Intel. Thank you.

Now for the challenge … The surprising return to PC TAM's growth has put pressure on our network of factories. 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 tight, especially at the entry-level PC market. 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.

To meet this challenge, we take the following actions:

We are investing a record $ 15 billion in investment spending in 2018, up about $ 1 billion from the beginning of the year. We are investing $ 1 billion in our 14-nm manufacturing sites in Oregon, Arizona, Ireland and Israel. This capital and other efficiencies increase our offer to meet your increased demand.
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, partner and keep you informed.
The actions we take have led to continuous improvement. At the end of the day, we want to help you create good products and achieve strong business results. Many of you have been long-time Intel customers and partners and have seen us better when we have solved problems.

Regards,

Bob Swan
Chief Financial Officer of Intel Corporation and Interim CEO