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Intel had supply issues at 14nm due to the delayed ramp-up of its 10nm output and (according to the company) increased demand for its enterprise and data center products. Bob Swan, chief financial officer and interim CEO of Intel, has issued a statement in which he blames Intel's production problems for increasing revenue from data centers and the cloud. Data center revenue grew 25 percent in the first six months of the year, while cloud revenue grew 43 percent.
There is undoubtedly some truth in that. According to Gartner, server revenues and deliveries both increased sharply in the first half of the year. Increased demand for server hardware means increased demand for the largest processors, putting Intel's production capacity under pressure by forcing the company to create larger dies that reduce the number of platelets per device. of. But Intel has also been stuck in the middle of a 10-nm transition that has reduced its production capacity by effectively stopping significant amounts of its overall production capacity.
But Swan's attempt to blame the PC industry for a shortfall – which he does – is simply laughable. Swan writes:
For example, according to Gartner, PC shipments in the second quarter increased for the first time in six years. We are now expecting a modest growth in the total PC addressable market this year for the first time since 2011 … PC TAM's surprising return to growth put pressure on our network of factories. We prioritize 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.
Why is this claptrap?
Because the consumer PC market grew 2.7% in the second quarter of 2018 after falling about 30% from 2011-2018. Intel attributes its problems to an unexpected growth in the consumer PC market after a decline of nearly 30% in seven years, which is absurd. The growth of the PC market could be the back drop of the camel, but this is not the immediate cause of Intel's lack of production. The company made strategic decisions until 2014 to leave Fab 42 idle rather than raising it to 14 nm. He later opted to convert Fab 42 to 7nm directly in 2017, rather than converting it to a 10nm facility. The industry also canceled the demand for 450mm wafers several years ago (such technology would not be online to offset the growing demand for silicon, but avenues that could have increased Intel's long-term sales Sales of PC several years ago). But the growth of sales of servers and data centers (where much larger chips are used) and the failure of 10 nm (the node, by introduction, will be at least three years late) are responsible for the deficits of Intel, no single digit increase. in consumer PC sales.
Computer sales by vendor until the first quarter of 2018. A tiny increase in the second quarter of 2018 will not change the trend.
The reason why Intel is probably focusing on the impact on the low-end consumer PC market is simple: the company can choose, to a certain extent, where this happens. This will push the downward impact of space, where any action ceded to AMD will make its own competitor as little as possible. Of course, AMD has its own ideas about Intel's market share in data centers and cloud installations; The company is expected to absorb about 5% of the server market by the end of 2018.
The Intel letter also states that it will increase an additional $ 1 billion in $ 14 million facilities in Oregon, Arizona, Ireland and Israel to increase capacity by 14 million and that its production of 10 million remains in 2019. No update date has been given. means that the 4th quarter of 2019 remains the expected official introduction date.
Now read: Intel drops back to 22nm for new chips to address the manufacturing shortage, AMD could regain 30% of market share by the fourth quarter of 2018 and if Intel is suffering from a shortage of processors, Can AMD gain ground?
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