A look at Intel’s CPU supply constraints
Advanced Micro Devices (AMD) has been benefiting from Intel’s (INTC) downturn. Intel began 2018 with the revelation of chip design flaws Spectre and Meltdown, which affected it more than AMD. Following that discovery, Intel delayed the launch of its 10nm (nanometer) node to the holiday season of 2019.
Citing J.P. Morgan Asia-Pacific technology analyst Gokul Hariharan, a September 14 CNBC report stated that Intel might have converted some of its 14nm manufacturing capacity to 10nm. However, the delay in its 10mm volume production is starting to take a toll on the 14nm node’s capacity.
Hariharan spoke with several PC vendors and found that the PC CPU (central processing unit) shortage started in the third quarter. He added that the intensity of the shortage is progressively worsening. This shortage is expected to peak in the fourth quarter when PC sales also peak.
TrendForce reported on September 11 that Intel originally planned to start volume production of its next-generation 14nm Whiskey Lake CPUs in the third quarter. This strategy would allow Whiskey Lake–powered notebooks to hit the shelves by the fourth quarter.
However, TrendForce noted that the overall 14nm CPU supply shortage—the gap between supply and demand—widened from ~5.0% in August to 5.0%–10.0% in September. This gap is expected to surpass 10.0% in the fourth quarter. When demand rises and supply falls, prices rise. As a result, the prices of many of Intel’s low-cost CPUs have been rising.
Impact on overall PC sales
Hariharan expects the supply shortage to have the greatest impact on commercial and high-end consumer PCs. As a result, AMD’s CPUs may not be the ideal substitute for Intel’s CPUs. The lack of availability of Intel’s CPUs, as well as the lack of ideal substitutes from AMD, could significantly impact global PC sales in 2018. J.P. Morgan expects global PC shipments to fall 5.0%–7.0% in the fourth quarter.
Next, we’ll see how Intel’s CPU supply shortage could impact the PC supply chain.
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