Economy

Intel apologizes for PC chip shipment delays in open letter

Intel apologizes for PC chip shipment delays in open letter”

"Despite our best efforts, we have not yet resolved this challenge", the Intel executive explains.

Essentially, this confirms our previous reporting that Intel shortages are set to run into 2020, as the silicon slinger focuses on churning out high-margin, high-end Xeon server chips as a priority over low-margin desktop and small-server parts, and shifts assembly lines from 14nm processes to 10nm and 7nm.

"I'd like to acknowledge and sincerely apologize for the impact recent PC (processor) shipment delays are having on your business and to thank you for your continued partnership", Intel marketing Vice President Michelle Johnston Holthaus wrote in a letter to customers posted on Intel's website.

Based on the letter, Intel does have a plan in place to increase production, both of 14 and 10nm chips architectures.

The demand for CPUs is such that Intel still can not meet it, despite all these efforts, is essentially the long and short of the situation as it stands.

The bright side for Intel is that this is not the worst problem in the world to have. None the less, with the problem going on for over a year now, customers who rely on Intel's chips are growing increasingly tired of being unable to acquire all the chips they need in a timely manner, and the resulting impacts it's having on their own businesses.

Intel had warned customers during its third-quarter earnings call in October that the higher demand for its PC chips was outstripping its ability to add capacity, and said then it was considering using third-party chip manufacturers.

This follows reports earlier this year that Intel planned to outsource production of its 14nm Rocket Lake CPUs to Samsung, which we also confirmed was not the case.

Intel has released a public apology to address complaints regarding the shipment delays hitting its chips.

Though whatever the issue, Intel has also confirmed that they aren't changing their Q4 revenue guidance; so it would seem the company still believes it can ship all the processors it planned for this quarter.

It's interesting the open letter has been signed by anyone other than Intel CEO, Bob "Robert" Swan.

Even with this increased CapEx, greater production, and increase usage of foundries, due to the strong demand and continued growth in the PC market, the demand has outpaced their manufacturing.

However, sustained market growth in 2019 has outpaced its efforts and exceeded third-party forecasts, and supply remains extremely tight in its PC business, with limited inventory buffers. She added that Intel is also increasing its use of outside foundries to produce more CPUs. As a result, we are less able to absorb the impact of production fluctuations that we experienced during the quarter.

The letter to customers and partners ends with Holthaus saying that Intel "will continue working tirelessly to provide you with Intel products to support your innovation and growth".



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