Intel admits supply problems ‘not yet resolved’

Intel has published a supply update letter to customers in which it has apologised to customers for not having been able to meet PC CPU demand in recent months while admitting it is yet to have fully resolved the issue.

For your average PC enthusiast, Intel’s supply shortages tend to present themselves as a general lower-than-expected availability of CPUs on retailer pages with frequent out-of-stock listings and delays in restocking, but Intel’s business is of course much larger in scope than this, and for business customers who rely on receiving CPUs en mass, ongoing delays can have significant consequences, and it is largely to these such ‘customers and partners’ that Intel is addressing.  

The letter (PDF warning), signed by Michelle Johnston Holthaus, Intel’s Executive Vice President and General Manager of Sales, Marketing and Communications Group, begins with the apology to customers for the ongoing CPU shipment delays then moves to update customers about the steps Intel has taken thus far to address it. Importantly, however, it does not make any promises as to when the situation is expected to be fully resolved, indicating that the end is perhaps not yet in sight.

The company’s many setbacks in moving from 14nm to 10nm have, along with a demand for new parts in the wake of hardware-level security vulnerabilities and a general increase in demand for CPUs, placed great stress on the existing 14nm fabs, which are responsible for offerings across the entire PC landscape from ultra-mobile to mainstream desktop and high-end Xeon.

‘In response to continued strong demand, we have invested record levels of Capex [capital expenditure] increasing our 14nm wafer capacity this year while also ramping 10nm production. In addition to expanding Intel’s own manufacturing capability, we are increasing our use of foundries to enable Intel’s differentiated manufacturing to produce more Intel CPU products,’ writes Holthaus.

She goes onto explain how those steps allowed Intel to achieve a double-digit percentage increase in its CPU output in the second half of the year versus the first year but that market growth has exceeded both this output and analyst expectations. ‘Supply remains extremely tight in our PC business where we are operating with limited inventory buffers. This makes us less able to absorb the impact of any production variability, which we have experienced in the quarter,’ Holthaus explains.

‘We will continue working tirelessly to provide you with Intel products to support your innovation and growth,’ the letter concludes.