Intel Interim CEO Comments On CPU Supply Challenges
In his letter he confirms the pressure on their supply chain and that they will be focusing on the production of the Core and Xeon CPUs while in the entry-level segment is where there will be greater supply challenges. Below is the relevant part of his open letter:
We now expect modest growth in the PC total addressable market (TAM) this year for the first time since 2011, driven by strong demand for gaming as well as commercial systems – a segment where you and your customers trust and count on Intel.
We are thrilled that in an increasingly competitive market, you keep choosing Intel. Thank you.
Now for the challenge... The surprising return to PC TAM growth has put pressure on our factory network. We're prioritizing the production of Intel Xeon and Intel Core processors so that collectively we can serve the high-performance segments of the market. That said, supply is undoubtedly tight, particularly at the entry-level of the PC market. We continue to believe we will have at least the supply to meet the full-year revenue outlook we announced in July, which was $4.5 billion higher than our January expectations.
To address this challenge, we're taking the following actions:
- We are investing a record $15 billion in capital expenditures in 2018, up approximately $1 billion from the beginning of the year. We're putting that $1 billion into our 14nm manufacturing sites in Oregon, Arizona, Ireland and Israel. This capital along with other efficiencies is increasing our supply to respond to your increased demand.
- We're making progress with 10nm. Yields are improving and we continue to expect volume production in 2019.
- We are taking a customer-first approach. We're working with your teams to align demand with available supply. You can expect us to stay close, listen, partner and keep you informed.
The just-published letter can be read in full at Intel.com.
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