Friday, September 28th 2018
Intel CFO and Interim CEO Writes an Open Letter on Processor Supply
Growing anger among PC manufacturers, retailers, and consumers in general, over supply issues with Intel processors, compounded with rising prices, and prompted Bob Swan, CFO and Interim-CEO of Intel, to write an open-letter, addressed to customers and partners, which counts you, since we received it in our main news channel from Intel. The language in the e-mail is straightforward and we wouldn't want to interpret it further than Intel grappling with a combination of massive demand from both its cloud-computing customers, and PC manufacturers hit by a surge of customers upgrading their machines (probably because it took Intel 10 years to increase CPU core counts, giving people a reason to upgrade).
To mitigate this, Intel is firing up all its manufacturing assets, across Oregon, Arizona, Ireland and Israel, in addition to its main foundries, by pumping in an additional $1 billion in capital expenditure (which is now at $15 billion). The letter doesn't miss out mentioning 10 nm, that the company is making progress with yields, and that volume production should roll out in 2019 (without offering guidance as to when). Intel also reassured PC OEMs that their supply teams will be in closer contact with them over the coming weeks. Without further ado, the open-letter follows verbatim.
The letter follows.
To mitigate this, Intel is firing up all its manufacturing assets, across Oregon, Arizona, Ireland and Israel, in addition to its main foundries, by pumping in an additional $1 billion in capital expenditure (which is now at $15 billion). The letter doesn't miss out mentioning 10 nm, that the company is making progress with yields, and that volume production should roll out in 2019 (without offering guidance as to when). Intel also reassured PC OEMs that their supply teams will be in closer contact with them over the coming weeks. Without further ado, the open-letter follows verbatim.
To our customers and partners,
The first half of this year showed remarkable growth for our industry. I want to take a moment to recap where we've been, offer our sincere thanks and acknowledge the work underway to support you with performance-leading Intel products to help you innovate.
First, the situation … The continued explosion of data and the need to process, store, analyze and share it is driving industry innovation and incredible demand for compute performance in the cloud, the network and the enterprise. In fact, our data-centric businesses grew 25 percent through June, and cloud revenue grew a whopping 43 percent in the first six months. The performance of our PC-centric business has been even more surprising.
Together as an industry, our products are convincing buyers it's time to upgrade to a new PC. For example, second-quarter PC shipments grew globally for the first time in six years, according to Gartner. 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:The actions we are taking have put us on a path of continuous improvement. At the end of the day, we want to help you make great products and deliver strong business results. Many of you have been longtime Intel customers and partners, and you have seen us at our best when we are solving problems.
- 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 14 nm 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 10 nm. 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.
Sincerely,
Bob Swan
Intel Corporation CFO and Interim CEO
54 Comments on Intel CFO and Interim CEO Writes an Open Letter on Processor Supply
[Roast me]
Holy shit just saw 8700k processors are now $400 on newegg. Wow
seems like damage control to me
Seems like it could be the former, just a standard industry open letter to partners and customers highlighting progress/updates throughout the year etc though if it's a reaction to the latter I think Intel would have been best to keep schtum as this screams knee jerk and personally confirms by Intel these issues and concerns are indeed correct.
Core i3 lost HTT because its core-count increased 100%. I don't think it has anything to do with security flaws in HTT.
No, that's not satire. It's what the execs are thinking.
If AMD does manage to build that fabled 12 nm 10-core chip, Intel's financials could implode, regardless of whether the market needs a 10-core AM4 chip at this time. AMD is a Mongol horde that's less afraid of taking risks than posh empire Intel right now.
Either way I'm not here to argue so I will leave it at that.
Anyway, I really find it odd how they have issues with 14nm production, as some say. They've been on that node for years and should know all about it by now.I assume this is the real reason, and I never really thought of it like that.
Someone have to be brain-dead to let PC noobs, who can barely insert pictures in Word, to diagnose their RAM compatibility and flash their BIOS, and tell them that stutters in some games are not AMD's fault.
Could you please give your reason for marking this post as "low quality"?New product lineup. They're moving from 2-4 cores to 2-8 cores on the consumer socket.
It looks very similar, but now "max cores + HT" is called i9, not i7.