So tell me what is Intel selling these chips for & by Intel I mean selling them to large distributors or someone like Amazon? Does Intel not make (more) money when the chips are selling way above MSRP?
Notebook chips, seriously they are the biggest sellers to OEM. I guess you have to elaborate what do you mean by high end ~ MSDT, HEDT, servers or notebook? I can't say what the product mix is for these products, but surely the retail lowly Pentiums, Celeron are
low margin & relatively low(er) volume as compared to the rest of the stack. I imagine even for OEM, we've also seen Intel limit the supply of one such chip in the past ~
https://www.techpowerup.com/235035/...ng-core-i3-sales-company-effectively-kills-it
Of course Intel makes more
per CPU by putting a higher markup on each one. But they won't necessarily sell
as many CPUs in total if the per-unit price is too high, because they'll get fewer buyers who can afford the higher price. So it's a balancing act between how much consumers are willing to pay vs how much Intel (or any company) can charge.
Those "lowly" Pentiums and Celerons make up the bulk of Intel's income (along with the server chips). Most systems built by OEMs are for secretaries and accountants and office workers who don't need high-core-count high-clocked processors, which means most of those systems use Pentiums and Celerons. And OEMs sell more systems, and therefore more CPUs, than every consumer retailer combined... probably a single OEM sells more than any retailer. OEM CPUs don't have as high a margin as retail, sure, but so many are sold that they still end up being many times more profitable than consumer sales.
Remember what I said before about contracts? OEMs have watertight contracts with Intel that specify that Intel will sell them X amount of CPUs at X amount of money and if Intel doesn't, Intel is in breach of the agreement. A breached agreement means Intel pays penalties to the OEMs... big monetary penalties. Really f'n big. The end result is that Intel literally cannot afford to not supply CPUs to its OEMs: it has to manufacture as many (probably more) low-end CPUs as it was before, but now it has less fab capacity. And - importantly - OEMs are essentially a guaranteed market for Intel; those contracts run for years, so if Intel breaks them, OEMs will go to AMD and stick with them. That's really bad news, maybe even worse than the financial implication.
D'you know the other type of chips that OEMs buy in massive volumes from Intel? Server chips. Again, Intel cannot cut production of those due to contractual agreements, and even if they could they wouldn't want to, because while comparatively few server chips are sold, the margins on those chips make the margins on retail look like a joke. (This is essentially the inverse of the low-end chips.)
What's the only segment that Intel can cut, to account for its diminished fab capacity, without kicking itself in the head too hard? That's right... consumer. The i7s and i9s, whether for mainstream or HEDT, are also the chips that make Intel the least amount of money. Cutting their production is going to be super painful for Intel's public image, but it's the "least bad" option in terms of what it means for the company's financials and relationship with OEMs.
