Intel's interim CEO Bob Swan has admitted that the market is suffering from chip shortages, partly driven by cloud data centre demands, but also by an unexpected upturn in the PC market.
Swan attributes this sustained increase in demand to gamers upgrading their PCs - or buying their first gaming PC to play games like Fortnite, PlayerUnknown's Battlegrounds (PUBG) and Monster Hunter: World.
In an open letter to customers and partners, Swan attributed the shortages to an "unexpected return to growth of the PC industry", after a year in which the company had been pivoting to meet rising demand from the data centre market.
"Our data-centric businesses grew 25 per cent through [the second quarter to the end of] June, and cloud revenue grew a whopping 43 per cent in the first six months [of the year]. 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," Swan claimed.
Now, the PC market is expected to grow significantly for the first time since 2011, with growth driven both by gamers, as well as businesses.
However, this unexpected turn of events has put pressure on Intel's "factory network", Swan admitted, with supply "undoubtedly tight, particularly at the entry-level of the PC market".
In response, wrote Swan, the company is investing what he claims is a record $15 billion in capital expenditure this year, with $1 billion going into 14nm production at sites in Oregon, Arizona, Ireland and Israel. He also claimed that Intel is making progress in its development of 10nm chip manufacturing processes.
Intel had planned to shift to 10nm in 2016, but 10nm Intel Core processors now won't be appearing in volume before the first quarter of 2019 at the earliest - with AMD already claiming that its third generation Ryzen CPUs will be built to TSMC's 7nm process by then.
It said that due to high demand for Xeon CPUs, Intel had shifted production to prioritise the server and data centre market, while less price-sensitive buyers had scooped up available supplies for PCs. For ordinary business and consumer buyers, therefore, this will mean a spike in prices for Intel processors between now and at least the first quarter of 2019, Novatech warned.
However, prices of AMD's highly rated Ryzen microprocessors have remained stable and should provide a viable alternative. The AMD Ryzen 5 1500X, for example, is now below £150, while the latest second generation Ryzen 5 2600 is now just under £160.
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