Intel's 10nm woes have been one of the biggest talking points of this year and while speculation had been running rampant on the exact state of things for their 10nm process, the blue giant has finally rolled out a statement putting all speculation to rest. According to Interim CEO Bob Swan, Intel's 10nm is on-track for volume production in 2H 2019.
Intel responds to 14nm supply and demand situation, re-iterates 10nm HVM is on track for 2H 2019
This statement is an exercise in refreshing openness and honesty from the silicon manufacturer, considering just a few months ago, they were iterating that 10nm was technically out (in the shape of their low power mobility parts). The company also took the time to acknowledge the supply and demand situation that they are facing (the pie has grown bigger and Intel is currently stuffed - leaving room for AMD to capture market share).
To those who are not aware, Intel's 14nm capacity is operating at its limits and the company is falling short of the demand that is currently coming in from the market. This was, of course, both good news and bad news for Intel shareholders. On the bright side, the company is selling every single chip it can produce and then some but at the same time, the unmet demand opens up opportunities for its rival AMD to snatch up that market share with their EPYC processors.
Intel had the following to say about the situation:
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 company also stated that they will be focusing on Intel Xeon and Intel Core processors first and foremost and then, on a secondary level, at every other product lineup - such as the mobility side. This, of course, means that laptop manufacturers might have to revise their forecasts in expectation of tight Intel CPU supply. All that said, Intel has affirmed that they have enough supply to meet the revised revenue outlook that they revealed in July - which was $4.5 billion higher than their January expectations.
We are clearly entering into uncharted territory as far as the x86 market goes, with demand at an all-time high, Intel struggling to get its 10nm process out and AMD as competitive as ever. Intel's 14nm process has been seeing incredible demand and the company will be putting in an additional $1 billion to ramp production up. One key thing to note here is that hardware for 14nm and 10nm fabrication is about the same - which essentially means that there is very little opportunity cost for chasing 14nm production at this time. Simply put, this update was great news for Intel shareholders.
