Taiwan's premier tech publication, DigiTimes, has published a very interesting story based on its own industry sources: the coronavirus may actually end up being a boon for Intel (NASDAQ: INTC) and its processor shortage dilemma. Since China's PC replacement demands have plunged in the wake of the virus and recovery isn't expected until late 2020, this would play well in Intel's favor as it gets its 10nm ramp-up to volume.
Coronavirus may help defend Intel's CPU shortage position in China
A caveat here though: the report talks primarily about mainland China - which is probably one of the biggest single market for any tech company. While this is not mentioned in the report, this year's Computex might be delayed as well considering it will be a one-stop-shop to spread the virus all over the world. A delay in Computex could potentially see a delay in new releases as well or at the very least a depression in the PC DIY industry. Before we go any further, here is the extract from DT:
Production and supply of related components in China so far have only seen minor impacts from the outbreak, but market demand has been hit hard as local consumers tend to avoid visiting public places such as Internet cafes and physical stores.
The sources pointed out that brand vendors originally expected China's PC DIY demand to enjoy a recovery in 2020 in the wake of the truce to the US-China trade war and the releases of new flagship products by Intel, AMD and Nvidia. But virus outbreak is likely to hinder the recovery for the year.
Although transactions via online shopping platforms will continue, brand vendors' shipments in China are still expected to slip dramatically, as many cities' logistic systems have already been suspended due to the virus.
Asustek Computer and Gigabyte Technology, which have a majority of shipments deliver to China, are expected to see their motherboard and graphics card businesses take a hit. Gigabyte shipped less than 10 million motherboards in 2019.
With China's PC replacement demand plunging, Intel's CPU shortages have been greatly eased at the moment and could decelerate AMD's penetration in the PC market, the sources said. -DigiTimes
The company is preparing two CPU launches this year: the first are the 10th generation processors that are going to be the last hurrah of their 14nm process (on the mainstream CPU side). According to our sources, these will be landing in late-March for the mobility side and after-May for the desktop side. Later on in the year (probably in 2H 2020) we have the anxiously anticipated 10nm desktop parts launch as well which should put Intel back in the game as far as IPC goes.
The company has been facing intense competition from AMD as its once-slumbering rival erodes its market share with its third-generation processors based on the 7nm process from TSMC (roughly equivalent to Intel's 10nm). The Coronavirus may prove to be the respite it needs to catch up to AMD on a sub-14nm process and start competing on IPC and architectural design again (as of right now, Intel is competing primarily on process maturity and the resulting high clock speeds). Needless to say, 2020 is going to be a make or break year for Intel.
