Bob Swan of Intel Pens Open Letter Addressing the Corporation's Supply Issues

cageymaru

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Intel CFO and Interim CEO Bob Swan has penned an open letter addressing supply issues at the corporation. He acknowledges the lack of consumer product availability in the retail pipeline as he explains the incredible growth that Intel is experiencing in the High-performance computing (HPC) sector and PC-centric business. "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."

He goes on to explain that the two sectors, data-center and PC, exploding in growth in 2018 has placed a tremendous strain on the foundry network owned by Intel. The decision to prioritize high performance chips such as Intel Xeon and Intel Core over the lower end market has caused supply shortages, but Intel is going to meet their revised full-year revenue outlook announced in July that is $4.5 billion more than the January expectations. The open letter goes on to announce future milestones and investment that Intel is making into the development of a 10nm process and foundry network.

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.
 

gxp500

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Why would demand be so high right now? Are data centers replacing their Specter/Meltdown vulnerable systems with Intel systems ...that are still vulnerable?
I don't think demand is high, it's just that the transition from 14nm to 10nm put their fabs offline and nothing is being produced by them.
 

cjcox

[H]ard|Gawd
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Summary: We make great stuff. It really is the greatest. Currently hard to get. But once you get it, it will be great, because you will see how great it is.
 

SmokeRngs

[H]ard|DCer of the Month - April 2008
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"tldr: We are so successful we can't keep up. This is a 'good problem' to have!"
No, it's not a good problem to have. Supply issues mean you can't be relied upon to fill future orders which reduces confidence in the company. You never want to be at 100% capacity because any little hiccup leaves you with big problems.
 

drescherjm

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Why would demand be so high right now? Are data centers replacing their Specter/Meltdown vulnerable systems with Intel systems ...that are still vulnerable?
If this is really true the fixes for these may actually be the reason for increased demand. I mean customers needing to increase the performance of their systems because of the software mitigation.
 

LostMF1

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Sep 20, 2018
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not wrong, the demand is out of control... selling HPC clusters like hot cakes over here!
 

Master_shake_

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scarcity increases prices so intel is like a rare commodity having less is more.

amd is everywhere it's over saturated the market you can pick one up at the dollar store now so it's obviously crap.

so in short; none, good. lots, bad.
 

Mega6

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scarcity increases prices so intel is like a rare commodity having less is more.

amd is everywhere it's over saturated the market you can pick one up at the dollar store now so it's obviously crap.

so in short; none, good. lots, bad.
Obviously.

That's how the market took it today.
 

drescherjm

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When they report earnings they have to tell the truth. Although when is the next earnings report due?

Edit: looks like 1 month away if last year is a guide. I mean the Q3 report for 2017 was Oct 26.
 

DrBorg

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I can't see buying intel until they have hardware mitigations in place for at least the known problems.

AMD was caught up, but not nearly as bad.

There will be no bios update fixes for any of my home pc's, so why would I buy more from intel?
 
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