Intel boss admits chips in short supply, lobs cash into the quagmire
PC sales surge, cloud demands complicate Chipzilla's struggle to produce 10nm processors
Intel on Friday published a letter from CFO and interim CEO Robert Swan reassuring customers that the chip biz will be able to make enough processors to satisfy its customers.
Currently, Intel chips are in short supply. The company's inability to deliver 10nm processors is well known; it played a role in the resignation of former CEO Brian Krzanich in June, along with related woes like the Spectre and Meltdown flaws and rising competition from AMD, Nvidia, TSMC, and Samsung.
The lack of 10mn chips has meant the company's 14nm production line, instead of being converted to the smaller process node, has to satisfy demand from current customers. And the demand is growing. In July, research consultancy IDC said global PC shipments had risen 2.7 per cent year on year, the most growth since the first quarter of 2012.
"The surprising return to PC [market] growth has put pressure on our factory network," said Swan. "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."
Intel has been in damage control mode for months. At its Data-Centric Innovation Summit, amid questions about its roadmap, it promised to deliver 10nm processors for desktop PCs in 2019 and Xeon processors in 2020. Meanwhile, Chipzilla's lagging delivery is hurting downstream firms, such as Micron.
The latest reassurance comes in the form of Swan's commitment of a record $15bn in capex this year, a billion more than the company planned to spend at the beginning of the year, to shore up 14nm manufacturing facilities in Arizona, Ireland, Israel, and Oregon.
But it's not just makers of entry-level PCs who are having trouble getting hold of enough Intel chips. The Register understands that Intel is having trouble satisfying the demands of large enterprise and cloud customers such as Google and Facebook, which rely on Intel-based chips in their data centers.
And Intel has promised to supply cellular modem chips to Apple for its millions and millions of iPhones, putting more pressuring on its fabs. Separately, El Reg has heard that Dell has a 70-day wait time for Intel CPUs permitted to run Windows 7, which of course helps Window 10 adoption.
In September veteran chip journalist Charlie Demerjian reported that HPE, on a webpage for partners and resellers, had taken the unusual step of recommending servers with AMD Epyc data-center-class processors due to Intel supply constraints – there were simply not enough Intel 14nm server-grade chips to go around.
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Earlier this year, Scotten Jones, president of semiconductor consultancy IC Knowledge, speculated that Intel's 10nm production problems might be related to its multi-patterning process for chip photolithography. He argued that while it's possible that Intel's reliance on cobalt for its chips – a material used by other chip makers – has led to some issues, Chipzilla's aggressive effort to shrink its chip mask's features to achieve 36nm metal pitches with self-aligned quadruple patterning and multiple block layers is probably the problem.
Intel is taking steps to address its technical struggles and to shore up its position in an increasingly competitive market. Its acquisitions of Altera, eASIC, Mobileye, Nervana Systems, and NetSpeed Systems, among others, may help if handled well. But ultimately, it has to deliver product to customers.
Swan insists Intel is up to the challenge.
"We continue to believe we will have at least the supply to meet the full-year revenue outlook we announced in July, which was $4.5bn higher than our January expectations," he said. ®