November 27, 2019

INTC - PC CPUs Update

By Van Tran
OTR Global believes Intel’s PC CPU shortage could create a significant shortfall for 14 nm PC CPUs lasting into 1Q20.
  • Shortage of 14 nm CPUs likely caused by back-end packaging problems related to equipment, packaging or testing
  • INTC’s production shortfall estimated around 10 million desktop and laptop PC CPUs for 4Q19 (approximately15% of total 68-70 million demand); no shortage of server CPUs reported
  • INTC’s shortage may enable design wins for AMD’s PC CPUs in 1H20, including its new Renoir platform

Sources said Intel Corp.’s increased allocation of manufacturing capacity to its new 10 nm Ice Lake CPU is causing constraints for its 14 nm CPUs. Intel began shipping 10 nm Ice Lake laptop CPUs in 3Q19, and sources said shortages for 14 nm CPUs (including Whiskey Lake, Comet Lake and Kaby Lake-R) began in November. “It is hard to say what the exact problem is, but it’s not wafer output at 14 nm. It’s mostly related to back-end production, such as equipment, packaging and testing for 14 nm,” a source said. Intel said on Nov. 20 that “sustained market growth in 2019” had outpaced its ability to supply CPUs. The company also admitted “extremely tight” PC CPU supply because of the shortage. Two sources said specifically that Intel’s shortage is not related to increased demand, however. One said total PC shipments for 2019 was expected to be flat-up 2% yy before the shortage in November.

Sources said the 14 nm shortage could be around 10 million CPUs for desktop and laptops for 4Q19 (which is around 15% of the 68-70 million demand for the quarter) and could last until February. The shortage affects large and small PC ODMs across the industry, including Dell Technologies Inc., HP Inc. and Lenovo Group Ltd.

A source said the Intel shortage could push laptop ODMs to increase design wins for Advanced Micro Devices Inc.’s Raven Ridge, Picasso and new Renoir platforms to replace Comet Lake and Kaby Lake-R in 1H20.

One source said Intel’s shortage is not affecting server CPUs. “Server CPUs are higher priced and higher margins for Intel, so they are doing all they can to meet [that] demand,” he said.