Thursday, November 16th 2017

Intel Cutting Retail Processor Supply for Holiday 2018

Prices of retail packages of Intel Core desktop processors could continue to rise over Q4-2018, as the company has reportedly cut their supply, in favor of tray/reel shipments to OEMs. This could mean DIY favorites such as the Core i5-8400, the i5-8600K, i5-9600K, or even Core i7 models such as the i7-8700K, i7-9700K, and the flagship i9-9900K could be severely in short supply, or heavily marked up wherever available. Intel recently devised a strategy to increase its Core processor volumes by pumping in an additional $1 billion to its usually-$15 billion capital expenditure, to fire up small-scale manufacturing facilities around the world, to augment its bigger fabs located in Malaysia and Vietnam.

Sites like Mexico, Israel, and Ireland are beneficiaries of this move, and are being expanded. Much of Intel's efforts appear to be focused on making sure notebook and pre-built PC manufacturers aren't starved of processor inventory. The DIY retail channel, which consists of boxed processors, will foot the bill for this move. A good example of understocked retail channel would be the $499 Core i9-9900K processor being sold for upwards of $900 in some online stores. AMD is in an enviable position to fill the void, comments PCGamesN. Prices of its Ryzen desktop processor PIBs are either flat, or marginally cut; and socket AM4 motherboards are generally cheaper than LGA1151 ones.
Sources: PCGamesN, DigiTimes
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106 Comments on Intel Cutting Retail Processor Supply for Holiday 2018

#1
GoldenX
Even higher prices. Nice tactic when you are losing market share, Intel.
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#2
R0H1T
GoldenX said:
Even higher prices. Nice tactic when you are losing market share, Intel.
That's because they can ask for even higher prices in OEM, enterprise space where the demand is pretty high & margins higher, than retail. It's like they're triple dipping :rolleyes:
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#3
kastriot
Good job Intel make more room for AMD :)
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#4
TheLostSwede
Sorry little Jimmy, Santa couldn't afford to buy you a new CPU, the prices were too inflated due to "shortages".
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#5
Paganstomp
<insert balloon sound when it deflates here>
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#6
TheOne
A Ryzen CPU and a GTX 1080 would be the parts I would buy right now to build a gaming PC.
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#7
The Quim Reaper
Ultimately they're just cutting their own throats by alienating the retail customer, Once Zen 2 lands and has IPC (and hopefully the clock speeds) to match Intel's best, the only remaining reason to choose an Intel CPU over an AMD one, goes out the window.

Intel could easily lose another 10-15% of CPU market share over the next two years because of their self entitled arrogance.

...If only we could see the same happen to Nvidia in the GPU market.
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#8
Gungar
R0H1T said:
That's because they can ask for even higher prices in OEM, enterprise space where the demand is pretty high & margins higher, than retail. It's like they're triple dipping :rolleyes:
The margin is obviously WAY higher when selling directly to consumer, this is 100% BS. But they do need to keep the OEM companies happy or they will lose them to AMD.
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#9
dj-electric
Intel does not want to sell their CPUs. There's no other way to look at it.
We could conspire in "why?" for all we want, but that's just a matter of fact.

It seems like they are purposefully making space for the market's competition, to increase the value and legitimacy of investing in the Desktop CPU space.
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#10
Prima.Vera
Middle finger to Intel from both hands. Zen 2 cannot come any faster....
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#11
R0H1T
Gungar said:
The margin is obviously WAY higher when selling directly to consumer, this is 100% BS. But they do need to keep the OEM companies happy or they will lose them to AMD.
We're talking mainly about enterprise & high end CPUs to OEM, so what you're saying is BS. Do you actually think Intel are cutting supplies of 9900k :rolleyes:
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#12
TheDeeGee
Why would you buy an Intel 9 Series anyway?

No Hyperthreading and still a big fat premium price.

I'm personally done with Intel, which i been using since 2008. My Next upgrade will be AMD Zen2.
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#13
oldtimenoob
Shouldn't they be putting up supply for the Holidays? That when sales goes up, makes no sence. Intel was asleep at the wheel for far to long. Now they are paying the price.
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#14
the54thvoid
oldtimenoob said:
Shouldn't they be putting up supply for the Holidays? That when sales goes up, makes no sence. Intel was asleep at the wheel for far to long. Now they are paying the price.
Law of economy, when demand is higher for a product, price rises. You artificially create demand by reducing supply. Its the opposite of volume models of trade, where profit margin per unit is low but sheer number sold is immense.

This, if true, is really quite poor from Intel, in terms of how they are treating the consumer DIY market. But, it'll please the shareholders.

Capitalism at its finest. Starve the populace to increase profit.
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#15
Assimilator
Bloody hell, you people make me feel like I've got an economics degree with this "Intel is purposely limiting supply to be greedy again" idiocy. If they were doing that, they would've just set the MSRP on the i9-9900K at $900 instead of $500. But contrary to your beliefs, Intel does realise that pricing their products out of the market will result in no sales.

Supply is constrained because Intel literally cannot produce enough CPUs to satisfy demand for servers (higher margins) and requirements by OEMs (contracts written in blood), while also having enough for consumers. So something has got to give, and that is the consumer supply. Do you honestly think this is something they'd do willingly, considering the most lucrative sales periods of the year (Black Friday and Christmas/New Year) are coming up?

AMD stands to benefit massively from this. I know their CPUs are cheap already, but they should go for the jugular by discounting them even further. This is a golden, maybe never-to-be-repeated opportunity for them to grab a decent chunk of marketshare and keep the Zen velocity going.

TheDeeGee said:
Why would you buy an Intel 9 Series anyway?

No Hyperthreading
Wrong.
Posted on Reply
#16
jmcslob
oldtimenoob said:
Shouldn't they be putting up supply for the Holidays? That when sales goes up, makes no sence. Intel was asleep at the wheel for far to long. Now they are paying the price.
February-March is usually when sales really start to go up from Tax return upgrades.
Christmas sales aren't bad either...
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#17
bonehead123
Supply is constrained because Intel literally cannot produce enough CPUs to satisfy demand for servers (higher margins) and requirements by OEMs (contracts written in blood), while also having enough for consumers
And who is to blame for this, oh do tell.....

seems like more bad management and lack of proper ramp-up planning to me :(

Me thinks AMD will be getting really, really, stinkin, filthy friggin rich in the next 90 days.......Unless they have Fab/supply issues too (does not seem like it atm)......
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#18
R0H1T
Assimilator said:
Bloody hell, you people make me feel like I've got an economics degree with this "Intel is purposely limiting supply to be greedy again" idiocy. If they were doing that, they would've just set the MSRP on the i9-9900K at $900 instead of $500. But contrary to your beliefs, Intel does realise that pricing their products out of the market will result in no sales.

Supply is constrained because Intel literally cannot produce enough CPUs to satisfy demand for servers (higher margins) and requirements by OEMs (contracts written in blood), while also having enough for consumers. So something has got to give, and that is the consumer supply. Do you honestly think this is something they'd do willingly, considering the most lucrative sales periods of the year (Black Friday and Christmas/New Year) are coming up?

AMD stands to benefit massively from this. I know their CPUs are cheap already, but they should go for the jugular by discounting them even further. This is a golden, maybe never-to-be-repeated opportunity for them to grab a decent chunk of marketshare and keep the Zen velocity going.



Wrong.
Right, maybe you should get a degree in economics then. That's not how markets works, case in point RTX. When there is (some) demand, you can always squeeze the consumer to buy a higher SKU through reducing the supply of lower end products or making the difference between the two seem more worthwhile. Just because you raise prices doesn't mean that there will be no sales.

This is exactly what Intel is doing, trying to move production of chipset, lower end Pentiums (some?) & Atom to TSMC. I'm also pretty sure they're making less Pentiums, Celerons, i3, i5(?) wrt to the higher end i7, i9 than we've seen previously.

If you're pointing fingers at Samsung, Hynix, Micron for proposing to limit supply then not doing the same for Intel is hypocritical to say the least!
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#19
gdallsk
good thing I grabbed it when I could :)
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#20
rtwjunkie
PC Gaming Enthusiast
Assimilator said:
Bloody hell, you people make me feel like I've got an economics degree with this "Intel is purposely limiting supply to be greedy again" idiocy. If they were doing that, they would've just set the MSRP on the i9-9900K at $900 instead of $500. But contrary to your beliefs, Intel does realise that pricing their products out of the market will result in no sales.

Supply is constrained because Intel literally cannot produce enough CPUs to satisfy demand for servers (higher margins) and requirements by OEMs (contracts written in blood), while also having enough for consumers. So something has got to give, and that is the consumer supply. Do you honestly think this is something they'd do willingly, considering the most lucrative sales periods of the year (Black Friday and Christmas/New Year) are coming up?

AMD stands to benefit massively from this. I know their CPUs are cheap already, but they should go for the jugular by discounting them even further. This is a golden, maybe never-to-be-repeated opportunity for them to grab a decent chunk of marketshare and keep the Zen velocity going.



Wrong.
YOU get it. :) Don’t be too hard on everyone. Most everyone here are techies who never took even 1 economics class, I bet. The outrage is a normal reaction in that case.
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#21
trog100
rtwjunkie said:
YOU get it. :) Don’t be too hard on everyone. Most everyone here are techies who never took even 1 economics class, I bet. The outrage is a normal reaction in that case.
stupid is as stupid does..

trog
Posted on Reply
#22
Vya Domus
Assimilator said:

AMD stands to benefit massively from this. I know their CPUs are cheap already, but they should go for the jugular by discounting them even further.
Intel has significantly larger margins, or at least that's what we assume we never really knew how much cash does Intel spend on their nodes and their actual manufacturing. It could be very well that they spend significantly more per mm^2 than AMD does but we'll never find out.

But still it's safe to say they are selling products with larger margins to a good degree, AMD can't go scraping the bottom of the barrel in terms of pricing because they simply don't have to, their products offer massively better value at every price point already. I've bought my 8-core 1700X for 240$, when do you think Intel will get even close to that ? They simply wont, they run with a different business model in mind, any deviation from that will be a long term endeavor, AMD is safe with their current pricing.
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#23
trog100
rtwjunkie said:
Guess you’ve not had any economics schooling either, so right back at you.
i didnt aim my comment at you.. just the appalling lack of knowledge as regards how basic supply and demand works.. :)

trog
Posted on Reply
#24
Vya Domus
trog100 said:
just the appalling lack of knowledge as regards how basic supply and demand works.. :)
Everyone knows how that works, to assume than every company would base their strategy on that at any given point in time would be the real appalling lack of knowledge.
Posted on Reply
#25
trog100
Vya Domus said:
Everyone knows how that works, to assume than every company would base their strategy on that at any given point in time would be the real appalling lack of knowledge.
the basic rules cant be altered.. intel for whatever reason cant make enough product.. one of two things happen the shelves empty (no available product) or the price goes up..

i assume that the fact that intel cant make enough product isnt intentional..

trog

ps.. there is one other basic rule.. if this situation continues AMD prices will also have to go up..:)
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