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Intel's 14nm Chip Shortage Continues

Intel is constantly having troubles with its silicon manufacturing business lately. Firstly the late delivery of 10 nm, then the shortage of 14 nm chips that started all the way back in 2018. Despite the making of $1 Billion investment into extending its 14 nm production capacity, there seems to be no end of troubles in sight.

According to sources close to DigiTimes, 14 nm production has fallen short of demand again and will likely cause many notebook manufacturers to delay their products to 2020. Most likely victim of this delay is the newly announced 10th generation mobile CPUs codenamed Comet Lake. Those CPUs were supposed to be built using Intel's "14nm++" revision of 14 nm technology which targets higher CPU frequencies and improved efficiency, but most likely due to continued shortage of 14nm, there will be only a few notebooks powered by these chips. As the source suggests, many manufacturers are likely to delay the launch of their products to 2020, when this situation is supposed to be resolved.

Intel Turns to Samsung in Order to Resolve CPU Shortage on the 14 nm Process

Intel has seemingly partnered with Samsung, one of the largest manufacturers of Integrated Circuits, in order to help reduce the CPU shortage currently affecting the PC market. It is the first time ever that Intel turned to Samsung for it's CPU manufacturing given that, historically, Intel's Client Computing Group (CCG) has always relied on Intel's internal fab to manufacture all of its components. But as resources in those fabs became constrained, Intel CCG started looking at other resources, such as TSMC, to manufacture the chipsets used in Intel-based motherboards.

In a report prepared by Sedialy, a South Korean news media, Intel turned to Samsung specifically to meet demand on its 14 nm products. This unexpected move came after negotiations which, if you believe the rumors before the news, were in progress for quite some time already. Samsung has formally agreed to manufacture Intel's CPUs of the microarchitecture code-named 'Rocket Lake', which will serve as processors for mini PCs, planned to be released in 2021.

Intel CPU Shortages Could be Over, Hints Microsoft

Microsoft CFO Amy Hood in a quarterly financial results conference call with investors this Wednesday hinted that the worst could be over with Intel CPU shortages. "In Windows, the overall PC market was stronger than we anticipated, driven by improved chip supply that met both unfulfilled Q2 commercial and premium consumer demand as well as better-than-expected Q3 commercial demand." It's important to note that Hood did not name Intel, as PCWorld otherwise observed, but it's highly likely that she was referring to Intel, given that it continues to dominate pre-built notebook and desktop markets.

PCWorld uses Hood's statement from the previous quarter's results call to zero in on Intel. "The overall PC market was smaller than we expected primarily due to the timing of chip supply to our OEM partners, which constrained an otherwise healthy PC ecosystem and negatively impacted both OEM Pro and non-Pro revenue growth," she had said. Prices of 9th generation Core desktop processors in the retail channel appear to be normalizing, with the Core i5-9400 selling for $184 on Newegg, which is close to MSRP, its iGPU-devoid twin, the i5-9400F selling at a discounted price of $169; the overclocker-friendly i5-9600K selling for $264, and the i7-9700K at $409, which is a tiny $20 markup over MSRP.

Intel CPU Shortages to Worsen Thru Q2-2019

Supplies of Intel processors will worsen in the second quarter of 2019 according to Taiwan-based industry observer DigiTimes. In a research-based report covering not just the DIY channel, but also the OEM channel focusing on notebook manufacturer, DigiTimes notes that heading into Q2, growth in demand for entry-level portables such as Chromebooks based on entry-level Intel processors, and mainstream notebooks powered by Core i3 processors, which make up the largest demographic of PC consumers in the market.

A pertinent concept to this report is supply-gap, the percentage difference between demand and supply. A positive supply-gap indicates demand exceeding supply and shortages. Leading notebook vendors HP, Dell, and Lenovo, reported supply-gaps of 5% going into Q3-2018, which severely impacted their bottom-lines. The companies waded through Q4 with 4-5%. DigiTimes reports that even Apple wasn't spared from shortages in "Amber Lake" processors. "In the first quarter of 2019, the Core i5 processors featuring Coffee Lake architecture are now having the worst supply shortfall. Some of the demand for Intel's entry-level Atom processors has turned to AMD, while some others have opted for Core i3 processors," the report reads. AMD's market-share among OEMs increased from 9.8% in Q1-2018 to 15.8% in Q1-2019.

CPU Shortages Will Continue Into the Second Quarter of 2019 According to Asustek CEO

A few weeks ago we talked about Intel problems in the production chain. The semiconductor giant was facing a shortage of 14 nm CPUs probably due to Intel allocating volumes from the same 14 nm++ node for its upcoming 9th Generation Core processors. That caused a clear rise in the prices of processors like the Core i7-8700K, which had a launch price of $359 and was hard to find for less than $400 a month ago. Prices have relaxed since then, but are still higher than their launch ones.

Intel's processor shortage could continue in the coming months, and in fact Jerry Shen, CEO of Asustek Computer, explained how the problem will continue until at least the second quarter of 2019. In his words, "the continued CPU supply crunch, escalating US-China trade disputes, and increasing competition in the notebook segment in Europe have pressed down Asustek's "operational visibility" for the fourth quarter of 2018 to the lowest level of 20% compared to an over 50% seen in previous years".

More Buyers for AMD Due to Intel CPU Shortages, OEMs Unhappy

Intel is hit by crippling inventory shortages for many of its fast-selling 8th generation Core desktop processor SKUs. A number of factors are contributing to these shortages, as we discussed in this article. A key short-term consequence of shortages in Intel's inventories is more uninitiated buyers discovering AMD processors, now that they've achieved the highest levels of competitiveness against Intel in over a decade. Stock market analyst firm Jefferies has raised AMD's outlook for Q4-2018, and projects that its $30 stock price could hit $36, by raising its target price.

OEMs are not happy with Intel. Haphazard roadmap and platform changes have forced them to revise their product designs way too frequently, and now they're faced with the prospect of a short-supply. A report from research firm Fubon predicts that by next year, 1 in every 3 personal computers sold by HP (Hewlett Packard) will run an AMD processor. "Fubon's report that Intel will undersupply the PC market between 4Q18 and 2Q19 leaves us with higher conviction that AMD will report improving revenue, pricing and margins near term, and that is positioned to take share in the high end PC MPU and server market long term," said stock market analyst Mark Lipacis. He predicts that AMD's CPU market-share climbing to 30% through next year (a very huge feat for AMD).

Intel 14nm Processors Face Shortages

Intel's 8th generation Core desktop processors based on the company's 14 nm node are facing shortages in the market, according to a Tom's Hardware report. Tracking prices and availability of popular 8th generation Core SKUs such as the i5-8400, i5-8600K, and i7-8700K, the report notes that retailers are heavily marking up these SKUs above their SEP, and many of whom are running out of stock often. This may not be attributed to heavy demand.

A possible explanation for these shortages could be Intel allocating volumes from the same 14 nm++ node for its upcoming 9th generation Core processors, which debut with three SKUs - i5-9600K, i7-9700K, and i9-9900K. Intel probably wants to launch the three chips not just at competitive prices, but also good enough volumes to win the 2018 Holiday season, and repair its competitiveness damaged by AMD 2nd generation Ryzen over the past couple of quarters.

The Balloon Falls: Memory Chip Price Decrease in Q4 2017 Prompts Investor Fear

Reuters reports that a sudden (if ridiculous) 5% drop in memory chip prices in Q4 2017 has brought revenue expectations and investors' profit measurements to a teetering halt. 5% may not look like much - it certainly isn't much when we look at the historic price increases that almost doubled the cost of DDR4 memory kits, as you can see in the PC Part Picker chart below. This memory module price chart doesn't include the 5% drop yet, probably because it takes time for memory chip pricing to materialize in end-user module pricing. But for investors, it's like a spark in a paper archive - it could signal an impending price decrease that would push all profit estimates out the window.

This 5% drop in pricing has prompted industry analysts to review their profit estimates for 2018, and expect that the memory industry's growth rate will fall by more than half this year to 30 percent. You read that right - investors are scared because growth rates will be 30 percent instead of 60 percent. Oh the joys of inflated pricing, and slower-than-usual ramp-up to keep demand higher than supply. The joys of economic capitalism, where prices for consumers go up, and an industries' value skyrockets by more than 70$ in a single year (2017).

No End to GPU Supply Woes: Germany Supplier Hit by Shortage, Pulls Cards

There seems to be no end in sight for current high-performance, discrete graphics cards' supply constraints. If you've been looking for a specialized graphics processing unit to push eye-candy on your favored 3D experiences to the max, you've probably been having trouble for a while now. It all stems from a crazy, dizzying wave of cryptocurrency mining. And the fact that this mining spree has already taken global mining power consumption to levels close to a 17 million population country, as one of our editors puts it, kind of has a human problem. And it would seem that not even NVIDIA and AMD's partners' attempts to sate current miners' appetite for profit-generating graphics cards has put a dent on demand.
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