Intel CEO moves to relieve chip production fears
Interim boss Swan addresses fears that Intel will fail to keep up with the 'surprising' demand for PCs
Intel CEO Bob Swan has reassured partners that the vendor can handle the "surprising" demand for PCs, amid reports that the firm's production line is struggling to keep up.
Analysts are predicting that the PC market will end a seven-year growth drought in 2019, but the unexpected upturn has led to reports that manufacturers might fail to produce enough chips to satisfy demand.
Intel's interim CEO Swan has however moved to address these fears in an open letter to partners and customers.
"We're prioritising the production of Intel Xeon and Intel Core processors so that collectively we can serve the high-performance segments of the market," he said.
"That said, supply is undoubtedly tight, particularly at the entry-level of the PC market."
Global PC shipments grew by 1.4 per cent year on year in the three months ending June 2018, marking the market's strongest performance since early 2012.
Demand for Intel's CPUs has also seen higher-than-expected demand due to a strong enterprise server upgrade cycle, the firm claims.
However, the California-based vendor's ongoing scramble to churn out chips is likely to push PC makers and OEMs into the arms of Intel's main rival, AMD.
AMD's share price has more than doubled since the middle of last year, but declined around six per cent after Swan's letter was published.
Research company Fubon claims that AMD has already stepped into the breach with deals with Dell and HP, CNBC reported.
In response, Intel has pledged to plough an additional $1bn (€861.5m) into its 4nm manufacturing across sites in Oregon, Arizona, Ireland and Israel.
"We're working with your teams to align demand with available supply. You can expect us to stay close, listen, partner and keep you informed," Swan said.
However, he made no mention of Intel's halting attempts to move chip production away from the 14 nanometer scale towards the smaller 10 nanometer scale.
But it didn't stop Intel shares from rising 4.1 per cent after Swan's public reassurance on Friday.
Yet, partners may find their patience wearing thin if Intel's chip backlog continues into mid-2019, as it is forecast to.
The legacy firm is also still on the hunt for a replacement CEO, following Brian Krzanich's unedifying resignation in June this year after a fling with a co-worker.
While the uncertainty continues, interim CEO Swan appealed to the channel to consider Intel's past history of delivering the goods.
"Many of you have been long-time Intel customers and partners, and you have seen us at our best when we are solving problems," he said.