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Intel Addresses Chip Supply Woes Prioritizing Xeon And Core CPU Production

At this point, everyone in the enthusiast community is aware that Intel is encountering some headwinds with respect to chip production. From comments that Intel has made in its most recent earnings release, to channel reporting, to comments from system builders, it's an issue that is likely to plague Intel over the next few months.

So, what is Intel doing about this? Intel says that overall global PC shipments grew for the first time in six years, and that it expects modest overall growth in the total addressable market for PCs for all of 2018. In preparation, interim CEO and CFO Bob Swan explains that Intel is giving production of its profitable Xeon and Core processors the highest priority so that it "can serve the high-performance segments of the market."

However, the company duly notes that "supply is undoubtedly tight, particularly at the entry-level of the PC market." As a result, the company is boosting its capital expenditures for 2018 from $14 billion to $15 billion. It will use that additional cash to boost 14nm chip production at its facilities in Arizona, Oregon, Ireland and Israel. As a result, Intel is expected to have "at least the supply" needed to meet full-year revenue forecasts.

Swan didn't give much of an update on Intel’s 10nm outlook other than to say that the company is "making progress" and that "yields are improving" with volume production coming in 2019. According to Intel's previous statements on the 10nm manufacturing process, we shouldn't expect to see shipping systems before Holiday 2019.

Intel also tries to reassure customers, ensuring them that it is taking this situation seriously. "The actions we are taking have put us on a path of continuous improvement," writes Swan. "At the end of the day, we want to help you make great products and deliver strong business results. Many of you have been longtime Intel customers and partners, and you have seen us at our best when we are solving problems."

One interesting side note; Swan added, "We are thrilled that in an increasingly competitive market, you keep choosing Intel. Thank you." That is clearly a reference to the resurgent AMD, which has been gaining ground with its Zen processor architecture over the past year. Some analysts have indicated that AMD stands to triple its market share due to Intel's supply issues, but this new guidance from Intel might tempers those expectations.

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