Higher-than-expected demand for Intel’s server and PC processors has been an interesting topic of discussion since the middle of 2018, when Intel first informed investors of its backlogged status. Since then, the situation has continued to dog the company, as executives have noted in virtually every quarterly conference call since that they haven't been able to meet the demand that's already pushed the company to record revenues. Since mid-2018, Intel has invested billions of dollars to increase its output of CPUs made using its 14 nm fabrication process, its most widely used technology these days. And yet even with that increase in 14nm capacity, the company expects that in the coming quarters they will contine to struggle.

The world’s largest supplier of processors boosted its 14 nm capacity in terms of wafer starts per month (WSPM) by 25% in 2019 as compared to 2018, Bob Swan, CEO of Intel, told analysts and investors during the company’s earnings conference call on Thursday. In the first three quarters of the year the firm spent $11.5 billion of CapEx money to buy new production equipment and now expects its total CapEx for the year to hit a whopping $16 billion, which is $0.5 billion higher than expected. Besides increasing its 14 nm capacity, Intel is also preparing to ramp up production of chips using its 10 nm technology, as well as start making enterprise-grade GPUs using its 7 nm process in 2021.

While the increase of the number of 14 nm wafer starts per month is a very good news – and Intel certainly deserves respect for the achievement – it's worth noting that 25% more wafers does not necessarily mean 25% more CPUs. Demand for processors with a higher core count and a bigger die size means that Intel has to produce more wafers just to maintain the number of CPUs it can ship. It is hard to estimate whether or not a 25% WSPM increase is sufficient, but Intel itself says that in the fourth quarter the supply-demand balance for its PC customers will not be met, despite the fact that shipments of Intel's CPUs will be up 'double digits' in the second half of the year compared to the first half of the year. 

Here is what the CEO of Intel had to say:

"We expect our second-half PC client supply will be up double-digits compared to the first-half. And we expect to further increase our PC client supply by mid-to-high single-digits in 2020. But that growth has not been sufficient. We are letting our customers down, and they are expecting more from us. PC demand has exceeded our expectations and surpassed third-party forecasts. We now think the market is stronger than we forecasted back in Q2, which has made building inventory buffers difficult. We are working hard to regain supply demand balance. But we expect to continue to be challenged in the fourth quarter."

The company is looking forward to finally catching up to total demand in 2020 as it ramps up additional 14 nm capacity, but for now it will give priority to production of Xeon as well as advanced Core i5/i7/i9 processors.

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Source: Intel

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  • sgeocla - Saturday, October 26, 2019 - link

    Just look at the 7700k 4 cores ($350), 8700k 6 cores ($370), 9700k 8 cores ($385), and also consider the HEDT line run over by Threadripper, and the notebook chips that also had to increase core counts.
    And also 14nm++ is 20% less dense than 14nm to allow for higher clocks.
  • eddman - Saturday, October 26, 2019 - link

    Uh, I was agreeing with you on the shortage part.

    14++ has a different gate pitch but the dies aren't bigger. Both kaby and coffee quad-cores have the same ~126mm2 size, at least according to wikichip.
  • brantron - Friday, October 25, 2019 - link

    8 core Coffee Lake R isn't much bigger than dual-core Haswell. Desktop sales also declined since Intel increased production, but the shortage continues.

    The trouble is that the largest Cascade Lake die is about 700 mm². While that is unchanged over the last 2 years, the Amazons and Googles of the world haven't stopped gobbling them up.
  • sgeocla - Saturday, October 26, 2019 - link

    You know 14nm++ is 20% less dense than original 14nm to allow higher clocks, right?
    Gobbling them up as you call it is due to all the security vulnerabilities that forced datacenter operators to make large orders to regain lost capacity.
    Intel may have screwed them in the short run but their relationships have deteriorated and Google, MS, Amazon see that Intel is taking all the profits an buying back shares and giving out dividends instead of investing in making their products more efficient (new nodes), more secure and more performant.
  • Ashinjuka - Friday, October 25, 2019 - link

    I can't wait for the tell-all memoirs about the 10nm debacle start coming out. I feel like years from now once all the details come to light this is going to be a huge cautionary tail for the tech industry, and a punchline for the modern ages.
  • scholztec - Friday, October 25, 2019 - link

    Adding all those plus signs to 14nm is hard...

  • TheJian - Tuesday, October 29, 2019 - link

    25% more wafers at 14nm. I'm confused, as I just read another Intel article here saying Intel has basically EOL 14nm...Hmm...Reporting these days...I'd say 14nm has a few years left and NOT on purpose from Intel...ROFL. You don't tool up just to shut it down and 10nm still has issues as noted by no LARGE dies yet, no high watt yet.

    And I think the avg consumer is a lot smarter today. It is EASY to read a review, find watts/heat/noise etc to your liking without doing anything more than reading a few pages. It used to be hard to get data on whatever you're buying. Not today, the data you want is on dozens of sites reviewing product X. I may read a dozen or more before buying, but I fully believe even the avg consumer reads at least ONE review of anything they consider pricey. I consider HEAT of everything before I buy because of where I live. IT is not because of how advanced I am in tech, it is simply because I'd like to game in the summer too without dehydrating at the desk...LOL.

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