Custom PC - UK (2020-05)

JAMES GORBOLD / HARDWARE ACCELERATED

James Gorbold has been building, tweaking and overclocking PCs ever since the 1980s. He now helps Scan Computers to develop new systems.

OPINION

S

upply shortages aren’t new in the PC industry – just

look at the highly volatile supply and price of memory

over the years. However, what’s new is a company

such as Intel having such serious supply problems for so long.

The first signs of trouble appeared back in the summer of

2018, with Core i5 chips becoming scarce as Intel prioritised

production of high-end CPUs. The situation became so bad

that in September 2018, Intel issued an open letter citing

massively higher-than-forecast growth in the server market

as the primary cause of the shortage, and committing to extra

investments in manufacturing.

Since then the situation has only deteriorated, with more

product lines going short and, in some

cases, disappearing. Intel’s flagship 10-series

Core X chips first launched in November,

but four months later, barely a trickle has

made its way onto shelves, with frankly

pathetic single-digit deliveries reaching

resellers and system builders.

The Core i7 and i9 K-series chips have been

prioritised by Intel, so they haven’t been too badly affected,

but Core i5 supply continues to be hit and miss, with many

models simply not being available. Laptop processors are

also in shortage, and Intel’s cash cow, its Xeon server CPUs,

isn’t in a great state either. It’s not just CPUs either; it’s also

hard to get hold of enterprise SSDs in significant volumes.

All in all, it’s quite an embarrassing situation, especially when

owning its own fabs was historically a massive strength for Intel,

enabling it to push out new process nodes faster than many of

its competitors. While there are multiple causes for the shortage,

including forecasting from both Intel and its customers, the

two biggest causes are ongoing process transition problems

and unexpected demand for certain products.

It’s well documented how Intel expected to transition its

CPUs from 14 to 10nm, but has had to keep pushing this move

back due to poor 10nm yields. This has had two knock-on

effects. Firstly, there’s the introduction of additional stopgap

14nm processors and the complex juggle between investing

in new 10nm fabs while keeping enough existing 14nm fabs

operational, which clearly hasn’t been achieved. Add a surge

in demand for server-grade CPUs and SSDs of around 50 per

cent from hyperscalers, such as Google, Facebook, Amazon

and Microsoft, and you’re looking at a perfect storm.

Supply shortages haven’t just led to price increases, but

also lost sales in many cases, because specific CPUs and

SSDs haven’t been available. As a result,

while Intel has been losing market share

in desktops and laptops, AMD has been

surging ahead, outselling Intel at certain

price points for the first time in decades.

This has helped to fuel a dramatic rise in

AMD’s share price, of 131 per cent in the

past year. It’s not all doom and gloom for

Intel, though, as in the same period, its share price also grew

a significant 30 per cent thanks to record revenue.

Looking forwards, Intel’s manufacturing problems and

the ongoing demand from hyperscalers isn’t going away

soon. It takes a long time to build a CPU, and billions of

dollars and years to spin up new fabs. The supply shortage is

expected to last a well into the summer, and quite possibly

into 2021 and later.

Thank goodness this is happening now though. Can

you imagine what this would be like when AMD didn’t

have any desirable mid-range or high-end CPUs, and had

discontinued making server processors? The PC market

would be facing global recession.

Barely a trickle has made its

way onto shelves, with frankly

pathetic single-digit deliveries

reaching resellers

SHORT SUPPLY

Intel’s fabs used to be pride of the company, but they’re now its

Achilles’ heel, argues James Gorbold

JAMES GORBOLD / HARDWARE ACCELERATED

James Gorbold has been building, tweaking and overclocking PCs ever since the 1980s. He now helps Scan Computers to develop new systems.

OPINION

S

upply shortages aren’tnewinthePCindustry– just
look at the highly volatilesupplyandpriceofmemory
over the years. However,what’snewisa company
such as Intel having such serioussupplyproblemsforsolong.
The first signs of trouble appearedbackinthesummerof
2018, with Core i5 chips becomingscarceasIntelprioritised
production of high-end CPUs. Thesituationbecamesobad
that in September 2018, Intelissuedanopenletterciting
massively higher-than-forecastgrowthintheservermarket
as the primary cause of the shortage,andcommittingtoextra
investments in manufacturing.
Since then the situation hasonlydeteriorated,withmore
product lines going short and,insome
cases, disappearing. Intel’s flagship10-series
Core X chips first launched in November,
but four months later, barely a tricklehas
made its way onto shelves, withfrankly
pathetic single-digit deliveriesreaching
resellers and system builders.
The Core i7 and i9 K-series chipshavebeen
prioritised by Intel, so they haven’tbeentoobadlyaffected,
but Core i5 supply continues to be hit and miss, with many
models simply not being available. Laptop processors are
also in shortage, and Intel’s cash cow, its Xeon server CPUs,
isn’t in a great state either. It’s not just CPUs either; it’s also
hard to get hold of enterprise SSDs in significant volumes.
All in all, it’s quite an embarrassing situation, especially when
owning its own fabs was historically a massive strength for Intel,
enabling it to push out new process nodes faster than many of
its competitors. While there are multiple causes for the shortage,
including forecasting from both Intel and its customers, the
two biggest causes are ongoing process transition problems
and unexpected demand for certain products.

It’swelldocumentedhowIntel expected to transition its

CPUsfrom 14 to10nm,buthas had to keep pushing this move

backduetopoor10nmyields. This has had two knock-on

effects.Firstly,there’stheintroduction of additional stopgap

14nmprocessorsandthecomplex juggle between investing

innew10nmfabswhilekeeping enough existing 14nm fabs

operational,whichclearlyhasn’t been achieved. Add a surge

indemandforserver-gradeCPUs and SSDs of around 50 per

centfromhyperscalers,such as Google, Facebook, Amazon

andMicrosoft,andyou’relooking at a perfect storm.

Supplyshortageshaven’tjust led to price increases, but

alsolostsalesinmanycases, because specific CPUs and

SSDshaven’t been available. As a result,

whileIntel has been losing market share

indesktops and laptops, AMD has been

surgingahead, outselling Intel at certain

pricepoints for the first time in decades.

Thishashelped to fuel a dramatic rise in

AMD’sshare price, of 131 per cent in the

pastyear.It’s not all doom and gloom for

Intel,though,asinthesameperiod, its share price also grew

a significant 30 per cent thanks to record revenue.

Looking forwards, Intel’s manufacturing problems and

the ongoing demand from hyperscalers isn’t going away

soon. It takes a long time to build a CPU, and billions of

dollars and years to spin up new fabs. The supply shortage is

expected to last a well into the summer, and quite possibly

into 2021 and later.

Thank goodness this is happening now though. Can

you imagine what this would be like when AMD didn’t

have any desirable mid-range or high-end CPUs, and had

discontinued making server processors? The PC market

would be facing global recession.

Barely a trickle has made its

way onto shelves, with frankly

pathetic single-digit deliveries

reaching resellers

SHORT SUPPLY

Intel’s fabs used to be pride of the company, but they’re now its

Achilles’ heel, argues James Gorbold