Intel ‘Letting Our Customers Down’ With Persistent PC Chip Shortages, Says CEO
Though Intel increased its 14-nanometer chip capacity 25 percent this year, the expansion “hasn't been sufficient” to satisfy global PC demand, said CEO Bob Swan on a Q3 call Thursday. “We're letting our customers down, and they're expecting more from…
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us,” he said. PC demand “has exceeded our expectations and surpassed third-party forecasts,” he said. “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.” Most analysts pegged Q3 global PC shipment growth in the low-single digits and said the growth would have been stronger if not for Intel’s chip shortages. Intel said it expects its Q4 “PC-centric” business to be flat to slightly down compared with Q4 a year earlier. Intel grew the PC-centric business 20 percent in the past three years, “and the practical reality is, we didn't anticipate that kind of explosive growth three years ago,” said Swan. “So we didn't have the capacity in place to deal with it and we've been working our tails off for the last 12 months to ensure for our customers that we wouldn't be a constraint on their growth.” Intel has “more work to do to meet our customers' demands in the fourth quarter and going into 2020,” said Swan. “As we see fourth quarter, we're still going to be a constraint in our customers' growth, which is absolutely where we do not want to be.” With another 25 percent capacity expansion next year, “we expect to be able to rectify things” in 2020, he said. Intel's Q3 PC-centric revenue declined 5 percent, while total revenue of $19.2 billion, though flat from a year earlier, was $1.2 billion better than the company's July forecast. The stock closed 8.1 percent higher Friday at $56.46.