Intel warns of impending CPU shortages, but won't raise prices
- 27 July, 2021 04:35
Intel executives say that the company will be unable to supply enough processors to meet PC demand, as the factors driving ongoing chip shortages affect it, too.
But surprisingly there’s some good news for end-users as well. Intel said it will probably eat the resulting increase in prices, at least where PC companies are concerned.
“We remain in a highly constrained environment where we are unable to fully supply customer demand,” said George Davis, CFO of Intel, as part of a SeekingAlpha transcript of Intel’s second quarter earnings call. In that call, the company admitted that it can’t get materials -- specifically substrate -- to make enough chips to keep pace.
“In [Intel’s Client Computing Group], we continue to see very strong demand for our client products and expect [total available market] growth to continue.” Davis said. “However, persistent industry-wide component in substrate shortages are expected to lower CCG revenues sequentially. We expect supply shortages to continue for several quarters, but appear to be particularly acute for clients in Q3.”
Worldwide chip shortages have affected everything from smartphones to graphics cards to cars, with critical components holding back production of finished goods.
Intel has weathered its own processor supply shortages over the past several years, though they’ve been mostly self-driven as the company shifted from 14nm to 10nm process technologies. Now Intel is warning that the upcoming shortages are out of its hands.
In response to a question from an analyst, however, Intel chief Pat Gelsinger said that Intel isn’t prepared to pass on higher prices to its customers.
“We don’t see a lot of movement on ASP [average selling price] in the first half to second half in either of those businesses,” Gelsinger said. “It really is about supply limitations. And as George [Davis] commented, we’re not passing through all of our supply constraint price increases that we’re seeing from our supply chain. We really see it as an opportunity to be investing with our customers, rebuilding their confidence and partnership for the future.”
The question, of course, is whether prices will rise regardless simply because of economic factors. Intel may not be charging higher prices to the hardware companies (like Dell, Lenovo, and HP) that it serves as customers, but retailers selling laptops and DIY processors may not be so kind.
Unfortunately, as we’ve seen in the market for graphics cards, scarcity simply means higher prices, no matter what the formal price of the card is.