The Intel processor shortage began last summer: rising and prioritized demand for processors in data centers caused a deficit of consumer 14nm chips. Difficulties in transitioning to more advanced 10nm standards and an exclusive deal with Apple for modem production for iPhones using the same 14nm process exacerbated the problem.
Last year, Intel invested an additional $1 billion in its 14nm production capacity and stated that the shortage should be resolved by mid-2019. However, Taiwanese publication DigiTimes reported last month that the Intel chip shortage may worsen in the second quarter of this year due to increased demand for Chromebooks and budget PCs. This shortage is a headache for Intel, but it also leads to issues for other tech companies. The Motley Fool explained how this situation affects HP, Microsoft, and Apple.
HP
The company steadily increased its PC sales while its competitors struggled due to a saturated market, long refresh cycles, and competition from mobile devices. HP gained popularity thanks to new high-end laptops and convertibles, maintaining a strong presence in the desktop PC market with its Omen gaming systems.
In the last quarter, two-thirds of HP's revenue came from its PC and workstation division. However, this division showed only a 2% increase in sales in the first quarter of 2019 compared to the same period last year. Shipments of HP laptops decreased by 1% year-over-year, while desktop computers fell by 8%, but HP offset this by increasing prices. Throughout 2018, the company experienced double-digit revenue growth.
HP attributes its weak PC sales primarily to the shortage of Intel processors. During the earnings call, Chief Financial Officer Steve Fieler stated that the CPU shortage will continue in the first half of 2019, after which some improvements are expected. This forecast is likely based on Intel's statements, so HP may face even greater challenges if the chipmaker fails to deliver on its promises.
by Microsoft
Microsoft and Intel were once reliable partners that dominated the PC market in a partnership often referred to as Wintel. However, in recent years, Microsoft has been trying to reduce its dependence on Intel x86 processors by releasing ARM-optimized versions of key software products, including Windows and Office.
Microsoft's first-quarter earnings report suggests that this is a prudent long-term strategy. Its cloud, gaming, and hardware divisions demonstrated steady growth, but revenues from selling Windows licenses to OEM manufacturers decreased by 5% year-over-year (sales of consumer OEM licenses fell by 11%, while professional sales decreased by 2%).
During the latest earnings call, Microsoft's CFO Amy Hood also explained that the decline was due to delays in OEM processor shipments, which negatively impacted the overall health of the PC ecosystem. Microsoft expects the chip shortage to persist until its third fiscal quarter, which ends on June 30.
Apple
After intensifying legal disputes with Qualcomm, Apple has relied exclusively on Intel modems in its latest iPhones. However, this shift has harmed the Cupertino company in two areas: Intel's 4G modems are not as fast as Qualcomm's, and Intel will not release a 5G variant until 2020. Meanwhile, the first devices equipped with Qualcomm’s Snapdragon X50 5G modem have already hit the market.
This means that Apple's first 5G iPhones are expected to arrive over a year late compared to leading competitors in the Android camp. This carries reputational costs, which are particularly undesirable for the 'Apple' giant. By the way, Intel currently faces a lot of uncertainty, and analysts from UBS and Cowen recently warned that the manufacturer may not release its 5G modem by 2020 (or may release it in insufficient quantities for the iPhone).
Intel, however, has denied these rumors, although its past production issues do not inspire confidence. It’s not surprising that Huawei has already offered Apple assistance. The latter, however, is more likely to resolve its conflict with Qualcomm.
Additionally, DigiTimes reports that Intel is still unable to fully meet the necessary supply volumes of Amber Lake processors used in the Apple MacBook Air. This shortage may negatively impact Apple Mac sales, which rose by 9% last quarter due to the release of the new MacBook Air and Mac mini.
Overall, the ripples from the supply issues with Intel processors are being felt throughout the technology market, as investors try to gauge the extent of the damage to hardware and software manufacturers. The shortage is unlikely to cause long-term harm to HP, Microsoft, or Apple, but may hinder the near-term growth of these tech giants. For AMD, however, this situation is like a gift from heaven, and the company is striving to make the most of it.
Source: 3dnews.ru
