The shortage of Intel processors began at the end of last summer: the growing and priority demand for processors for data centers caused a shortage of consumer 14-nm chips. Difficulties in moving to more advanced 10nm standards and an exclusive deal with Apple to produce modems for iPhones that use the same 14nm process exacerbated the problem.
Last year, Intel invested an additional $14 billion in its 1nm manufacturing facility and said the shortfall should be overcome by mid-2019. However, Taiwan's DigiTimes reported last month that the shortage of Intel chips could widen in the second quarter of this year due to increased demand for Chromebooks and low-cost PCs. This shortage is a headache for Intel, but it also causes problems for other technology companies. Resource The Montley Fool told how the problem affects HP, Microsoft and Apple.
HP
The company has steadily increased its PC sales as its competitors have stalled due to a saturated market, long update cycles and competition from mobile devices. HP has made headlines with new high-end laptops and convertibles, while maintaining a strong foothold in the desktop market with Omen gaming systems.
Last quarter, two-thirds of HP's revenue came from its PC and workstation business. At the same time, the division showed only a 2 percent increase in sales in the first quarter of 2019 compared to a year ago. Shipments of HP laptops were down 1% year-on-year and desktops were down 8%, but HP made up for it with higher prices. At the same time, during 2018, the company experienced a double-digit increase in revenue.
HP attributed its weak PC sales mainly to a shortage of Intel processors. During a keynote conference, CFO Steve Fieler stated that the CPU deficit will continue into the first half of 2019, after which some improvements will follow. This prediction is most likely based on statements from Intel, so HP could face even more difficulties if the chipmaker fails to deliver on promises.
Microsoft
Microsoft and Intel were once staunch allies that ruled the PC market in a nexus that was eloquently referred to as Wintel. But in recent years, Microsoft has been trying to reduce its reliance on Intel x86 processors by releasing ARM-optimized versions of key software products, including Windows and Office.
Microsoft's first quarter earnings report shows it's a smart long-term strategy. Its cloud, gaming, and hardware divisions posted solid growth, but Windows OEM license revenues were down 5% year-on-year (non-professional OEM sales fell 11% and professional licenses fell 2%).
During the latest keynote, the software giant's chief financial officer, Amy Hood, also attributed the slowdown to OEM processor delivery delays, which proved to be a negative factor for the otherwise healthy PC ecosystem. Microsoft expects the chip shortage to last until its third fiscal quarter, which ends June 30th.
Apple Lossless Audio CODEC (ALAC),
After the escalation of legal disputes with Qualcomm, Apple began to rely exclusively on Intel modems in the latest iPhones. However, the change hurt the Cupertino company in two ways: Intel's 4G modems aren't as fast as Qualcomm's, and Intel won't release a 2020G variant until 5. At the same time, the first devices equipped with a Qualcomm Snapdragon X50 5G modem have already entered the market.
This means that Apple's first 5G iPhones should arrive a year or more late compared to leading Android competitors. And this entails reputational costs, which is highly undesirable for the "apple" giant. By the way, Intel has a lot of uncertainty right now, with analysts from UBS and Cowen recently warning that the manufacturer may not release its 5G modem by 2020 (or release insufficient circulation for the iPhone).
Intel, however, has denied these rumors, although its previous production problems are not encouraging. Not surprisingly, Huawei has already offered to help Apple. The latter, however, is more likely to decide to bury the hatchet with Qualcomm.
In addition, DigiTimes reports that Intel is still unable to fully supply the Amber Lake processors used in the Apple MacBook Air. This shortfall could weigh on Apple Mac sales, which rose 9% last quarter on the back of the new MacBook Air and Mac mini.
In general, waves of problems with the supply of Intel processors are spreading throughout the technology market, and investors are trying to assess the extent of the damage to hardware and software manufacturers. The shortage probably won't hurt HP, Microsoft, or Apple in the long term, but it could hinder the near-term growth of these tech giants. But for AMD, this situation is like a gift from heaven, and the company is trying to use it as efficiently as possible.
Source: 3dnews.ru