PC Revival Affecting Intel

It’s been a long time since we could even think of such an article, doomed to the annals of history, PC’s were seen as a sunset industry with the advent of firstly the tablets and then the smartphones. But a revival of sort is happening with computing getting more attention due to heavy processing needed in new economies like eCommerce, cryto-mining and even gaming. All driving up demands and sending the industry back into production.

Total shipment across the globe was at positive territory after years of decline, Lenovo just a year ago was in the brink of distress has now turned fortunes around is heading upwards, Acer is also reporting better than expected revenue with HP continuing to lead in US and rest of the world. Good news for the industry all round surely, but before PC manufacturer could start popping the Champagne, Intel the company that makes 90% of processors for the industry is having problem keeping up with demands and could restrict supply.

In a statement released recently, CFO and Interim CEO at Intel Bob Swan alerted to the matter: “The continued explosion of data and the need to process, store, analyse and share it is driving industry innovation and incredible demand for compute performance in the cloud, the network and the enterprise. In fact, our data-centric businesses grew 25 percent through June, and cloud revenue grew a whopping 43 percent in the first six months. The performance of our PC-centric business has been even more surprising. Together as an industry, our products are convincing buyers it’s time to upgrade to a new PC. For example, second-quarter PC shipments grew globally for the first time in six years, according to Gartner. We now expect modest growth in the PC total addressable market (TAM) this year for the first time since 2011, driven by strong demand for gaming as well as commercial systems.”

Now for the challenge… The surprising return to PC TAM growth has put pressure on the factory network. The company is prioritising the production of Intel Xeon and Intel Core processors to serve the high-performance segments of the market which is tightening supply for the entry-level of the PC market.

To address the challenges, Intel is taking action by firstly increasing capex from an earlier $14 billion and adding another $1 billion into the 14nm manufacturing sites and has also reiterated its progress in the 10nm process which should expect volume in 2019.

For now there will be production delays and expect slower availability of orders, on the hind sight this is an healthy problem to have for the industry, as a whole.

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