Intel Struggles To Meet AI Data Center Demand 31
Intel says it struggled to satisfy demand for its AI data-center CPUs while new PC chips squeeze margins. CEO Lip-Bu Tan framed the turnaround as supply-constrained, not demand-constrained, with manufacturing yields (18A) improving but still below targets. Reuters reports: The forecast underscores the difficulties faced by Intel in predicting global chip markets, where the company's current products are the result of decisions made years ago. The company, whose shares have risen 40% in the past month, recently launched a long-awaited laptop chip designed to reclaim its lead in personal computers just as a memory chip crunch is expected to depress sales across that industry.
Meanwhile, Intel executives said the company was caught off guard by surging demand for server central processors that accompany AI chips. Despite running its factories at capacity, Intel cannot keep up with demand for the chips, leaving profitable data center sales on the table while the new PC chip squeezes its margins.
"In the short term, I'm disappointed that we are not able "to fully meet the demand in our markets," Chief Executive Officer Lip-Bu Tan told analysts on a conference call. The company forecast current-quarter revenue between $11.7 billion and $12.7 billion, compared with analysts' average estimate of $12.51 billion, according to data compiled by LSEG. It expects adjusted earnings per share to break even in the first quarter, compared with expectations of adjusted earnings of 5 cents per share.
Meanwhile, Intel executives said the company was caught off guard by surging demand for server central processors that accompany AI chips. Despite running its factories at capacity, Intel cannot keep up with demand for the chips, leaving profitable data center sales on the table while the new PC chip squeezes its margins.
"In the short term, I'm disappointed that we are not able "to fully meet the demand in our markets," Chief Executive Officer Lip-Bu Tan told analysts on a conference call. The company forecast current-quarter revenue between $11.7 billion and $12.7 billion, compared with analysts' average estimate of $12.51 billion, according to data compiled by LSEG. It expects adjusted earnings per share to break even in the first quarter, compared with expectations of adjusted earnings of 5 cents per share.
Bub-ble (Score:2)
Even Intel, after years of decline, can't keep up.
I'm not a person who denies the usefulness of AI. But there is a ton of garbage ideas out there that will never pan out. But in the short term, all those garbage-AI-idea startups are still needing lots of computers and chips. But a whole lot of them will go out of business, leaving behind perfectly good hardware that can be bought up at fire sale prices. Let the good times roll, because soon, they'll be a distant memory.
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I forecast Intel will belly up when the AI bubble crash depresses the entire IT industry.
That is unless The Orange One wants the gov't to own even more of Intel: socialism, wooopyy!
However, the backlog of people who want to buy PC's but delay due to high prices may actually give Intel a boost after the crash, as people start buying regular equipment again.
Re:Bub-ble (Score:5, Insightful)
Someone will buy it. That sheer volume of IP and physical assets wont simply slip below the waves, someone will acquire it. I mean shit, Intel actually has Fabs. No doubt debt levered to hell and back, but Fabs none the less. My guess is Nvidia would be eyeing it off hungrily, and so would AMD, although AMD would face serious regulatory hurdles being that such an acquisition would create a true monopoly.
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I looked it up and that revenue/debt ratio for Intel is not good.
INTEL Revenue: $53.4B Long term debt: $44B
AMD Revenue: $32B Long term debt: $2.4B
NVDIA Revenue $187B Long term debt: $7.5B
Maybe they are sitting on a pile of 2% corporate bonds, like a Boomer holding a mortgage, but still, that debt is an anchor.
Near term I would say Intel benefits greatly from current administration interference in free-markets, if Apple is 'encouraged' to buy 14A chips, if other firms are '
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Theres a spiralling list of datacenter cancellations going on right now. Some 25 at last count. Not a lot in the scheme of things, but the number keeps growing. I'd say the opening motions of this little symphony of ruination have already started.
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You give NVIDIA too much credit. NVIDIA is 75% hype, 25% product advantage. They would try to make another ARM based chip, but that would have to go head to head with Qualcomm in that space, and Exynos isn't bad, just isn't quite as good.
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If they are smart, they should be able to use this wave to re-make themselves as a pure foundry business, like TSMC. And then make chips for everybody - Qualcomm, Apple, AMD, Nvidia,.... Heck, also sell their entire x86 business to Nvidia, so that they no longer have to bother about that. Maybe buy back the 10% that the US government owns, and get back to what the original Intel used to do - build absolute copies of foundries at various process nodes
I don't see semiconductor manufacturing going away an
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Even Intel, after years of decline, can't keep up.
All fabs (TSMC, Intel, Samsung, etc.) have a fixed number of wafers they can produce per hour. Most of those wafers already have customer contracts (and most of Intel's fabs customers are Intel itself, but it is still a customer). Building new fabs takes time (and billions of dollars), and most companies do not build until they have predictions and commitments of future customers (an entirely new fab that has no customers can be a $20B white elephant). The AI demand (bubble) was not predicted with enough
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Not just that, by the time they do ramp up production, the demand has caught up, and in fact exceeded the market, and that's when demand drops, followed by price drops. That's when all that production is for nothing. It's safer for fabs to stick to their averages, so that the market isn't saturated w/ their product, causing it to drop
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Even Intel, after years of decline, can't keep up.
I dunno about that. If they can get yields up on 18A, that would, unquestioningly, place them quite a ways beyond what *anybody* else is doing right now. Shit, they're basically already there, it seems. Until I read this, I didn't even know it was fabbed yet, all I knew was that it was theoretical, but here they are, and apparently the newer core processors already in the hands of some OEMs are built on it, so it's already well past that.
https://www.youtube.com/watch?... [youtube.com]
TL;DR for those who don't know: A ref
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Or they could just rename their process to 17A, then they would be even further ahead. (/sarc)
Re:Bubble of corruption (Score:1)
the end game of corruption is decline, these incompetent upper class people will continue to hoard all our capital until our entire economy is dysfunctional and collapses once again, this is exactly what evil looks like
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I think you've been watching too many YouTube influencers. There is no "end game." For there to be an "end game," there would have to be a grand master plan, and that concept is nothing more than a conspiracy theory. Super rich people aren't thinking about grand master plans, they just focus, 24/7, on how to gain more wealth.
And corruption exists, but it isn't a particular issue in the US, certainly not compared to other countries. https://www.transparency.org/e... [transparency.org]
Evil also looks like *deception.* And there
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USA Ranks only 28 / 180 Score change -4 since 2023
not even in the top 25 and notice it's getting worse
Northern European countries are by far our most ethical and responsible societies.
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Another way of framing those numbers, is that the US ranks in the top 16% for low corruption.
I agree it's getting worse, due to the current administration's corruption, requiring bribes such as a 747 jet from Qatar, and politically-motivated lawsuits. But even with that concerning trend, the US is nowhere near being a "corrupt nation."
TSMC? (Score:2)
Presumably he's talking about their supply from TSMC. TSMC are, of course, overtaxed on every front.
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Presumably he's talking about their supply from TSMC. TSMC are, of course, overtaxed on every front.
Intel does use TSMC (notably for their discrete GPUs, and to deal with chip cadence), but primarily uses it's own fabs. At this point, no advanced lithography fab has any measurable excess capability.
Re:TSMC? (Score:5, Informative)
Intel uses TSMC for the compute tiles on their latest consumer CPUs (Arrow Lake). Panther Lake is on 18A but is (for now) relatively low-volume. Their latest datacentre CPUs (Granite Rapids) still use internal Intel processes (Intel 3).
There are not yet any datacentre products on 18A, and their may not be until the limited release of Diamond Rapids on 18A or 18A-P.
Intel is beyond repair (Score:2)
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Layoffs were announced just 3 months ago... (Score:3)
Maybe that was a bad idea in the face of rapidly growing demand.
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Always depends on who is being laid off. Is it the juicy middle management that presided over the decline, the ones that somehow missed the exploding data center market that has been in the news since 2021? In that case maybe for the better.
Process engineers, probably want to keep those around.
Obviously (Score:1)
There's a pattern here. Today's "server" becomes tomorrow's must have home personal computer.
They should bring back the guys in the bunny suits while they're at it!
18A? (Score:3)
18A isn't used in any current Intel datacentre products. Their latest datacentre CPU is Granite Rapids on Intel 3. The only CPU/SoC on 18A so far is Panther Lake, which is a mobile SoC.
don't keep up (Score:2)
You know what happens when you keep up with surging demand? You invest a ton of money, a lot of it borrowed, to meet that surging demand. Then, three years later, the surging demand ends, but not your loan obiligations.