We are rolling into the 4th quarter, which is the most important for companies selling to the consumer segment regardless of whether we are talking PCs, smartphones, or gaming systems. Currently I’m hearing reports that there are huge shortages of Intel processors which are going to have a severe impact on the recently recovering PC market—a recovery that Intel initially aggressively backed, but seems to have lost interest in.
Intel has had a significant adverse impact on both PC and server sales starting with the delayed disclosure of the Spectre and Meltdown vulnerabilities. The apparent sale by the now fired CEO of the majority of his stock options after those exposures were discovered but before they were disclosed, and the massive layoffs by that departed CEO have also adversely impacted Intel’s ability to execute.
Most recently, I’ve noted concerns that Intel is unable to provide 14nm processors for everything from servers to PCs in this critical period ramping into the 4th quarter. And this is being attributed by some of my peers to something very different.
This inability to produce these processors in significant volume forced them to shift manufacturing to TSMC, but so late that TSMC may be unable to spin up to save the 4th quarter sales—adversely impacting the revenue of every x86 vendor needing 14nm processors. To be clear, these processors are not the i series (i3, i5, or i7). Adversely impacted are Xeon 14nm SP processors for servers and Pentium, Celeron, and Atom processors for high volume value systems that typically do very well in the 4th quarter.
Cause of Processor Shortage
Now, I initially thought this was largely due to the layoffs which were massive. Often, layoffs of this scale cause manufacturing lines to fail due to the lack of qualified staff. This is one of the major problems with massive layoffs, it is like doing surgery with an axe where the collateral damage is significant.
However, there was a recent disclosure that Apple allegedly provided intellectual property to Intel stolen from Qualcomm so that Apple could use Intel’s lower cost technology which, allegedly, was stolen from Qualcomm rather than Qualcomm’s superior products. This suggests that Intel had to shift manufacturing capacity from long time loyal resellers to Apple—a firm that has been shifting their own sales from x86 products like the MacBook to ARM based products like the iPad Pro.
In effect, in an effort to help Apple in their allegedly illegal fight against Qualcomm (Intellectual Property theft is decidedly illegal) Intel appears to have acted against the best interest of their most loyal customers to assist Apple.
Several of these loyal companies—most notably Lenovo and Samsung—compete with Apple and may have been doubly damaged by this both on smartphones through Intel’s unique and allegedly illegal behavior and through what appears to be a shortage of processors for the PC and server products they sell.
In fact, Lenovo may be triply damaged because the modem efforts impact smartphone, PC, and server sales for them.
This may not be the extent of the allegedly intentional damage to Intel’s partners who also use these processors for storage, networking, security and other products.
This all could and will likely adversely impact these firm’s revenues and profits while inordinately and allegedly illegally helping Apple’s.
I am increasingly concerned about Intel’s behavior. From the behavior of its now fired CEO, to their treatment of their own employees, to the alleged theft of Qualcomm’s technology, to this apparent betrayal of existing customers to favor Apple—a firm that appears to be planning to replace Intel technology with its own. I can’t reconcile this with the company that Andy Grove helped start so long ago—a firm with a powerful and once trusted brand. It just seems a shame that the firm has fallen so far, and I continue to wonder how much more its partners will take before they more aggressively seek alternatives.
Apple has a history of screwing vendors and it is this company Intel effectively threw every one if its loyal customers under the bus for. There is stupid and then there is Intel stupid.
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