Intel’s Current CPU Shortage Creates Uncertainty for the Electronics Industry

Intel’s Current CPU Shortage Creates Uncertainty for the Electronics Industry

Updated: Aug 5, 2019

The current Intel CPU (central processing unit) shortage, which began in early 3Q18, is forecast to continue throughout the remainder of 2018 as global PC demand steadily increases. This electronic component shortage is anticipated to have a heavy impact on PC sales for the 2018 holiday season and is expected to last through the first half of 2019. Due to the shortage, extended lead times for Intel CPU’s will have a direct effect on PC shipment lead times as they have already been pushed out from an average of 14 days to a staggering 120 days with no relief in sight.

Located at the core of the motherboard, CPU’s are considered the brains of a computer. CPU’s are designed to preform functions as instructed from different applications within any computer, whether it be a PC, laptop or tablet.

Considering their crucial role to the overall performance of end-devices, the demand for CPU’s has steadily increased over the previous months. According to a supply update from Intel’s CFO and Interim CEO Bob Swan, there is tremendous pressure on Intel’s CPU production lines due to the “surprising return” of growth in the PC component market.  In response to the CPU strain, Swan noted Intel is “prioritizing the production of Intel Xeon and Intel Core processors” to “serve the high-performance segments of the market.”

In order to help relieve the heavy electronic component shortage, Intel recently announced their efforts towards adding manufacturing capacity to CPU’s by spending an extra US $1 billion on existing 14nm facilities in the U.S., Ireland and Israel. Even with this increase in supply, Intel CPU’s will likely remain in high demand as PC OEM and EMS companies continue to generate consumer interest through their technological developments such as a thinner body, smaller screens and faster performing speeds.

The increase in Intel’s spending and capacity to compensate for the tremendous component shortage is an investment in older technology, considering the 14nm manufacturing process was created in 2013. While Intel has stated their 10nm production is in the works, an investment in their 14nm processors gives opportunity for competitors, specifically Advanced Micro Devices (AMD) as they expect to gain market share with their rumored 7nm processor chip production launching in 2019.

Amongst Intel’s CPU inventory, the Core i3-8100, Core i5-8400, Core i5-8500, Core i7-8700 and the Core i7-8700K are desktop CPU’s with the tightest supply. Additionally, Intel’s FJ8067703282016, FJ8067703282221, FJ8067702739765 and FJ8066201930409 are currently in high demand by OEM and EMS companies.

Moreover, the shortage is expected to affect the entire memory market as DRAM prices are forecasted to drop further than previously anticipated price points. Previous reports from DRAMeXchange estimated that contract prices were previously predicted to reduce by about 2% QoQ in 4Q18 due to possible oversupply.

As a leading independent distributor of electronic components for over 40 years, Advanced MP Technology has a proven track record of providing excellent support to OEM and EMS customers going through the tough realities of severe electronic component shortages. Our global sourcing network of trusted supply chain partners provides a solid foundation for our resourceful and skilled team to effectively help customers mitigate any shortage outcomes.