J.P. Morgan today added its voice to the chorus of analysts claiming a shortage of Intel processors will hurt the laptop and desktop markets in the fourth quarter of 2018. A note from Gokul Hariharan, the company's head of Asia-Pacific technology research, reportedly warned J.P. Morgan clients that PC sales could drop between five to seven percent in the coming months as manufacturers scramble to source enough CPUs for their pre-built systems.
CNBC reported that in his warning to J.P. Morgan clients Hariharan said that "our conversations with PC vendors indicate that the shortage, which started in small magnitude in 3Q, has been progressively worsening and is likely to have the maximum impact in 4Q18." The problem is expected to be particularly bad when it comes to "high-end consumer PCs, where using AMD or older Intel family of CPUs as substitutes are more difficult."
Hariharan's warning follows reports of numerous problems with Intel's processor supply. The company had to delay its 10nm process to 2019, and over the last several months, evidence mounted of a shortage of CPUs based on the 14nm process as well. That was all but confirmed on September 10, when reports circulated about Intel outsourcing production of some 14nm chipsets to TSMC.
It didn't take long for all those signs of an Intel shortage to worry analysts. TrendForce said on September 11 that it expects the limited availability of Whiskey Lake processors to affect the notebook market, with the effects being felt until the first half of 2019, although one upside could be reduced DRAM and SSD prices.
Such PC market problems would be a sharp reversal of the PC industry's fortunes. IDC reported in July that the PC market grew 2.7 percent in the second quarter of 2018, which is the strongest growth rate it's observed since the first quarter of 2012. The five to seven percent drop predicted by Hariharan would undo all of that growth and force the industry to fight just to restore parity with previous results.
The bad news for Intel could be good news for AMD, though, as supply of the AMD Ryzen Mobile processors remains strong. Companies that previously wouldn't have even considered AMD CPUs might be forced to decide between waiting for Intel to meet demand or giving the red team a shot. Hariharan's concern is that makers of high-end systems will have no choice but to weather the storm because they can't make the switch.
We reached out to Intel to see if J.P. Morgan's warnings are empty warbling or carry a note of truth and received this statement, which we also received on September 5 in response to our earlier report on the 14nm shortage:
"Customer demand has continued to improve over the course of the year, fueling growth in every segment of Intel’s business and raising our 2018 revenue outlook $4.5 billion from our January expectations. We will have supply to meet our announced, full-year revenue outlook and we’re working closely with our customers and factories to manage any additional upside.”
