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JP Morgan: Intel CPU Deficit Will Cut PC Sales Five to Seven Percent

(Image credit: Intel)

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.”

  • cd000
    "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."

    Why the hell not? Absolutely no reason not to switch to Ryzen.
    Reply
  • quilciri
    *Lisa casually sidles up to PC manufacturers*...."how YOU doin' ?"
    Reply
  • redgarl
    Time to bring "PROPER" Ryzen mobile solutions.
    Reply
  • redgarl
    21320611 said:
    "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."

    Why the hell not? Absolutely no reason not to switch to Ryzen.

    They will when they realize this shortage is making them lose sales. The good old time when Intel could corrupt OEM to block products from the competition is over...

    HP, Lenovo, Acer... they need to be serious with their offering. I would have bought one if the offering was interesting, but their models are plain simply bad.

    Reply
  • Kaz_2_
    love live AMD in cpu business, no more monopoly from Intel......we got a choice now! choice how we select our cpu....... support AMD forever regardless Intel forthcoming cpu!
    Reply
  • redgarl
    That means the 9900k is going to be in short supply.
    Reply
  • Tanyac
    If only the AMD HEDT motherboards weren't so damned insanely expensive...
    Reply
  • kenjitamura
    If this causes RAM prices to drop enough I might snatch some up.
    Reply
  • Co BIY
    I doubt we'll see Intel drop prices to compete with AMD with this news.

    The number crunchers in green eye-shades see more profit in ceding a bit of market share than in a price war.

    This is not that competitive a market yet. Read a little on oligopoly market structure and Intel 's action jump out at you..

    - excessive levels of differentiation in order to stifle competition (sooo many SKUs)
    - acknowledged market leader which informally sets prices - Price leader
    - Barriers to entry are high - economies of scale, patents, access to expensive and complex technology

    I believe this is an open communication by Intel "No price war, we'll let you have market share this round and both make big profits."

    Remember the Intel sales guys even being told to recommend Epyc products. Why was this leaked ? It probably isn't even a viable option to switch for many customers but the signal to AMD went out clear.
    Reply
  • alextheblue
    21320791 said:
    *Lisa casually sidles up to PC manufacturers*...."how YOU doin' ?"
    "Why not Zoidberg??"

    I did pick up a $500 Lenovo with a 2500U (configured at 15W) and an SSD. It's not a bad little machine but it's got half it's RAM soldered... ughh… so it's dual channel 8GB but I won't be upgrading to 16GB. Which is fine since it's not going to be doing anything really heavy (that's what the desktop is for) but it does give the impression that these manufacturers aren't serious about Ryzen laptops yet. That aside, my impressions of the APU itself are very positive. It's quite competitive with similarly priced Intel solutions also bearing 15W chips.

    OEMs should be kicking themselves right now for not supporting Ryzen more broadly with better models. There are a few exceptions, of course, but most of them are desktop models. Laptops are where most of the sales are going to be lost.
    Reply