Intel acknowledges "pressure" on its 14-nm production capacity

Lately, rumors have been swirling that Intel is facing the potentially enviable prospect of more demand for its products than it can supply. This morning, interim CEO Bob Swan confirmed that thanks to strong growth in Intel's data-centric businesses and unexpected growth in the client PC market for the first time since 2011, the company is facing "pressure on [its] factory network." As a result, Swan says the company is prioritizing production of its Xeon and Core processors "to serve the high-performance segments of the market."

As a result of that strategy, Swan concedes that supply of Intel products is "tight," especially in its entry-level PC chips. To take the edge off this supply pressure, Swan says that Intel plans to increase its capital expenditures by $1 billion compared to its projections at the beginning of the year, to $15 billion, in order to boost production capacity at its 14-nm fabs in Oregon, Arizona, Ireland, and Israel.

Swan also notes that Intel continues to make progress on its 10-nm process. He claims that 10-nm yields are improving, and that the company still expects it can begin "volume production" on its troubled next-generation node in 2019. Increased 10-nm production would presumably lessen pressure on the company's 14-nm production capacity, as well.

In closing, Swan says the company will "stay close, listen, partner and keep [customers] informed" about its ability to meet demand for its products. He notes that of the companies he's addressing in his letter, "many of you have been longtime Intel customers and partners, and you have seen us at our best when we are solving problems." He says that "the actions we are taking have put us on a path of continuous improvement." We'll be watching to see how those efforts bear fruit in the months and years to come.

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