Just when Intel seemed to be on the cusp of success, the company reported supply issues that will limit the number of available PC chips that PC makers will be able to buy.
Moreover, Intel said that it’s prioritizing the higher-margin data center chips with what it can manufacture, leaving supplies of upcoming chips like the Core Ultra Series 3 (Panther Lake) apparently constrained. Intel also said that its next-generation processor, Nova Lake, would arrive at the end of 2026.
“So it’s just literally hand to mouth what we can get out of the fab and what we can get the customers, is how we’re managing it,” David Zinsner, Intel’s chief financial officer, said during a call with analysts reporting Intel’s Q4 earnings for 2025. A transcript was recorded by Investing.com.
“Obviously, we’re shifting as much as we can over to data center to meet the high demand, but we can’t completely vacate the client market,” Zinsner added. “So we’re trying to support both as best we can and obviously work our way out of this supply issue. I do believe that the first quarter is the trough. We will improve supply in the second quarter.”
The problem right now is two-fold, Intel chief executive Lip-Bu Tan explained: though Intel is now shipping Panther Lake chips using its 18A technology, the company’s yields—the number of “good” wafers, capable of making finished chips—is meeting internal expectations but not enough to meet demand. The company ate up most of its in-house supply of chips during the fourth quarter and is down to about 40 percent of “peak levels,” executives said. Intel said that its supply would continue to increase during the course of the year.
Intel’s processor supply crunch comes at a time when the PC industry is facing acute shortages of memory and flash storage, all of which are having a negative impact on PC sales and prices. First benchmark impressions of Intel’s Panther Lake were terrific, but if customers can’t get them, then no one wins. Tan implied that Intel’s own allocation strategy could be brutally practical, favoring larger customers over small.
“Some of the bigger players and the OEMs and the bigger player in the hyperscale [business], they have more access into the memory allocations,” Tan said. “And then secondly, I think some of the smaller ones, they are really challenging to scramble to get the memory. So I think that will be very important for us, Dave and I, how to allocate and also our sales grid and how to allocate to the right customer. We don’t want to have a CPU we send to them but they are missing the memory. They cannot complete the products. So we try to do it correctly.”
Intel executives said that the company has “very active” engagement with customers on its foundry business, specifically on the Intel 14A manufacturing process.
Finally, Intel chief executive Lip-Bu Tan said that Intel would consolidate its data center and AI programs under a single leader, and “simplified” the company’s enterprise roadmap on the 16-channel Diamond Rapids part. Intel also said that it continues to work closely with Nvidia to build a custom Xeon fully integrated with its NVLink technology, as per Nvidia’s $5 billion investment last year, but there was no news of any RTX GPU chiplets for Intel PC processors.
Intel reported a loss of $600 million on revenue of $13.7 billion, down 4 percent from a year ago. Intel’s Client and Computing Group reported a 7 percent drop in revenue to $8.2 billion. Intel projected lower sequential revenue, between $11.7 billion and $12.7 billion.