Intel to up investment in 14nm manufacturing sites for PC business

Intel CFO and Interim CEO Bob Swan said the company is increasing its investment by $1 billion to $15 billion in capital expenditures in 2018.
Intel for CIOsIntel said the company is making additional investment due to the surprise return to PC total addressable market (TAM) growth that has put pressure on its factory network.

Second-quarter PC shipments grew for the first time in six years, according to research firm Gartner.

Research firm IDC said shipments of personal computing devices market — traditional PCs, tablets and workstations will dip by 3.9 percent in 2018. This decline is expected to continue throughout the forecast period as the market shrinks to 383.6 million units in 2022 with a five-year compound annual growth rate (CAGR) of -1.5 percent.

But the global device market is expected to grow 3.6 percent in terms of dollar value to $237 billion in 2018, fuelled by detachable tablets, convertible notebooks, ultraslim notebooks, and gaming desktops, said IDC.

“We now expect modest growth in the PC TAM this year for the first time since 2011, driven by strong demand for gaming as well as commercial systems – a segment where you and your customers trust and count on Intel,” Bob Swan said.

Chipmaker said it has enough supplies to meet annual revenue targets and was boosting PC chip output, allaying fears that rival AMD was eating into its market share due to supply constraints, Reuters reported.

Intel, the biggest supplier of PC chips, has shifted its main focus to data centers as revenue from the personal computers business flattened since shipments peaked in 2011.

Last year, AMD launched cheaper Ryzen CPU chips based on a new architecture called Zen to challenge Intel’s Core chips monopoly in personal computers.

AMD is also ready to roll out its first 7 nanometer (nm) chips for gaming later this year and its 7nm server CPU in 2019, while Intel has been delaying its 10nm-based chips.

Intel said it expects volume production for its 10nm chips in 2019. The company said that the return to PC growth has put pressure on its factory network, pushing up shares of companies selling chip manufacturing gear rose.

Intel is investing that $1 billion into its 14nm manufacturing sites in Oregon, Arizona, Ireland and Israel.

“This capital along with other efficiencies is increasing our supply to respond to your increased demand. We expect volume production of 10nm in 2019,” Bob Swan said in a statement issued on Friday.

Intel is prioritizing the production of Intel Xeon and Intel Core processors to serve the high-performance segments of the market.

“Supply is tight, particularly at the entry-level of the PC market. We will have at least the supply to meet the full-year revenue outlook we announced in July, which was $4.5 billion higher than our January expectations,” Bob Swan said.

Intel’s data-centric businesses grew 25 percent through June, and cloud revenue grew 43 percent in the first six months.

Baburajan K

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