Intel's chip shortage for PCs will last longer than anticipated. The company now expects the supply issues to persist through the fourth quarter and possibly into 2020.
Intel has been trying to resolve the chip shortage, which began last year, by investing in more manufacturing capacity. The result has boosted production of its 14-nanometer and 10nm chips, "but that growth hasn't been sufficient," Intel CEO Bob Swan said in an earnings call on Thursday.
"We're letting our customers down and they are expecting more from us," he added.
Swan made the comment as Intel reported sales from the company's PC-centric chip business were down 5 percent year-over-year in the third quarter. Intel is attributing the company's chip shortage to stronger than expected PC demand. Currently, many businesses are migrating to Windows 10 systems when the older Windows 7 OS is slated to lose official support in January 2020.
According to Intel, the shortage has been confined to lower-end PC processors. "We are working hard to regain supply demand balance, but we expect to continue to be challenged in the fourth quarter," Swan said.
So don't be surprised if you see more PC models using AMD chips. Due to the shortage, research firms have been noticing more device vendors sourcing processors from AMD to power their latest Windows laptops and Chromebooks.
Intel, however, hopes to rectify the supply problems some time next year. The goal is to add another 25 percent in manufacturing capacity for the company's 14nm and 10nm chips by 2020, Swan said during the call. So far, the company has spent $30 billion in capital expenditures over the last two years on expanding Intel's manufacturing capacity.
Although the chip shortage is preventing Intel from helping PC vendors ship more product, the company's business for server processors grew in the third quarter, thanks to demand from data center providers. As a result, the company earned a record $19.2 billion in revenue during the period, which is up 6 percent from last year.