He pointed to a “continued explosion of data” and “the need to process, store, analyse and share”, as a key driver for industry innovation which has resulted in a demand for “compute performance in the cloud, the network and the enterprise”.
He added that Intel’s data-centric businesses grew 25 percent through June, and cloud revenue grew 43 percent in the first six months.
He expressed surprised in the performance of Intel’s PC-centric business. “Together as an industry, our products are convincing buyers it’s time to upgrade to a new PC. For example, second-quarter PC shipments grew globally for the first time in six years, according to Gartner. We now expect modest growth in the PC total addressable market (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.”
But admitted there will be challenges, with the “surprising return to PC TAM growth” putting pressure on Intel’s factory network. Consequently, he said that production of Intel Xeon and Intel Core processors are being prioritised, so that collectively it can serve the high-performance segments of the market.
“That said,” Swan wrote, “supply is undoubtedly tight, particularly at the entry-level of the PC market. We continue to believe 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.”
To address this challenge, Swan has said Intel will be taking the following actions:
- Investing a record $15bn in capital expenditures in 2018, up approximately $1bn from the beginning of the year. Intel intends to put that $1bn into its 14nm manufacturing sites in Oregon, Arizona, Ireland and Israel. According to Swan, this capital along with other efficiencies is increasing Intel’s supply to respond to increased demand.
- Intel says it is making progress with 10nm - yields are improving and it continues to expect volume production in 2019.
- The company is also taking a customer-first approach and plans to work with customers’ teams to align demand with available supply.