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Intel boss ‘maniacal’ about eliminating supply constraints

CEO updated analysts on the progress the vendor is making in eradicating the CPU supply issues that have been a problem throughout 2019

Intel's CEO has outlined the steps it has taken to ease the CPU shortages and indicated that it is expecting the situation to improve over the course of this year.

The chip maker has been plagued with supply issues throughout 2019, with both HP and Dell using quarterly results announcements towards the end of last year to bemoan the problems.

What will be worrying for Intel is that some channel players have been recommending AMD in a bid to ensure they capture the customer investment, rather than lose out because of supply constraints.

Speaking to analysts as he took them through the firm's fourth quarter numbers, Intel's CEO Bob Swain did directly address the shortages issue.

"We have significant opportunities but realizing them requires improved execution, starting with delivering more supply for our customers. In response to continued strong demand, we invested record levels of CapEx in 2018 and 2019. That added capacity allowed us to increase our second half 2019 PC CPU supply by double digits relative to the first half. However, demand has continued to outpace PC supply and supply remains tight in our PC business," he said.

He said that it was continuing to add capacity: "Across our 14 and 10 nanometer nodes, we are adding 25% wafer capacity this year to deliver a high single digit increase in PC unit volume".

He assured analysts that those investments would bring an end to the long-running problems and give it the chance to get on with meeting its growth targets.

"This will enable us to meet market demand, deliver our 2020 financial plan and increase inventory to more normalized levels. Our near term challenge is working with our customers to support their desired product mix," he said.

Intel delivered an 8% increase in revenues to $20.2bn with net income improving by 33% to hit $6.9bn. The PC-centric revenue also up by 2% year-on-year, coming in at $10bn. For the full year the vendor reported a 2% revenue increase to $72bn and flat net income of $21bn.

The vendor is expecting PC demand to dip in the second half of 2020 as the demand for the Windows 10 refresh starts to wane and that should help it in the drive to get inventory levels back on an even keel.

"Our expectations in 2020 is it will have high single digit PC unit volume and against a market that we expect to be flat to down slightly. So we are going to be in good position and meet the market demand in 2020," said Swan.

"We look to deliver on our full year outlook and to begin to build the inventory levels to more natural position so that the mix dynamics of what product we sell and when, we can manage the volatility in that much better than we have been able to in the fourth quarter. So supply constraints, we are maniacal about eliminating those so that we can meet customer demand and never have to worry about it," he added.

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