The functioning of the technology companies, especially in the consumer electronics sector, is so closely interlinked that each of them depends on the other to keep going. It is best explained by the crisis in the PC industry due to short-supply of microprocessors, the cause of which can be traced to the production issues at Intel (INTC).
Intel, which was dethroned from the top position by Samsung recently, has been facing investor scrutiny following reports that the company is struggling to meet the demand for its 14 nm chips. However, the management dismissed the matter and claimed it has sufficient backup to meet customers’ requirements.
Intel has been facing investor scrutiny following reports that the company is struggling to meet the demand for its 14 nm chips
It is feared that the PC market will be severely affected by the shortage of Intel chips in the fourth quarter. Statistics show PC shipments increased at the fastest pace in six years in the June quarter.JP Morgan estimates a 5-7% fall in the shipments in the fourth quarter, including desktops and laptops. The research firm believes the shortage of microprocessors is worsening progressively and could drag the revenues of manufacturers in the coming months.
The inadequate availability of 14np chips is also creating pricing issues, and there are reports that at one point Intel had weighed the option of outsourcing production to Taiwan Semiconductor Manufacturing Company.
There are a number of PC brands designed to run only on Intel chips, which leaves manufacturers with limited alternatives. A section of market watchers thinks there is a link between Intel’s operational issues and the recent exit of Brian Krzanich as CEO, following allegations of workplace misconduct.
And, of course, Intel’s loss is AMD’s (AMD) gain, which is preparing to launch the next generation chips in a few months. On the other hand, Intel has no plans to launch new products any time before the final months of next year. If the current situation prevails, AMD might replace Intel from its current position soon.
After hitting an 18-year high in June, Intel shares have been moving southward, slipping to a fresh low earlier this month. The stock witnessed a 3% decline so far this year and traded flat during Friday’s regular session.