Intel CEO Swan says chip shortages will never happen again on his watch

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Newly-confirmed Intel chief executive Bob Swan made a bold claim on Thursday afternoon: that the company’s manufacturing would never again be a constraint on customer growth, following several quarters in which it did just that.

Put another way, Intel said that it was investing again in more 14nm capacity, even as it planned to offer a higher volume of next-gen 10nm products during the 2019 holiday season than it had originally planned.

Both statements came as Intel reported a tumultuous second quarter. The PC-centric Client Computing Group—which has historically struggled, and which Intel was gradually deemphasizing—reported positive revenue and operating income growth, while the historically more successful Data Center Group saw revenue and operating income decline. That, as Intel reported flat revenue of $16.1 billion and an 11-percent drop in profit to $4.0 billion YOY, and lowered full-year revenue forecasts because of a “more cautious” view of the year. Whew!

intel q1 2019 earnings ccg results Intel

A summary of how Intel’s Client Computing Group fared during the first quarter 2019.

Swan, who was named permanent CEO in January, has already overseen the company’s withdrawal from the 5G smartphone modem market. Swan referred to Intel’s divestiture of McAfee and its sale of Wind River as indicators that Intel plans to get back to basics. Swan described the company’s decision on what to do with the 5G technology it developed as a “work in progress.”

“By doing fewer things, we’ll execute better at the things that matter most,” Swan said. 

What this means to you: Intel, as the old curse goes, is living in interesting times. Some Wall Street analysts seemed irritated that Intel’s steady streak of successful quarters had stalled. Poor Swan was even mistakenly referred to as an interim CEO by his own investor-relations chief during introductions. Intel’s 5G plans appear to have flopped, again, and who knows how quickly Intel will be able to ramp 14nm capacity.

One bright spot: Microsoft’s own earnings call signaled that Intel’s manufacturing was back on track, now and in the quarters to come. Or will Swan’s bold statements come back to haunt him?

PC processor plans on track

Intel has been fairly forthcoming with its plans for the PC market, and little appears to have changed. Intel still plans to qualify its first 10nm chip, Ice Lake, with customers during the second quarter, with PCs using it on store shelves by the holidays. What’s changed is that Intel’s confidence in its 10nm production is improving, and it plans to ship more units during the fourth quarter than previously indicated, Swan said.



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