Key points from the letter include:
- Intel is prioritizing the production of Intel Xeon and Intel Core processors to maintain its position in high-performance segments of the PC market.
- Intel increased CapEx outlook to $15B from $14B prior, and the incremental $1B will be used towards Intel’s 14nm facilities.
- Intel reaffirmed its CY18 revenue outlook (revenue target of $69.5B).
- Intel continues to make progress with 10nm, and yields are improving.
“The actions we are taking have put us on a path of continuous improvement. At the end of the day, we want to help you make great products and deliver strong business results. Many of you have been longtime Intel customers and partners, and you have seen us at our best when we are solving problems,” Swan wrote.
For some reason, the street viewed Swan’s update as negative for Advanced Micro Devices (AMD), sending the stock tumbling nearly 5% in Friday’s trading session.
RBC’s top analyst Amit Daryanani noted, “In our opinion, Intel’s CPU shortage is expected to worsen Dec-qtr vs. a relatively mild impact in Sept-qtr due to Intel possibly shifting capacity from 14nm to 10nm to prepare for its delayed 10nm ramp. Compal [CEO Martin Wong] noted that the shortage of Intel’s CPUs would not be resolved until 2H19 and revised forecasts down to flat for the latter part of the year.”