Dell mulls using more AMD chips as Intel chip shortage drags on

Dell CFO Tom Sweet says the company is "evaluating" using more AMD chips for its PCs in light of the continuing Intel chip shipment problems. (Dell)

Dell is considering using more AMD chips amid continuing problems gaining access to Intel processors, according to Dell CFO Tom Sweet.

Sweet spoke on Yahoo Finance’s The First Trade program on Tuesday, saying, “We are evaluating AMD chips,” when asked about how Dell will address the Intel chip shortage problem. Dell predicts it will take until the second half of 2020, at earliest, for Intel to catch up.

Dell has primarily used Intel chips for more than 35 years. 

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Dell recently reported a 6% decline in consumer PC sales in its latest quarter and cited difficulty accessing Intel chips. Server and networking sales also declined by 16%, due instead to economic uncertainty expressed by customers wanting to delay capital spending. On an earnings call Nov. 26, Sweet cited a soft market for servers, particularly in China and large enterprise customers in the U.S. and Europe.

Sweet also forecast a reduction of anticipated revenue for all the current fiscal year “principally due to the Intel supply dynamic.” In response to a question by an analyst, Sweet added, “the Intel CPU shortages [are] causing some dynamics that are causing us to be a little bit more cautious than perhaps we would have been, say, 3 to 4 months ago.”

Earlier on the call, Dell Vice Chairman Jeff Clarke had said that Intel CPU shortages “have worsened quarter-over-quarter. The shortages are now impacting our commercial PC and premium consumer PC Q4 forecasted shipments.”

Intel apologized for its PC CPU shipment delays in an open letter to customers and suppliers on Nov. 20, just days ahead of Dell’s earnings report. The letter was signed by Michelle Johnston Holthaus, general manager of sales, marketing and communications for Intel. She wrote that Intel appreciates that the shipment delays “are creating significant challenges for your business.”

RELATED: Intel apologizes for PC chip shipment delays in open letter

Two analysts downplayed the Intel apology letter, one saying it was a fairly standard practice. However, comments by Sweet and others at Dell clearly show that the shipment delays are having a serious impact.

Intel has invested capital funds for increasing 14nm chip production this year, while ramping up 10nm production. AMD produces chips on a 7nm process, taking up less space on a chip, but Intel has contended that its 10 nm node is comparable to 7nm nodes made by foundries such as TSMC that is used by AMD.

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