Intel apologizes for PC chip shipment delays in open letter

intel sign
In an open letter, Intel's general manager of sales apologized to customers for continuing delays in PC CPU shipments. The problem had been acknowledged before but continues. (Intel)

Intel apologized for PC CPU shipment delays in an open letter to customers and suppliers sent late Wednesday.

“Supply remains extremely tight in our PC business where we are operating with limited inventory buffers,” according to the letter from Intel. “This makes us less able to absorb the impact of any production variability, which we have experienced in the quarter. This has resulted in the shipment delays you are experiencing, which we appreciate is creating significant challenges for your business.”

The letter was signed by Michelle Johnston Holthaus, general manager of sales, marketing and communications for Intel.

In it, she apologized, opening by saying, “I’d like to acknowledge and sincerely apologize for the impact recent PC CPU shipment delays are having on your business and thank you for your continued partnership.” 

She noted, as other executives have stated earlier, that Intel has invested record levels of funding for capital expenditures to increase 14nm wafer production this year while ramping up 10nm production. She added that Intel is also increasing its use of outside foundries to produce more CPUs.

The added capacity has allowed Intel to increase PC CPU supply by double digits in the second half of the year, compared to the first half, she continued.

“However, sustained market growth in 2019 has outpaced our efforts and exceeded third-party forecasts,” she added. Intel will reach out to customers on various revised shipment schedules.

“We will continue working tirelessly to provide you with Intel products to support your innovation and growth,” the letter concluded.

On a separate note on Intel’s web pages, the company reaffirmed its October earnings guidance despite the supply problem. “Although Intel is working hard to regain supply-demand balance, it remains a challenge,” the statement added.

Third quarter revenue announced Oct. 24 was $19.2 billion, setting a record. At the time, Intel raised its full revenue outlook to $71 billion, up from $1.5 billion in a July guidance statement.

On the October earnings call, CEO Bob Swan indicated the second half shipments of PC client chips were up more than 10%, but added, “that growth hasn’t been sufficient…We are letting customers down.”

Swan said at the time that the company anticipated challenges in the fourth quarter. Apparently, those challenges have continued in late November, prompting the customer letter sent on Wednesday.

Analysts have broadly questioned Intel’s production capabilities due to delays and some have recently raised an old admonition, urging the company to split its fabrication business from its design and research business.

RELATED: Intel at crossroads: Should it split into two companies?