Intel is reallocating production capacity for its upcoming Panther Lake chips from the consumer PC market to its data center division, citing a severe memory crisis and a projected downturn in PC sales. Intel CEO Lip-Bu Tan indicated that the next few quarters will be challenging for the PC market during the company's latest earnings call.
This strategic shift involves repurposing 18A wafers initially intended for Panther Lake products. CFO David Zinsner confirmed that this capacity will be used to build more data center wafers, a move prompted by the difficulties in selling consumer chips. The primary consumer chip families on the 18A node are Panther Lake and Wildcat Lake, with Clearwater Forest designated for corporate customers.
Despite the challenges, Intel has successfully ramped up Panther Lake production on the 18A process. However, the company is experiencing strong demand for its more budget-friendly Wildcat Lake offerings, which are reportedly sold out. Zinsner noted that Wildcat Lake units increased by approximately 70% sequentially and are currently out of stock. This surge in demand for budget options underscores the market's sensitivity to pricing amidst the broader economic climate.
Beyond wafer allocation, Intel is also facing constraints on the substrate side, further complicating production and supply chain management. The company's internal outlook for the consumer PC and gaming chip group (CCPG) suggests a potential decline of over 20% sequentially in the coming quarters. This forecast is attributed to companies reducing inventory and orders heading into the new year.
The current memory and storage crisis, exacerbated by factors like AI demand, shows little sign of immediate relief and is projected to continue impacting the market through 2027, potentially extending to 2030. This situation creates a ripple effect, causing consumers to reduce purchases, leading retailers and suppliers to cut orders, and ultimately affecting manufacturers like Intel. In response to these market pressures, Intel's share price has seen a significant decline of 23% in after-hours trading.