Intel is pressuring PC and notebook manufacturers to build new systems around its 18A processors. The chipmaker is said to have severely limited the availability of older Intel 7 processors for consumer products, leaving OEMs with few other options.
According to sources at Nikkei Asia, this includes the new Panther Lake and Wildcat Lake processors, which are manufactured using Intel’s 18A process. Partners have reportedly been told by Intel that the availability of these chips is better than that of older generations, such as Alder Lake, Raptor Lake, and Arrow Lake.
At the same time, Intel is reportedly increasingly prioritizing its remaining Intel 7 capacity for servers and industrial applications, according to Tom’s Hardware. That segment yields higher margins than consumer hardware. According to an executive in the PC sector, margins on industrial CPUs are about twenty percent higher than on comparable consumer processors.
Intel 7 still underpins a significant portion of Intel’s portfolio, including Xeon server chips and desktop and notebook processors. The strong growth of AI workloads in data centers has significantly boosted demand for server processors. Intel, therefore, appears to be shifting capacity to its Datacenter and AI division.
CFO David Zinsner indicated last year that Intel was facing constraints related to Intel 7 and Intel 10 production. He noted that the company was struggling to supply enough chips for both data center and client products. According to Nikkei Asia, there are currently no plans to expand Intel 7 production capacity further.
Deliveries Partially Replaced by 18A Processors
A source told Nikkei Asia how an order for 100 Intel 7 processors ultimately resulted in a shipment of only 30 units. Furthermore, ten of those chips were reportedly replaced by newer 18A processors that had not been explicitly ordered. According to the same source, manufacturers were told that the 18A CPUs would otherwise go to competing suppliers.
Intel itself does not confirm that customers are being actively steered toward the 18A. However, the company told Nikkei Asia that its new Core Series 3 processors are an important part of its client strategy.
Many manufacturers reportedly initially developed only limited numbers of systems with 18A processors. Not because of high market demand, but primarily to support Intel’s introduction of the new chips. According to sources, the processors are relatively expensive and primarily aimed at the premium segment.
Higher price point
The situation is now changing rapidly as manufacturers may need to accelerate adjustments to their product lines. According to an industry executive, it takes at least three months to develop and certify new designs. Furthermore, a switch to more expensive processors often requires higher-end displays and other components to justify the higher price point.
Furthermore, Wildcat Lake has only recently become available. As a result, manufacturers may have to purchase large volumes from a platform that has not yet been commercially proven.
Intel also has a stake in rapidly scaling up 18A production. Zinsner previously indicated that the yields from the production process are currently insufficient to achieve strong margins. Higher volumes should help bring down production costs more quickly.