For several consecutive quarters, Intel emphasized that it has no problem increasing the volume of its own products, but is not fully satisfied by the market due to a shortage of related third-party components. At the quarterly reporting conference, the company’s management made it clear that it is not worth counting on deficit containment by the end of this year and it will continue for part of 2023.
Intel CEO Patrick Gelsinger remindthat the company ran out of substrates and silicon wafers last year, and the same laptop makers suffered badly from shortages of some third-party components. Other market segments were also affected, be it the server, automotive or Internet of Things segments.
Intel considers itself a privileged player in the market as it has its own manufacturing facilities. The latter allow not only a quick response to peaks in demand, but also better control of production costs. At least now Intel is minimally dependent on the prices of contract manufacturers’ services and therefore does not transfer their growth to the costs of their own products for customers.
In the fourth quarter, the company managed to ship a record number of server components and reduced the cost of 10nm products by 30% in one year. Intel partners have been able to increase the number of substrates produced for their needs, albeit with direct financial support from the processor giant. As explained by the CEO, the company increased the amount of advance payments on future deliveries of silicon wafers, substrates, process equipment and the provision of services by contract manufacturers within the framework of long-term contracts. Indeed, about $1.6 billion in prepayments was made in the fourth quarter, up eight times from a year earlier. We are also particularly proud of the agreement reached with ASML for the delivery of the first serial lithography scanner, which enables the production of chips with Intel 18A technology using high-aperture optics.