Intel Corp, which dominates the market for PC processors, said it is taking steps to increase output and alleviate a shortage that had threatened to slow the industry’s growth.
The Santa Clara, California-based chipmaker has added an extra US$1 billion to its capital equipment budget this year, increasing output from existing facilities in the US, Ireland and Israel.
The company said it has been surprised by a return to growth in demand for PCs.
Total spending this year would be US$15 billion, Intel said in a letter to customers posted on its Web site on Friday.
The shares gained 3.1 percent to US$47.29 in New York trading on Friday, after jumping as much as 4.1 percent on the announcement. Rival Advanced Micro Devices Inc (AMD) fell as much as 8 percent on concern that increasing production by Intel would deprive it of the chance to gain market share.
Intel’s effort to try to reassure its customers and investors about the company’s production highlights the importance of output from its factories to the computing industry and the concern that has been building. The chipmaker’s processors are the heart of more than 90 percent of the world’s laptops and almost all server computers.
Intel has struggled to shift to a more-advanced manufacturing technique, called 10-nanometer, and that has given rivals such as AMD a chance to catch up in this crucial part of the chip industry. Friday’s update suggests that demand for Intel’s current chips remains strong.
Longer-term implications might not be as rosy, Sanford C. Bernstein analyst Stacy Rasgon said.
Boosting production of older technology raises costs, as does raising spending on production equipment that can become outmoded, he wrote in a note to investors.
Intel’s announcement also does not shut the door on AMD making market share gains because its chips tend to be cheaper, a segment of the business that Intel has said it is not prioritizing, Rasgon added.
Intel said it is making progress in moving its output to 10-nanometer technology, an effort that is as much as two years late, according to some analysts’ estimates.
“Yields are improving and we continue to expect volume production in 2019,” Intel said.
Yield refers to the amount of usable chips made from every production batch.
Shrinking the dimensions of the tiny transistors that give chips their function allows chipmakers to produce them more cheaply, make them more powerful or give them the ability to use less electricity. Intel has led the race to make such improvements, measured in nanometers, or billionths of a meter, for decades. The increase in spending would go to the older 14-nanometer production, a technique introduced at the end of 2013.
Intel said it is devoting production resources to high-end chips such as server parts. That might cause a shortage of budget PC chips.
The squeeze would not affect Intel’s ability to hit annual revenue targets, according to the statement.
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