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Intel Corp. has been reporting strong financial results this year since it gained market share from Advanced Micro Devices, enjoyed increased sales of corporate PCs and introduced rather competitive products for various market segments. However, the success of Intel’s products could also has its disadvantage: since the company is boosting inventory in the channel, this may impact its future sales.
It is normal for chipmakers to build channel inventory in the first half of the year and then sell it in the second half of the year. According to Stacy Rasgon, an analyst with Bernstein Research, the situation with Intel this year is somewhat atypical since inventory build in the first half of 2014 was not followed by channel inventory drain in the second half of the year. The world’s largest chipmaker sells microprocessors at a rate that surpasses sales of PCs, thus continues to build up inventory in the channel.
“Far from draining channel inventory in 2H14, Intel’s Q3 results and implied Q4 outlook suggest channel inventories will continue to build into the second half of the year, an event we have not seen in years and years,” said Ms. Rasgon in a note to clients, reports Tech Trader Daily. “This is not necessarily inconsistent with Intel’s own statements (they have indicated they are replenishing the channel in front of a “normal” consumer sell-through season).”
If sales of personal computers during the holiday season and prior the Chinese New Year are high enough, then Intel’s chips will all be used to build systems. However, if sales of PCs fall short of expectations, then there will be millions of unsold Intel’s processors in the channel.
Excessive amount of microprocessors in the channel will make it harder for Intel and partners to sell future chips, including mainstream central processing units based on the “Broadwell” and the “Skylake” micro-architectures starting from the second quarter of 2015. In the worst-case scenario Intel may even need to delay (or limit) new product launches to sell older products first.
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KitGuru Says: Intel is clearly interested in selling as many CPUs as possible, it is just natural for the company. What is unclear is why PC makers and channel partners of the chip giant get more microprocessors than they can possibly sell?
They can drop prices if they want…
After AMD failed to keep up on the raw power game, intel’s prices skyrocketed.
Pretty normal sure, no competition is bad for us, the consumers, but maybe they want to do something about their inner competition.
Their old CPUs are good enough to not worth that high price for an upgrade, so they need to make CPUs that give more than just 5-10% in power, if they don’t want to lower the prices.
You have to understand though AMD and Intel tackle completely different things outside the workstation/server market. AMD hasn’t put out a 16 core opteron since 2012. The FX chips were marketed towards streaming/small server applications/development and other things while being strong also in the price to performance area. Intel does terrible in price to performance, but their raw power is designed for editing rigs/general use/single thread and core tasks. Another issues is that people buy into the brand name game rather than tackling what’s best for their budget+what they are doing or going to be doing. That’s what usually hurts sales. Ignorant consumers buying parts for all the wrong reasons. I can see AMD hurting themselves though not for raw power, but for putting things on hold and delaying things.
I do not disagree, I just remember a time when the competition between both gave us impressive new CPUs and nice prices.
We will probably be seeing that again with the new AMDs vs the New Intels. The FX line was a step away. I kinda wanna see AMD put out a new 16+ core opteron again…it has been too long like 2 years. ><
I resent your analysis. Intel has innovated and provided so much in terms of new instructions and better speed. The problem is software hasn’t been keeping up even in the professional sector. How many programs take advantage of AVX 256 released with Sandy bridge? I know of 4.
So many programs aren’t parallel enough to push Intel chips, and single-threaded performance can’t keep getting better forever. Vertical scaling has limits relative to the lengths of circuits in a CPU. The only way Intel can squeeze more single-threaded performance is to drop 16-bit support, x87, and Itanium. If they did that, doe of their big-money customers would riot, not to mention Operating systems would need to completely re-engineer boot loaders which currently start in 16-bit mode in the BIOS, move to 32-bit for parallel loading, and finally 64-bit. The 16-bit instructions are that important, but they’re useless for big applications, yet we know they’re adding to the heat and electrical draw of the chip.
Intel is a victim of its own success and lousy programmers imho.
I agree, my current setup is running a x6 core phenom and I hardly see more than 50% usage and it feels so stupid to have the power but yet to not be able to use it and hit bottleneck in CPU side.
The only time I see good usage is when I do some 3d renderings for use in my job, which is rare since I work more in 2d graphics.
I agree, my current setup is running a x6 core phenom and I hardly see more than 50% usage and it feels so stupid to have the power but yet to not be able to use it and hit bottleneck in CPU side.
The only time I see good usage is when I do some 3d renderings for use in my job, which is rare since I work more in 2d graphics.
Intel may even need to delay (or limit) new product launches to sell older products first.
Exactly there’s way to many processors on the market now, could you just imagine if they were to launch Broadwell-E after Skylake, plus Haswell-E and Haswell devil’s canyon with some Z87 motherboard still kicking around wow what a mess. Reminds me of the Nehalem days and Westmere Gulftown.
It’ll clean up really nice when AMD files for bankruptcy after 2015, maybe before their Zen K12 Architecture or after either way is good for me.
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