Intel says it is lacking enough wafers to meet client demand
When a company is struggling to meet client demand, it can be interpreted one of two ways.
On one hand, it always sounds like a good thing when the demand is bigger than what a company was expecting. On the other hand, it could point to a failure to properly gauge your client's needs, leaving you without the necessary inventory to meet this demand.
It appears that Intel (INTC) could be facing a situation that matches up more with the latter scenario.
While speaking at the UBS Global Technology and AI Conference 2025 last week, the company said it could not meet the demand of clients and data center processors because it lacked a sufficient supply of wafers for its high-performance processors.
Specifically, the company needs more wafers for its Core Ultra 200-series Arrow Lake and Lunar Lake processors for desktop and laptop PCs, as well as edge computing.
"If we had more Lunar Lake wafers, we would be selling more Lunar Lake, if we had more Arrow Lake wafers, we would be selling more Arrow Lake," said Microsoft's John Pitzer.
"I think we feel pretty good about where we are in the AI PC transition."
Growth in the PC market has been slowing, but for a company like Intel that famously (or infamously) missed out on the mobile phone boom, PCs are still a crucial market for its business.
In fact, this segment generated $30.3 billion in revenue for Intel in fiscal year 2024, representing approximately 57%, or the majority, of its total revenue for the year.
The issue for Intel is that while its packaging is done in-house, the logic tile for both Arrow Lake and Lunar Lake CPUs are manufactured by rival Taiwan Semiconductor Manufacturing Company Limited (TSM).
Logic tiles are the "chiplets" that make up contemporary modular processors.
And because TSMC's advanced fabs are almost always fully utilized, Intel will be unable to rapidly ramp up capacity of its needed wafers, as tech reporter Anton Shilov noted.
And so, by not ordering enough of the necessary wafers, Intel may have dug itself in a hole.
This means that even though Intel expects increased demand for its Arrow Lake and Lunar Lake processors in the fourth quarter, it's unclear whether the company will have the necessary supply in order to meet that demand.
Intel's stock has surged 106.5% this year, but many analysts attribute this gain to the "Trump bump" it got when the government took a 9.9% stake in the company back in August.
What Wall Street wants to see are fundamentals showing that its long-awaited turnaround is actually progressing.
However, after a long and often rocky process, Intel finally launched its new Core Ultra 3 processor, called Panther Lake, that was built using its 18A process technology.
Panther Lake is the first product that Intel has built using its 18A technology, and the company calls it “the most advanced semiconductor process ever developed and manufactured in the United States.”
The 18A is primarily used for internal use and CEO Lip-Bu Tan has said the financial viability of Intel's Foundry requires that the company land at least two major external clients that will give the business the scale it needs to be profitable.