Intel Corp. Is Facing Supply Challenges With Its Skylake Processors -- Again

By Ashraf

A picture of Intel's quad core Skylake die size. Image source: Intel.

In early August this year, Intel introduced a new set of processors aimed at enthusiast desktop buyers. Relative to the processors they were supposed to succeed, these chips benefited from both a move to Intel's new 14-nanometer manufacturing technology as well as a two-generation leap in processor architecture.

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The chips themselves received positive reviews and early on Intel faced some serious supply shortages. However, Intel's PR department assured anybody in the press who asked that supply would improve as the third quarter of the year progressed. And, for a while, supply did improve as promised.

However, it would seem Intel is once again facing some supply issues with these chips.

The evidence is in plain sightAccording to Intel, the "MSRP" for these processors is $350 ($339 when sold in "tray" form to system builders). Historically, PC builders in North America could count on being able to buy processors at prices that just about matched the MSRP through the various online retailers.

Imagine my surprise, then, when I saw that, arguably the most popular online retailer for computer gear, is selling these chips for $389.99.

I purchased mine from the very same website for "just" $369.99 a few months ago. (not some third-party seller on, which is generally known for having extremely competitive prices, is selling the chip for a whopping $429.99.

It's clear these retailers are gouging because they know supply is relatively tight.

Why is supply so tight?As I have written previously, I believe Intel is still struggling to try to improve its manufacturing yields on its latest 14-nanometer process upon which these Skylake chips are built. This means Intel's effective capacity to build products on its 14-nanometer process is not as high as the company had hoped as wafers produce fewer good chips as hoped.

At the same time, Intel is currently in the process of trying to ramp 14-nanometer volume in other segments of its business. For one thing, Applehas just transitioned its iMac lineup to 14-nanometer silicon, away from 22-nanometer silicon, so Intel needs to make sure Apple gets all of the chips it needs to avoid a shortage.

All of the other PC vendors are transitioning their desktops/notebooks to 14-nanometer Skylake chips as well and Intel needs to make sure they, too, have all the chips they need.

Another thing to keep in mind is that Intel is on the verge of transitioning its server product lines away from 22-nanometer Haswell-EP/EX to 14-nanometer Broadwell-EX. Intel sells quite a lot of server chips and these chips are fairly large, so Intel will need to dedicate quite a lot of wafer starts to supporting this demand, especially if yield issues on the 14-nanometer problem persist into next year.

This "price gouging" may push customers to Intel's higher end x99 platform ... or older Z97If the 6700K could be bought at $350, then for many enthusiasts it could be the better choice than the six-core Intel Core i7 5820K (based on the older Haswell architecture and a different, higher-end chipset), which sells for around $385 on

However, at what is essentially the same price (the 5820K is actually slightly cheaper on, it's much easier to make the case for the 5820K since it can overclock quite nicely (helping to erase the fairly large single-core performance deficit that exists between the chips "out of the box") and has more cores.

Alternatively, customers may simply buy the older generation mainstream Haswell processors and accompanying chipset/motherboards. These chips are actually sold at a fairly sizable discount to the latest Skylake parts, offer fewer platform features and no upgrade path, but could be a reasonable alternative for buyers who need to build systems today.

At any rate, I don't see this shortage necessarily hurting sales of Intel processors to PC enthusiasts, but I could see it pushing customers to buy different Intel platforms.

The article Intel Corp. Is Facing Supply Challenges With Its Skylake Processors -- Again originally appeared on

Ashraf Eassa owns shares of Intel. The Motley Fool owns shares of and recommends and Apple. The Motley Fool recommends Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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