Did you think the chip shortages were getting better? Think again. Intel confirms WCCF rumour that the entire industry is running out of substrates.

[Master Disaster]

A few months ago rumour mill WCCF posted an article about the industry running out of ABF Substrates, as is the correct thing with WCCF rumours though, most people ignored it. Well turns out they were absolutely correct.

 

In a recent investor earnings call Intel has confirmed that they are running low on substrates and the entire industry is facing a shortage as demand hugely outstrips supply. Intel also confirmed this is going to impact the price of consumer products more dramatically as they intend to prioritise their server SKUs  over consumer SKUs for the coming months.

Quote

As we exclusively reported almost a quarter back, Intel in a supply exceeds demand situation where they are running out of raw materials to produce their chips. This is something that has now been confirmed by the company. As we reported, only consumer chips are going to be impacted due to ABF shortages as the company is prioirtizing server shipments (Ice Lake specifically) to protect its x86 market share.

They stated this is the reason for recent Ice Lake price spikes over the last few months and that they expect this to get worse when Alder Lake launches.

Quote

In terms of priority we are told Intel is dedicating the most resources to servers, then mobility and finally desktop consumer parts. This is also why Tiger Lake has had intermittent supply and price hikes and is something that is expected to get worse with Alder Lake. What we are seeing with GPU prices (premium) is slowly going to be the case with CPUs as well considering the global chip squeeze isn't expected to end till 2023.

Upstream substrate manufacturers are running at 100% capacity and are already unable to meet demand, since the supply issue is upstream there's not much foundries can do except wait.

Quote

Upstream 300mm wafer manufacturers like Shin-Etsu and Global Wafers are already running at a 100% capacity and there is a finite supply of substrate trickling down to downstream foundries like Intel. With the company confirming the shortage to its partners, it looks like gamers are up for a very difficult year ahead with cryptocurrencies and substrate shortages having driven prices up. Since the shortage stems from upstream, there is very little foundries like Intel and/or TSMC can do to mitigate this situation.

 

Source - https://wccftech.com/intel-confirms-abf-substrate-issues-going-into-q3-2021-for-consumer-chips/

 

When a company tells their investors things are going to be tough for the next 18 months then it means things are going to be tough for the next 18 months, at least.

 

I don't understand why they'd prioritise server stuff over consumer stuff though, large business is much more likely to swallow a price hike over Mr Joe Consumer.

[Eigenvektor]

5 minutes ago, Master Disaster said:

I don't understand why they'd prioritise server stuff over consumer stuff though, large business is much more likely to swallow a price hike over Mr Joe Consumer.

I think you answered your own question. Server stuff has a better margin and they are more likely to accept a price hike, so it makes sense to prioritize these customers.

 

If you lose the business of a few individual consumers, who cares, they'll come back eventually. If you lose business customers who order a large amount of hardware each year, it's a different story.

[Freakwise]

Silicon getting better and now we have this, what's next?, Pcb shortage?

[Moonzy]

can we go back to GPU shortage? I have the GPU, just want the next gen CPU, please

[Master Disaster]

53 minutes ago, Eigenvektor said:

I think you answered your own question. Server stuff has a better margin and they are more likely to accept a price hike, so it makes sense to prioritize these customers.

 

If you lose the business of a few individual consumers, who cares, they'll come back eventually. If you lose business customers who order a large amount of hardware each year, it's a different story.

Fair but what I meant was, will Intel even bother hiking the price of their server products considering the margins on them are already huge?

 

For all intents and purposes, there's no difference between a Xeon and an I9 except a few bits flipped in the microcode (and maybe a few broken traces to stop pencil overclocking) yet one can be upwards of 3x the cost of the other. You telling me Intel will be increasing that margin even more?

 

Sounds to me like they intend to try to keep business customers appeased by keeping prices as stable as they can (including OEMs since mobile stuff is also getting prioritised) and dumping the entire burden of the shortage onto normal consumers.

[Arika]

12 minutes ago, Master Disaster said:

Sounds to me like they intend to try to keep business customers appeased by keeping prices as stable as they can (including OEMs since mobile stuff is also getting prioritised) and dumping the entire burden of the shortage onto normal consumers.

Which would be expected from literally any manufacturer of any product. Business customers come first because that's where the bulk of the money is.

 

Individual consumers like to think they matter, but ultimately, they don't.

[Master Disaster]

6 minutes ago, Arika S said:

Which would be expected from literally any manufacturer of any product. Business customers come first because that's where the bulk of the money is.

 

Individual consumers like to think they matter, but ultimately, they don't.

Unless your business has been top dog for over 10 years but recently a competitor has started stealing your marketshare with a better product that is cheaper.

 

Intel server customers are likely to buy Intel replacements no matter how much it costs them, Joe Consumer is gonna shrug, say Fuck It and buy an AMD instead. AMD is going to retake the consumer CPU crown and IMO its unlikely Intel will be in a position to retake it any time soon.

 

Being the gaming top dog might not be as important as being the server or mobile top togs but I guarantee you they do care about it.

[Arika]

2 minutes ago, Master Disaster said:

Unless your business has been top dog for over 10 years but recently a competitor has started stealing your marketshare with a better product that is cheaper.

 

If you were intel and you had to make 50,000 CPUs, would you rather prioritize customers that:

• are guaranteed to buy all 50,000 units and keep them coming back

or

• people that respond to every new announcement or launch of a new product with "huurruduududurrrrr 14nm++++++++++++++++++++" 

 

Quote

Intel server customers are likely to buy Intel replacements no matter how much it costs them, Joe Consumer is gonna shrug, say Fuck It and buy an AMD instead. AMD is going to retake the consumer CPU crown and IMO its unlikely Intel will be in a position to retake it any time soon.

You're assuming that they have enough substrates to even meet their business customers needs if they did push the cost onto businesses by focusing on consumer parts. hiking up the price doesn't mean anything if you can't fulfil an order. That would be more damaging to Intel if their business customers end up feeling like they cannot rely on them to provide the products they need, more than a few individuals who are salty that the price as gone up on a CPU in a market where prices for anything with silicon is stupid.

 

If that pushes more people to AMD, then so be it, it's what this forum wants anyway.

 

Let me change my response from my first reply:

Gamers like to think they matter, but ultimately, they don't.

[Master Disaster]

6 minutes ago, Arika S said:

If you were intel and you had to make 50,000 CPUs, would you rather prioritize customers that:

• are guaranteed to buy all 50,000 units and keep them coming back

or

• people that respond to every new announcement or launch of a new product with "huurruduududurrrrr 14nm++++++++++++++++++++" 

 

You're assuming that they have enough substrates to even meet their business customers needs if they did push the cost onto businesses by focusing on consumer parts. hiking up the price doesn't mean anything if you can't fulfil an order. That would be more damaging to Intel if their business customers end up feeling like they cannot rely on them to provide the products they need, more than a few individuals who are salty that the price as gone up on a CPU in a market where prices for anything with silicon is stupid.

 

If that pushes more people to AMD, then so be it, it's what this forum wants anyway.

 

Let me change my response from my first reply:

Gamers like to think they matter, but ultimately, they don't.

I see the logic and I understand that it makes good business sense, I just don't like it.

 

A few others are saying these shortages are going to affect Intel disproportionately since apparently, TSMC has a higher level of control over their substrate supply chain. Intel's supplier also supplies others and Intel are in the queue with everyone else.

 

So while Intel is taking a dump over its non business consumers, AMD should be able to keep productions levels close to normality.

[porina]

45 minutes ago, Master Disaster said:

Fair but what I meant was, will Intel even bother hiking the price of their server products considering the margins on them are already huge?

The list pricing is unlikely to be the pricing any large buyer actually pays. It's a starting point for negotiation, but not the final number. Think people have tried to work out what they really charge based on sales revenue and units shifted, but don't know how reliable those attempts are.

 

45 minutes ago, Master Disaster said:

For all intents and purposes, there's no difference between a Xeon and an I9 except a few bits flipped in the microcode (and maybe a few broken traces to stop pencil overclocking) yet one can be upwards of 3x the cost of the other.

Which Xeons? The ones which have direct counterparts in the consumer world are usually not priced that differently.

 

The serious higher end stuff that doesn't overlap with consumer models obviously can't be directly compared.

 

45 minutes ago, Master Disaster said:

Sounds to me like they intend to try to keep business customers appeased by keeping prices as stable as they can (including OEMs since mobile stuff is also getting prioritised) and dumping the entire burden of the shortage onto normal consumers.

Within a product lifespan official pricing changes are uncommon. Also large customers may aim for longer term contracts too.

[Master Disaster]

6 minutes ago, porina said:

Which Xeons? The ones which have direct counterparts in the consumer world are usually not priced that differently.

 

The serious higher end stuff that doesn't overlap with consumer models obviously can't be directly compared.

I'm not talking about the product as is on the shelf though, more in production.

 

Xeons & HEDTs are all from the same wafer, Xeons are higher binned ones, HEDTs are lower binned ones. They cost Intel the exact same price to fab.

[Mark Kaine]

48 minutes ago, Master Disaster said:

Unless your business has been top dog for over 10 years but recently a competitor has started stealing your marketshare with a better product that is cheaper.

 

Intel server customers are likely to buy Intel replacements no matter how much it costs them, Joe Consumer is gonna shrug, say Fuck It and buy an AMD instead. AMD is going to retake the consumer CPU crown and IMO its unlikely Intel will be in a position to retake it any time soon.

 

Being the gaming top dog might not be as important as being the server or mobile top togs but I guarantee you they do care about it.

did you not see their latest "presentation"? they dont give a fuck lol.

Back to you Steve

[Master Disaster]

Just now, Mark Kaine said:

did you not see their latest "presentation"? they dont give a fuck lol.

Back to you Steve

I did not, you gotta link? (You canny beat a good Intel marketing slide )

[GDRRiley]

its been a pretty common thing stated in the rumor land for hardware with mid 2022 more supply coming.

I expect it would give it to servers over desktop because desktop makes so low margins and anytime a customer struggles to get a server chip, they may flip to AMD

[Mark Kaine]

18 minutes ago, Master Disaster said:

I did not, you gotta link? (You canny beat a good Intel marketing slide )

 

[leadeater]

3 hours ago, Master Disaster said:

I don't understand why they'd prioritise server stuff over consumer stuff though, large business is much more likely to swallow a price hike over Mr Joe Consumer.

Because business customers cannot wait, when something is ending warranty support period you either have to pay to extend it (not generally favorable) or purchase a replacement. If Intel cannot supply that business customer then they will turn to AMD, who will also prioritize server CPUs for the same reason.

 

Consumer customers are far more forgiving with time frames, businesses are not.

[leadeater]

1 hour ago, Master Disaster said:

Xeons & HEDTs are all from the same wafer, Xeons are higher binned ones, HEDTs are lower binned ones.

They used to be but not anymore. HEDT and Xeon-W only share that now, Scalable Xeon does not anymore.

[tikker]

Unfortunately I'm not really surprised. I was expecting the shortages to continue for a bit. This is speculation on my side, but Im guessing at first there was still a buffer of sorts. Now that the world has all but stopped for almost 2 years those buffers are empty and the entire industry is basically living paycheck to paycheck in terms of materials.

 

No new PC for a little while longer I guess

[porina]

5 minutes ago, leadeater said:

Because business customers cannot wait, when something is ending warranty support period you either have to pay to extend it (not generally favorable) or purchase a replacement. If Intel cannot supply that business customer then they will turn to AMD, who will also prioritize server CPUs for the same reason.

Out of interest, are you seeing constraint in server supplies?

 

In a recent interview, the lead of Final Fantasy XIV said that they were having trouble sourcing additional servers, even at above market rates. A large increase in player numbers is leading to login congestion, so the simple and obvious fix is more servers. But it appears they're unable to do that in a timely manner. I don't know how many systems go into each gaming "server" but they did recently announced an additional datacentre*, and showed a photo where I count 9 racks.

 

*In a similar way there are game servers implemented in hardware servers, they group their game servers into game datacentres. I don't know if they host their own or rent part of a managed datacentre.

[leadeater]

11 minutes ago, porina said:

Out of interest, are you seeing constraint in server supplies?

Not really no, but we haven't been placing orders larger than 6 for a while. We have a lot up for replacement next year though.

 

A Supermicro server with 2x 7713, 1TB RAM, 2x Nvidia A40 (plus the extras not worth mentioning) current pricing within last week or 2 weeks is around ~$35k NZD (~$24k USD). Supermicro itemizes their quotes so I have the actual CPU prices but I can't actually say what it is.

 

Same HPE server configuration is like $30k NZD more btw, words are being had 

[Master Disaster]

1 hour ago, leadeater said:

Because business customers cannot wait, when something is ending warranty support period you either have to pay to extend it (not generally favorable) or purchase a replacement. If Intel cannot supply that business customer then they will turn to AMD, who will also prioritize server CPUs for the same reason.

 

Consumer customers are far more forgiving with time frames, businesses are not.

Apparently AMD might not be hit as hard as Intel since TSMC seems to have dedicated substrate suppliers, Intel relies on the same suppliers as everyone else. If that is true then it might end up being a double whammy for Intel, while they're imposing restrictions their competition is carrying on almost as normal.

[Mark Kaine]

It really sux too i wanted an EAlderlake for that PS3 goodness…no seriously. but looks i may not be able to afford it… ~300-400 is max for CPU imo, i can spend. And AMD will probably price hike too. Oof.

 

 

[Guest willies leg]

I thought it was mostly because of the Republic of China's unwillingness to export chips. That's what CNN said, except they used the term Taiwan.

[Murasaki]

So am i supposed to panic buy my future ryzen cpu now?

[CarlBar]

2 hours ago, Master Disaster said:

Apparently AMD might not be hit as hard as Intel since TSMC seems to have dedicated substrate suppliers, Intel relies on the same suppliers as everyone else. If that is true then it might end up being a double whammy for Intel, while they're imposing restrictions their competition is carrying on almost as normal.

 

Again though thats going to be eaten up pretty hard by the difference in scale. AMD, or rather TSMC doesn't have the production capacity to take away the majority of Intel's customer base. Intel's scale lead in terms of compute node fab capacity is just huge. they could be running at significantly reduced capacity and still have a bigger market share than AMD on that basis alone.