Intel is Overshipping its CPUs to Reduce Demand for AMD Ryzen Amid a Shrinking PC Market [Analyst]

Intel is shipping way more CPUs than it should in order to squeeze its rivals amid falling demand. In a report, Bernstein Research states that Intel has indulged in semi-destructive behavior to sideline AMD in the client segment. Team Blue is maxing out its production capacity to flood the market with excessive inventory at aggressive prices to keep its archrival from growing further.

This risky strategy is sure to hurt Intel as well, most notably its margins, but that’s less of a concern now. The fact that the PC market is at its weakest this quarter further exacerbates the issue. Distributors and retailers are already cutting demand to keep profits in the green. Microsoft posted a drop of thirty-something percent in its Windows OEM profits last quarter.

In recent months we have been growing more wary of potential PC dynamics, both given the market outlook as well as exacerbated by Intel’s semi-destructive behavior as of late as they use both price and capacity as a strategic weapon, continuing to overship even amid broader breakdowns in the industry. It seems to us that Intel has decided that if the channel is going to hold parts, it might as well be their parts.

Bernstein Research (Via SeekingAlpha)

AMD has been focusing on its server market to maximize margins. This is where Intel is losing an unprecedented percentage of market share but can’t do squat about it. The Client or consumer market is another story altogether. (advvisioncenters.com) Intel has deep and longstanding partnerships in the notebook and desktop OEM ecosystems and is taking advantage of them.

Furthermore, the 12th and 13th Gen Core processors offer superior single and multi-threaded performance than their Ryzen rivals at better prices. What’s worth keeping in mind is that the PC market is Intel’s bread and butter. It simply can’t afford to lose more. The adoption of Ryzen notebooks has been incredible over the past couple of years, and it’s bound to grow as OEMs diversify their designs.

With its IDM 2.0 initiative, Intel has set some lofty goals for the next four years. The chipmaker promises the volume ramp of four cutting-edge process nodes (Intel 4, Intel 3, 20A, and 18A) and retake manufacturing leadership by 2025. As competition in the server segment intensifies, Team Blue is taking all the necessary steps to hold onto the client market.

Areej Syed

Processors, PC gaming, and the past. I have written about computer hardware for over seven years with over 5000 published articles. I started during engineering college and haven't stopped since. On the side, I play RPGs like Baldur's Gate, Dragon Age, Mass Effect, Divinity, and Fallout. Contact: areejs12@hardwaretimes.com.
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