Intel faces chip shortages despite losing ground to competitors

Intel is experiencing supply shortages for its processors despite facing significant competitive challenges in the chip manufacturing industry. The shortages are driven by high demand for AI computing infrastructure and businesses upgrading to Windows 11, creating unexpected constraints for the struggling chipmaker.

What you should know: The supply crunch affects Intel’s older manufacturing nodes, specifically Intel 10 and Intel 7 technologies used to produce current-generation processors.

• “The shortage is pretty much across our business,” said Intel CFO David Zinsner during the company’s Q3 earnings call.
• The tight supply situation is expected to persist into next year as Intel hasn’t been investing in expanding capacity for these older chip nodes.
• Zinsner explained that “as we get more demand, we’re constrained. In some ways, we’re living off of inventory.”

Why this matters: The shortage highlights how AI’s explosive growth is creating unexpected demand patterns throughout the semiconductor industry, even for companies that have lost their technological edge.

• Intel has been forced to rely on rival TSMC to manufacture some of its newest chips, including Lunar Lake laptop processors and Arrow Lake desktop chips.
• The situation demonstrates how legacy technologies can become bottlenecks when market demand shifts rapidly.

Key demand drivers: Two major factors are fueling the unexpected surge in orders for Intel’s older processor technologies.

• Companies are rushing to build new data centers to meet surging AI computing demand, driving server CPU purchases.
• The Windows 10 to Windows 11 migration is requiring more PC hardware upgrades than anticipated, with Raptor Lake processors addressing this market need.
• “The Windows refresh is happening more significantly than I think we expected,” Zinsner noted.

Looking ahead: Intel is preparing new processor generations using advanced manufacturing technologies to compete more effectively.

• CEO Lip-Bu Tan confirmed the company remains on track to launch its first Intel 18A chip for PCs, called “Panther Lake,” by year’s end.
• Additional processors using the 18A node will follow in the first half of 2026.
• For desktop gaming, Intel’s next-generation “Nova Lake” processors will combine new architecture with software upgrades, though they won’t arrive until next year and will use both Intel’s 18A node and TSMC manufacturing.

What they’re saying: Intel executives expressed confidence in their upcoming product portfolio despite current manufacturing constraints.

• “With this lineup, we believe we will have the strongest PC portfolio in years,” Tan said regarding the Nova Lake desktop processors targeting PC gaming enthusiasts.