Intel’s CPU shortage is threatening to drag down PC and computer component sales from Taiwan’s top two vendors: Asus and Acer.
On Tuesday, Asus CEO Jerry Shen warned investors during an earnings call that the CPU shortage may last until next Q3 2019 or beyond. In the meantime, the company’s motherboard business is taking a hit.
“From now until next year, the uncertainty with the shortage will be considerably huge,” he added.
Last Friday, Acer also went out of its way to say the CPU shortage was cutting into the company’s PC sales. As a result, the vendor’s revenue was down year over year by 11.1 percent in October.
The shortage, which began in the third quarter, has been limiting supplies of entry-level CPUs, according to Intel. However, certain high-powered desktop CPUs have also been hard to find in recent weeks.
There is some good news. Intel has been prioritizing chips for laptops in the gaming and commercial segments, according to Shen. Another Taiwanese PC vendor, MSI, separately told PCMag the same. “Mobile CPU gets less impact,” said Sam Chern, MSI marketing manager, in an email. “The shortage is mainly desktop CPU.”
Intel declined to comment on when the shortage might end. But in September, the company announced it was investing $1 billion in its manufacturing sites to produce more chips.
“Within our CPU product lines, we’re prioritizing the production of our Xeon and Core processors so that we and our customers can serve the high-performance segments of the market,” interim Intel CEO Bob Swan said in an earnings call last month.
Nevertheless, the Intel CPU shortage doesn’t bode well for the PC market when the holiday shopping season is about to begin. The main worry is that PC vendors, especially smaller ones, won’t be able to pump out as many products, according to analysts.
“We have definitely seen the shortage affecting the consumer PC supply because manufacturers put more priority to allocate CPUs for business PCs,” Gartner analyst Mikako Kitagawa told PCMag. However, the shortage may be an opening for Intel’s rival AMD, which has been releasing new chips.
“Using AMD solutions is something all companies are now considering,” Asus’ Shen said during Tuesday’s earnings call.
However, the PC vendor’s challenges don’t end with the chip supplies; the US-China trade war also risks adding new costs on the company’s business. In September, the Trump administration imposed a 10 percent tariff on Chinese imports, including on PC components such as motherboards and graphics cards. By January, the tariffs will rise to 25 percent, meaning building a PC could get a lot pricier.
To avoid the tariffs, Asus’s CEO said the company is considering moving certain product manufacturing from factories in China to other locations such as Vietnam, Indonesia, and Taiwan.