1 More Potential Explanation for Intel Corporation's Core X Supply-Demand Imbalance

A combination of potentially higher demand and harder-to-manufacture parts could be driving an apparent supply-to-demand imbalance for Intel's latest chips.

Ashraf Eassa
Ashraf Eassa
Jul 16, 2017 at 6:00PM
Technology and Telecom

I recently wrote about the apparent supply-to-demand imbalance of Intel's (NASDAQ:INTC) eight- and 10-core Core X processors for the high-end desktop market. In short, demand seems to be outstripping supply. 

I pointed to a couple of factors that may be driving this supply to-demand imbalance. The first was that the Skylake-X-based Core X chips are based on the same chips Intel sells to its data-center customers in the form of Xeon Scalable Processors.

The backside of an Intel Core X processor.

Image source: Intel.

Since those data-center customers generally dramatically outnumber the high-end desktop processor customers, and since those data-center customers feed into what is arguably Intel's most important business unit, they're likely to be taken care of first, at the potential expense of consumers.

The second factor I wrote about was that the launch of these chips was rushed. That may have given Intel less-than-typical time to build up inventories of some of these Core X chips -- which, in turn, may have caused Intel not to ship enough initial product to its distribution partners.

As I think about it, though, another potential factor comes to mind: the difficulty of building these Core X chips.

Intel's Core X lineup is relatively aggressive

One of the things I really liked about Intel's Core X lineup is that it's aggressive -- substantially more than what Intel sold previously. What I mean is that Intel validates these chips at much higher speeds out of the box than it had done with previous high-end desktop chips.

Here's an example. Intel's last generation Core i7-6950X -- a 10-core processor that sold for north of $1,700 at launch -- was rated at a base frequency of 3GHz and a maximum single-core turbo frequency of 3.5GHz. This year's Core i9-7900X, also a 10-core processor, comes rated at a 3.3GHz base frequency but a maximum single-core turbo speed of 4.3GHz.

What this means, then, is that Intel needs to certify that each one of the 10 cores found on the 7900X runs at 4.3GHz -- a 22% jump from what Intel had to deliver with its prior-generation 10-core part.

Now, to some extent, Intel's improved manufacturing technology helps Intel deliver that increased frequency -- Intel says the 14-nanometer+ technology used to build the 7900X is about 12% faster than the 14-nanometer technology used to build the 6950X. But I still believe the 7900X is fundamentally significantly harder to build than the 6950X.

Moreover, Intel sells the 7900X for $999, while the older 6950X sold for around $1,700, so demand is likely to be higher for the 7900X than it was for the 6950X simply because of the former's much lower price point.

A similar argument can be made for the Core i7-7820X eight-core processor relative to the last-generation Core i7-6900K. The 7820X runs at much higher frequencies out of the box than the 6900K did, yet the 7820X is substantially cheaper.

So when considering the supply-to-demand imbalance, it may be that the current Core X processors are seeing higher demand than their predecessors because of lower price points while being significantly harder to manufacture.