- Intel just had an impressive fiscal first quarter, somehow beating revenue expectations
- This would be partly due to the “transformation of what could have been scrap metal or unanticipated production into income”, according to an analyst firm.
- This essentially means reusing silicon that isn’t up to its intended use, but that doesn’t reflect the quality of the processor, it’s worth noting.
Intel could have increased its revenue by selling CPU chips that in the past would have ended up in the scrapyard.
Tom’s Hardware spotted an article on
Add your own pinch of salt, but Bajarin says: “Intel achieved an unexpected margin increase thanks to better yield recovery. Chips that would normally have been of lower value on the wafer were stockpiled and still sold in usable SKUs, turning what might have been scrap or low-wait production into additional revenue.
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Multiple chips are cut from a single wafer, but not all chips are up to the intended use, and so some – especially those cut near the edge of the wafer, as shown – are either downgraded for use as a lower-tier processor (where faulty cores are simply disabled) or they are simply discarded (well, recycled for other purposes).
This is a basic summarized view of what’s going on, but you get the point, and apparently part of Intel’s big revenue increase for this quarter was due to its ability to sell chips that normally would have been “scrap” to its customers.
As Bajarin observed: “The customers didn’t care, they just said I’ll take anything. This is the demand environment we’re in for processors.”
Interestingly, Bajarin is optimistic about Intel’s processor manufacturing capabilities, to the point that in another article he envisions that before long, AMD could have some of its processors manufactured at Intel Foundry (to make up for what it can’t produce at TSMC, which is struggling to keep up with demand).
Analysis: bad omens?
There are a few important points to note here. First, we don’t know for sure that this is happening; we only have the word of an analyst for this. Although it does shed some light on how Intel pumped a lot more money into its coffers for the first quarter than financial experts had anticipated (revenue beat expectations by 10%, in fact).
The other thing to clarify is that these “mediocre” chips are not questionable, which means that you are not taking any risk in purchasing such an Intel processor. It is common industry practice to use chips that do not match the intended product quality, as stated, in a lower quality product.
A chip that failed to be adapted for a Core Ultra 9, for example, can be reused as a Core Ultra 7, with the faulty cores simply disabled (as they are not needed for the latter’s core count). This doesn’t make such a chip any different from another Core Ultra 7, or those that were designed to be Core Ultra 7 models: they all have exactly the same number of working cores, with no greater chance of anything going wrong. Failed Core Ultra 7 models could then become Core Ultra 5, and so on.
All this is to say that you don’t have to worry about anything regarding the quality of the chips here. All that’s happening is that Intel is making more money on chips that wouldn’t normally be sold, because hardware makers are buying these processors because there is currently such a demand for silicon that supply seems tighter.
Sound familiar? Yes, this may remind you of the scarcity of memory chips – affecting RAM and storage – and as expected, the same problems are now occurring on processors. As more and more data centers are built to meet the demand for AI, the servers in these giant buildings don’t just need RAM and SSDs, they’re also powered by CPUs, of course.
Now here’s the dark side. Remember the start of the RAM crisis, when prices started skyrocketing? And further remember that they then exploded at an incredibly rapid rate. Well, we could also see an acceleration in processor prices. Indeed, a recent report has already observed significant price increases for AMD processors in Japan, adding to other rumors that server and consumer processors are becoming more expensive.
Don’t get me wrong, I don’t think this will follow the same upward trajectory as the price of memory, but nonetheless, this rumor is yet another sign that another PC component, and a key one, could become much more expensive as 2026 progresses.
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