Intel delays Broadwell PC chip production to early next year

The semiconductor giant during its earnings call reveals the delay of its 14-nanometer chip due to a defect issue but says the problem is fixed.

Shara Tibken
Shara Tibken Former managing editor
Shara Tibken was a managing editor at CNET News, overseeing a team covering tech policy, EU tech, mobile and the digital divide. She previously covered mobile as a senior reporter at CNET and also wrote for Dow Jones Newswires and The Wall Street Journal. Shara is a native Midwesterner who still prefers "pop" over "soda."
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Intel has been promoting new thin-and-light PCs to boost the market. Shara Tibken/CNET
Intel on Tuesday said its upcoming PC chip, dubbed Broadwell, will be delayed by a quarter.

CEO Brian Krzanich, speaking during a call discussing the company's third-quarter earnings, said Intel will begin production on Broadwell in the first quarter of 2014 rather than later this year. The chip is the first manufactured at 14 nanometers, or billionths of a meter, which puts Intel at least a year ahead of rivals.

The delay has been caused by a "defect density issue" that impacts the yields, or number of usable chips, Krzanich said. He noted that once defects are discovered, Intel inserts a set of fixes. In the case of Broadwell, the fixes didn't deliver all the improvements Intel had anticipated. However, Intel now believes it has all the required fixes in place, Krzanich said.

"We have confidence the problem is fixed because we have data it is fixed," Krzanich said. "This happens sometimes in development phases like this. That's why we moved it a quarter."

He added that Intel and its PC customers "have a strong desire to get Broadwell to market. If I could, there'd be nothing slowing me down. This is a small blip in the schedule, and we'll continue on from here."

Krzanich also said Skylake, the PC chip to follow Broadwell, won't be delayed.

The Santa Clara, Calif., company makes chips that power the majority of the world's computers and servers. Broadwell is expected to make PCs even thinner, lighter, and faster than the current generation, as well as boost battery life. Such features are important as consumers debate whether to buy a new computer or to buy a mobile device like a tablet.

Evercore analyst Patrick Wang said no one was really expecting a Broadwell delay, but the later release will give Intel more time to work through existing chip inventory already in the market.

Last week, tech research firms Gartner and IDC said worldwide PC shipments slid about 8 percent year-over-year in the third quarter of 2013. They largely attributed the drop -- the sixth consecutive quarter of declining shipments, according to Gartner -- to rising popularity of mobile devices. Consumers, still with limited budgets, are opting to buy tablets instead of new notebook or desktop PCs.

Intel on Tuesday reported third-quarter earnings that were better than analysts expected, while its revenue was in line with projections. It issued a cautious forecast for the current period but said it believes demand for PCs in mature markets like Western Europe and North America "appeared to bottom out."

Updated at 2:40 p.m. PT with additional details and executive comments.