**Global:** Intel reports strong sales of older Raptor Lake chips over newer models as customers face economic pressures, tariffs, and recession risks. The shift affects product launches and production strategies, while Intel plans new releases focusing on AI demand and increased in-house manufacturing.
Intel is seeing a notable shift in customer buying behaviour amid ongoing economic uncertainties and trade concerns, according to statements from company executives during a recent earnings call. Despite launching new processors, Intel’s customers are favouring older, higher-performance chips instead of the latest offerings, a trend attributed to economic pressures such as tariffs and potential recession risks.
David Zinsner, Intel’s Chief Financial Officer, revealed that the company sold more units of its Raptor Lake processors than the newer Lunar Lake chips, which debuted in September 2023. Raptor Lake chips, launched earlier in 2023, are based on the Intel 7 process and deliver strong performance, making them more attractive to customers amid current market conditions. Zinsner explained that the future remains uncertain due to fluctuating trade policies and regulatory risks, particularly within the US and internationally. “The very fluid trade policies in the U.S. and beyond, as well as regulatory risks, have increased the chance of an economic slowdown with the probability of a recession growing,” he said. These factors complicate Intel’s forecasting for quarterly and annual performance.
An important reason behind Intel clients opting for older processors appears to be cost. Michelle Johnston Holthaus, who recently resumed her role as head of Intel Products, detailed how customers prefer “N-1” and “N-2” products—Intel’s terminology for slightly older processor generations. Speaking to PC World Magazine, Holthaus noted that “What we’re really seeing is much greater demand from our customers for N-1 and N-2 products so that they can continue to deliver system price points that consumers are really demanding.” She added that macroeconomic concerns and tariffs have caused customers to hedge their bets in managing inventory.
Holthaus emphasised how the cost structures of Meteor Lake and Lunar Lake chips are higher, not only for Intel but also for OEMs (original equipment manufacturers), thus affecting system price points. “As you think about an OEM perspective, they’ve also, you know, ridden those cost curves down from a Raptor Lake perspective, and it allows them to offer that product at a better price point,” she said. Intel executives also acknowledged that the production capacity for Raptor Lake processors is constrained due to strong demand.
This preference for older generations aligns with broader perceptions of Intel’s latest processors. Reviews, including one for Intel’s 15th-generation Arrow Lake desktop parts, have found performance improvements to be limited compared to the previous generation. The Arrow Lake series was characterised by critics as offering “basically the performance of Intel’s Raptor Lake generation,” indicating incremental enhancements that may not justify the higher cost for many customers.
Looking ahead, Intel is preparing to launch its Panther Lake processors featuring 18A technology later this year. While first-quarter guidance suggested that the majority of Panther Lake shipments will occur in 2026, Holthaus confirmed that the launch timeline remains consistent with previous product introductions. She said, “The Panther Lake launch matches exactly what we did on both Meteor Lake and Lunar Lake in regards to timing. So it’s very aligned with how customers like to take products to market.” She expressed confidence in Panther Lake’s performance and pricing, predicting strong uptake, particularly driven by commercial demand for AI-capable PCs. “We still see very strong commercial demand for AI PCs as [customers are] deploying their fleets, as they’re doing their upgrades, they want to future-proof their products and have that AI capability.”
Holthaus also highlighted Intel’s manufacturing strategy for Panther Lake, with a goal to produce 70 percent of all silicon used in-house at Intel’s fabs. This in-house production commitment is expected to increase further with Nova Lake, Intel’s 2026 processor architecture, where more wafers will be made using Intel’s own processes. Intel CEO Lip-Bu Tan, participating in his first earnings call, spoke about the company’s priority to rebuild trust in its manufacturing and to attract more customers for its foundry business, though he cautioned that “there is no quick fix” for the challenges ahead.
In response to organisational challenges, Tan announced plans to reduce management layers and enforce a return to office policy requiring employees to be on-site four days a week or more. Financially, Intel reported a GAAP loss of $800 million on revenue that remained steady at $12.7 billion compared to the previous year. The Client Computing Group, Intel’s core business for PCs, posted $7.6 billion in revenue—representing an 8 percent decline year-over-year.
Intel’s current trajectory reflects the complexities of navigating a market influenced by tariffs, economic concerns, and evolving customer priorities. Customers’ apparent preference for older, proven processor models demonstrates how cost considerations and performance needs are balancing product adoption amidst a challenging environment for the semiconductor giant.
Source: Noah Wire Services
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