Intel made way too many Prescotts in Q2

SUCCESS IN MOVING its manufacturing capabilities from 130 nanometres to 90 nanometres meant Intel ended up with excess stock, it emerged from a conference call last night. While chief financial officer Andy Bryant would not quantify exactly what that overproduction cost Intel, it accounted for half a percentage point of its gross margin. And as Intel turned over $8.05 billion in its Q2, with gross margins of 59.4%, it's not too hard to figure out.

Intel is shifting production to 90 nanometres fast, and is also producing chips on 12-inch, rather than eight inch wafers, meaning that you get more viable chips per wafer. Bryant said that Intel only realised late in June that it was producing too many Prescotts, and said that, in hindsight, he'd wished he'd realised the overstocking a month or so earlier. Prices won't change because of the excess stock of Prescotts, said Intel president Paul Otellini. He added that the recall on Grantsdale chipsets in June was minor, because the problem only happened on one line in one Intel factory (fab).

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