Intel reportedly selling 'scrap or low-expectation' chips is an ominous sign that CPU price hikes might get worse | Tech Radar
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Intel reportedly selling 'scrap or low-expectation' chips is an ominous sign that CPU price hikes might get worse
Revenue is up at Intel, and getting more mileage from 'low-expectation' chips is seemingly part of that equation
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Intel just had an impressive Q1 fiscal, beating expectations for revenue by some way
This is reportedly in part due to 'turning what may have been scrap or low-expectation output into revenue', according to an analyst firm
This essentially means repurposing silicon that hasn't made the grade for its intended usage, but isn't a reflection on CPU quality, it should be noted
Intel has reportedly been able to boost its revenue by selling CPU chips that would in the past have effectively ended up on the scrapheap.
Tom's Hardware spotted a post on X from the CEO of analyst firm Creative Strategies, Ben Bajarin, who claims to have got feedback from Intel's investor relations as to where some of Team Blue's additional profits have come from (in its Q1 earnings, which were just reported).
Add your own sprinkling of salt, but Bajarin says: "Intel got an unexpected margin lift from better yield salvage. Chips that would normally have been lower-value edge-die on the wafer were binned down and still sold into usable SKUs, turning what may have been scrap or low-expectation output into incremental revenue."
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Multiple chips are cut from a single wafer, but not every chip is up to par for its intended usage, and so some — particularly those cut from near the edge of the wafer, as noted — are either downgraded for use as a lower-tier CPU (where faulty cores are simply disabled), or they're just thrown away (well, recycled to other ends).
That's a boiled-down, basic view of what happens, but you get the point, and seemingly part of Intel's big jump in revenue for this quarter was down to being able to sell chips that'd normally have been 'scrap' to its customers.
As Bajarin further observed: "Customers didn't care, just said I'll take it all. That's the demand environment we are in for CPUs."
It's interesting to note that Bajarin is bullish on Intel's CPU manufacturing capabilities, to the point where in another post, he envisions that before long, AMD might be having some of its processors made at Intel Foundry (to make up for what it can't get produced at TSMC, which is struggling to cope with demand).
There are some important points to note here. First, we don't know for sure that this is happening; we only have one analyst's word for it. Although it does throw some light on how Intel pulled a good deal more money into its coffers for Q1 than those in the financial know had forecast (revenue beat expectations by 10%, in fact).
The other thing to make crystal clear is that these 'subpar' chips are not somehow dodgy, meaning that you're not running a risk buying such an Intel CPU. It's a common industry practice to use chips that don't make the grade for their intended product, as noted, in a lesser product.
A chip that's failed to make the cut for a Core Ultra 9, say, can be repurposed as a Core Ultra 7, with the defective cores simply disabled (as they aren't needed for the core count of the latter). This doesn't make such a chip any different from another Core Ultra 7, or those which were made to be Core Ultra 7 models — they all have the exact same number of functional cores, with no greater chance of anything being awry. Failed Core Ultra 7 models might then become Core Ultra 5, and so on.
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All of which is to say you don't need to worry about anything relating to chip quality here. All that's happening is that Intel's making more money from chips that wouldn't normally be sold, as hardware makers are buying these CPUs because there's such a demand for silicon right now, that supply is looking dicier.
Sound familiar? Yes, this may remind you of the scarce supply of memory chips — affecting RAM and storage — and as predicted, the same woes are now being visited on processors. With more and more data centers getting built to service AI demand, the servers in those behemoth buildings don't just need RAM and SSDs, they're also powered by processors, of course.
Now, here's the gloomy bit. Remember early in the RAM crisis, when prices started to spike? And further recall that they then shot up at an unfathomably fast rate. Well, we could see an acceleration of processor prices, too. Indeed, a recent report already observed some major price rises in AMD CPUs in Japan, which comes on top of other rumors of both server and consumer-targeted processors getting pricier.
Don't get me wrong, I don't think this will have the same upwards trajectory as with memory pricing, but nonetheless, this rumor is a further sign that yet another PC component, and a key one, could get a good deal more expensive as 2026 progresses.
➡️ Read our full guide to the best processors
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- Best professional: Intel Core i 9-14900K
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Darren is a freelancer writing news and features for Tech Radar (and occasionally T3) across a broad range of computing topics including CPUs, GPUs, various other hardware, VPNs, antivirus and more. He has written about tech for the best part of three decades, and writes books in his spare time (his debut novel - 'I Know What You Did Last Supper' - was published by Hachette UK in 2013).
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