Economic uncertainty boosts demand for older Intel processors

Summing up the results of the last quarter and forming a forecast for the current one, Intel management focused on one of the trends, according to which in recent months the demand for cheaper processors of previous generations such as the same Raptor Lake has grown, while more advanced and expensive models were in less demand by customers.

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Intel’s customers were apparently betting on more affordable, time-tested chips by stockpiling more processors ahead of price increases due to new tariffs in the U.S. and China. Chief Financial Officer David Zinsner acknowledged that there was a surge in Intel purchases in the first quarter, and the economic uncertainty generated by new tariffs and sanctions could lead not only to a slowdown in economic growth, but also to a recession. While the surge in purchases helped Intel improve its first-quarter results, it is bound to cause some demand weakness in the second quarter.

Third-party analysts estimate the volume of Chinese imports in the category of central processors in the American direction at $10 billion per year, of which about $8 billion are Intel products. If the increased customs duties are fixed at the current level, then processors of this brand produced in the USA will be taxed at a rate of 85% when imported to China.

Demand for more mature processors has even led to the company experiencing a shortage of capacity to produce chips based on Intel 7 technology, which cannot be called advanced. The concentration of customers on processors of previous generations overshadows the sales forecasts of more modern chips of the Lunar Lake and Meteor Lake families. Head of Intel’s product business Michelle Johnston Holthaus said at the reporting event: “In the client segment, we are seeing strong demand for products of the previous generation, and in the data processing segment as well.” She added that macroeconomic instability and customs tariffs are forcing many to hedge their purchases in this way. Intel’s own costs will inevitably increase, as the company’s CFO emphasized.

Newer and more expensive Intel processors with local acceleration for working with AI systems will be in less demand in such conditions than the company expected.