Full capacity production still cannot meet demand! Intel(INTC.US)CFO: Server chip demand "remains strong" supply bottlenecks will persist throughout the year

Intel (INTC.US) Chief Financial Officer Dave Zinsner said in a meeting that demand for the company’s high-margin server processors remains strong and that it expects this trend to continue into next year.

On Wednesday, at an event hosted by Morgan Stanley in San Francisco, Zinsner noted that, due to limitations in the company’s own factory capacity as well as supply shortages across the semiconductor industry, Intel has found it difficult to meet demand for continuously growing orders.

Zinsner said that, building on last year’s more than 20% increase in sales, the server market “will once again deliver substantial growth this year.”

The surge in demand for equipment used to create and run artificial intelligence (AI) services further drives demand for processors from companies like Intel—processors that play a supporting role in relevant hardware—which also spreads the strained supply situation to more and more different types of suppliers.

While this helps Intel catch a late share of a trend that is driving progress in the computer industry, the company is still working to increase its factory and supplier capacity. This semiconductor company, which once held a dominant position, has spent years trying to reshape its technology advantages and regain market share it has lost. The operating efficiency of its manufacturing plants is crucial to hopes for turning things around.

Zinsner said that the capacity shortage problem will continue to ease, but it will still run through the end of this year. He pointed out that many of Intel’s factories currently have capacity utilization rates above 100%.

Supported by the remarks above, Intel’s stock price rose as much as 6.9% on Wednesday, reaching a high of $46.08; by the close, the stock’s cumulative gain for the year had already reached 23%.