Intel boosts spending to head off PC shortages

Intel Corp., which dominates the market for personal computer processors, said it’s taking steps to increase output and alleviate a shortage that had threatened to slow the industry’s growth.

The Santa Clara, Calif.-based chipmaker is adding an extra $1 billion to its capital equipment budget this year, increasing output from facilities in the U.S., Ireland and Israel.

The company said it’s been surprised by a return to growth in demand for personal computers. Total spending in 2018 will be $15 billion, Intel said in a letter to customers posted on its website Friday.

The shares gained more than 3 percent to $47.29 at Friday’s close in New York, after jumping as much as 4.1 percent on the announcement. Rival Advanced Micro Devices Inc. fell by 5 percent on concern that increasing production by Intel will deprive it of the opportunity to gain market share.

Intel has struggled to shift to a more-advanced manufacturing technique, called 10-nanometer, and that has given rivals like AMD a chance to catch up in this crucial part of the chip industry. But Friday’s update suggests that demand for Intel’s older chips remains strong.

Intel said it’s making progress in moving its output to 10-nanometer technology, an effort that’s as much as two years late, according to some analysts’ estimates.

“Yields are improving and we continue to expect volume production in 2019,” Intel said. Yield refers to the amount of usable chips made from every production batch.

Shrinking the dimensions of the tiny transistors that give chips their function allows chipmakers to produce them more cheaply, make them more powerful or give them the ability to use less electricity. Intel has led the race to make such improvements for decades.