Intel has issued end-of-life (EOL) notices for over 30 Ethernet controller products. The affected 500 and 700 series were initially released in 2015, but recent spikes in demand amid the global chip shortage have led to a ramp-up in production that has stretched Intel’s capacity a little too thin.
To say there have been supply chain obstacles for the US-based chipmaker is an understatement. Like many manufacturers, Intel has had to navigate the ongoing wafer and substrate shortages due to deteriorating raw materials, as well as manufacturing disruptions at production and packaging facilities in Southeast Asia.
The EOL notice means certain SKUs will only be available to order until 2022 or 2023 depending on the series, after which the only option customers will have is to go to the open market or change controllers. The purpose of the large quantity discontinuation is to “consolidate and maintain supply for high-volume products,” states Intel CEO, Pat Gelsinger. Intel has been known for its wide portfolio of Ethernet controllers, but product diversity also comes with the challenge of manufacturing diversity —any kind of logistical hiccup can hinder production. Supporting older lines over time means Intel’s customers have comfortably enjoyed the usage of the same products over the years, but this announcement means a not-so comfortable accelerated timeframe to make a change.
Discontinuing the older products works in Intel’s favor as it consolidates portfolios, which essentially eliminates the costly need to support and maintain older series. In its Q3 earnings call, Intel divulged that the strain from the Ethernet controller shortage has been taking away from the company’s Data Center Group revenue. The shift to prioritize the higher-priced products will allow Intel to rebound where there were previous losses.
Time will tell how customers respond, but market tightness and pricing increases are anticipated following this announcement.
