Intel is not just performing well; it’s operating smartly. The company is driving up its revenue by salvaging less-than-perfect CPU dies and selling them to eager AI customers.
Demand for CPUs is skyrocketing as AI inferencing, especially with the rise of Agentic AI, continues to surge. CPUs have become incredibly important for AI, a market that GPUs once largely dominated. Now, AI inferencing is strongly targeting CPUs and memory, and leading companies like Intel are all increasing their production to meet this huge demand.
Intel’s recent earnings were very positive, with strong execution and growing supply being key drivers for its above-seasonal first-quarter results. Intel is mainly a CPU maker, and its Xeon chips go into major data centers, AI firms, and servers worldwide. So, with CPU demand soaring, Intel was expected to see a big boost.
However, in further details shared with Ben Bajarin of Creative Strategies, it appears a major part of this revenue boost came from something unexpected.
Intel makes its Xeon CPUs in its own factories. Each silicon wafer produces a certain number of usable chips. Usually, most chips in the middle of the wafer are good, while those around the edge are considered “lower-value.” These are often used in less demanding products or simply discarded.
This time, due to the incredibly high demand for CPUs in the AI markets, Intel reused these dies by sorting them and selling them as usable products. And because CPU demand is so high, customers were even willing to buy these chips. This clearly shows how scarce CPUs are right now, with customers willing to use even lower-end dies to meet their needs.
Other CPU makers are also expected to be doing the same. AMD, which produces its chips at TSMC, can also turn lower-end dies into usable products. This applies to everyone else as well. These dies were previously considered waste, but now they are an extra source of income for chipmakers.
