Computer chipmaker Intel Corp. took the rather unusual step Wednesday of providing an update on its ongoing chip supply issues.

In a letter to its customers and partners, the company said it’s increasing its reliance on contract chip manufacturers to try to expand production to meet demand for its products.

Even so, Intel warned that processor supply remains “extremely tight” despite increasing its second-half personal computer chip supply by double digits compared with the first half of the year.

“Despite our best efforts, we have not yet resolved this challenge,” Michelle Holthuas, executive vice president and general manager of Intel’s Sales, Marketing and Communications Group, said in the letter.

Intel had warned customers during its third-quarter earnings call in October that the higher demand for its PC chips was outstripping its ability to add capacity, and said then it was considering using third-party chip manufacturers.

But in fact, it has been over a year since Intel first admitted it was having supply problems. It’s causing headaches for Intel’s customers, because it means delayed shipments and deferred revenue as well as higher prices.

Intel Chief Executive Officer Bob Swan had said in the October that the shortage was likely to last beyond the fourth quarter since it was seeing stronger-than-expected demand for its PC chips.

Holthaus didn’t say when Intel expects the shortage to end, but said the company has reached out to its partners with further information as the impact will vary from customer to customer.

“Intel recorded $1.2 billion incremental chip upside last quarter, so it is, in fact, experiencing more than expected demand,” Patrick Moorhead, principal analyst at Moor Insights & Strategy, told SiliconANGLE. “I believe Intel will meet its financial commitments if for no other reason than it won’t need to provide price discounts that aren’t already contractually committed.”

He added, “This looks like a good opportunity for AMD,” one of Intel’s longtime rivals.

Intel’s stock was down 1% in after-hours trading.

Photo: Julia Hiltscher/Flickr