Intel boosted margins by selling chips that would normally be scrap

Intel reportedly confirmed that part of its unexpected first-quarter margin improvement came from selling chips that would normally be discarded as scrap or low-quality output. In an April 24 post on X, tech analyst Ben Bajarin said Intel's investor relations team told him customers are buying "what may have been scrap or low-expectation output" CPUs. The edge dies from silicon wafers, which typically have more defects and lower performance than center-cut dies, are being binned down to lower-tier SKUs and sold rather than discarded. Intel reported first-quarter revenue of $13.6 billion on April 23, beating expectations of $12.36 billion. Non-GAAP gross margins reached 41 percent, 650 basis points above the company's guidance of 34.5 percent. Earnings per share beat expectations by 3000 percent. The demand is being driven by an AI-driven infrastructure buildout that has created what the source describes as a voracious appetite for server processors. Intel's Xeon CPUs, which power data center servers running AI workloads, have remained in sustained high demand. Major OEMs including Dell, HP, and Lenovo, alongside hyperscalers such as Microsoft, Google, and Amazon, purchase Intel processors in massive volumes to expand data center infrastructure.