April 28, 2026 /SemiMedia/ — Intel reported a stronger-than-expected margin in its latest quarterly results, helped in part by selling chips that would previously have been classified as lower-grade output.

Technology analyst Ben Bajarin said on April 24 that Intel’s investor relations team confirmed customers are buying CPUs that were once considered low-yield or less desirable, turning them into revenue.

Intel posted first-quarter revenue of $13.6 billion, above expectations of $12.36 billion. Its non-GAAP gross margin reached 41%, well above earlier guidance of about 34.5%, reflecting a shift in product mix and sales approach.

In semiconductor manufacturing, chips produced on the same wafer can vary in performance. Dies from the wafer edge tend to have lower performance and may not meet higher-tier specifications. Instead of discarding them, Intel sorts these chips into lower-tier SKUs and sells them at reduced prices.

With demand rising, customers are now more willing to accept a wider range of CPU performance levels. This has allowed Intel to sell chips that previously had limited commercial value, adding incremental revenue without major changes in production cost.

The trend highlights tight supply conditions driven by AI-related infrastructure spending. Demand for compute capacity has increased rapidly, putting pressure on the server processor market.