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Mon, 21 Aug 2006 Demand for Intel chips creates shortage

Dan Nystedt

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A spike in PC demand has created a new shortage of Intel chipsets, potentially reviving an issue blamed for causing the company to lose market share to rival Advanced Micro Devices (AMD) last year. Demand for new PCs spiked after the two microprocessor makers slashed prices for desktop chips in late July, but the sharp rise in purchases has caused component makers to scramble to keep up, said Sunny Han, director of marketing at Asustek Computer, the world's largest motherboard maker.

"This year, the problem is with the 965 chipset," said Han, referring to the shortage. He said he did not know of any production glitches, believing instead that the sharp upswing in demand caught companies by surprise.

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"Back to school demand is very strong in the US," he said.

Asustek supplies almost 40 per cent of the world's motherboards, giving it a unique view of the PC industry and the component supply situation. It can see which chips are hot sellers.

Motherboards are the printed circuit boards inside every PC that connect its microprocessor, chipset, other components and peripherals.

An executive from Giga-Byte Technology, another Taiwanese motherboard maker, said the shortage exists among several chipsets in the 965 family, citing the G965 chipset for mainstream desktop PCs, in particular. He declined to be named in this story.

Core 2 Duo

Apple's processor partner Intel announced the 965 chipset family in June, including the Q965, G965 and P965 for mainstream desktop PCs. The chipsets work with the company's latest microprocessor, the Core 2 Duo.

Last year, a serious shortage of certain Intel chipsets helped rival AMD snatch away some market share. Chipsets control the flow of data between the microprocessor and other chips in a PC, and they have to be made for specific microprocessors. A chipset made for an Intel system, for example, cannot be used in an AMD system. A shortage of Intel chipsets could, therefore, boost demand for AMD processors and chipsets to meet PC demand.

Intel's previous chipset woes cleared up early this year, and the company vowed to make sure there was no repeat. The world's largest chip maker set aside two advanced chip plants to manufacture its new 965 chipset family and ensure a plentiful supply, said Richard Malinowski, general manager of Intel's chipset group, at a meeting with Taiwanese PC component makers in June.

Intel declined to immediately comment on the latest chipset issue.

The problem could grow if demand continues to rise. It takes several weeks to finish production of a chipset, meaning output increases can take some time to actually reach the market.

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