This is worth reading if you are interested in PC hardware secto

Demand spike is causing new Intel chip set shortage
Intel sees recurrence of issue that many blamed for causing it to lose market share to rival AMD last year



By Dan Nystedt, IDG News Service

August 21, 2006
A spike in PC demand has created a new shortage of Intel chip sets, 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 chip set," 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.

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

Asustek supplies almost 40 percent 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, chip set, other components, and peripherals.

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

Intel announced the 965 chip set family in June, including the Q965, G965, and P965 for mainstream desktop PCs. The chip sets work with the company's latest microprocessor, the Core 2 Duo.

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

Intel's previous chip set 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 chip set family and ensure a plentiful supply, said Richard Malinowski, general manager of Intel's chip set group, at a meeting with Taiwanese PC component makers in June.

Intel declined to immediately comment on the latest chip set issue.

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