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Intel admits Pentium 4 supplies still tight

No improvement 'til Q1 2002?

Intel has publicly admitted that the supply of Pentium 4 processors continues to be a problem for the chip maker, suggesting that volumes may not increase significantly this quarter as some Taiwanese motherboard manufacturers have predicted in the past.

"People are beginning to see the benefits of Pentium 4 PCs - this is actually a hot buying season,'' Intel Far East spokeswoman Evia Shum told Bloomberg. But? "We are trying to remedy the tight situation this quarter," she added.

Last month, the company told its distributors that Socket 478 P4s were in short supply, a fact a number of PC makers and system builders had been suggesting since early October. Intel's message to the channel was that supply should return to normal by the end of the month. And Intel admitted that supplies of 2GHz P4s would remain tight through Q4.

Behind the shortages appears to have been an attempt by Intel to shift unsold stocks of Socket 423 P4s. Socket 478 was introduced earlier this year to support the SDRAM-based 845 chipset and future DDR SDRAM chipsets. Older Socket 423 Pentiums were intended only to be used with the 850 chipset, which uses Rambus Direct DRAM. Certainly it's the older parts - most notably the 1.5GHz P4 - which initially shipped as Socket 423 parts that are the most hard to come by.

This morning's comment by Intel's spokeswoman suggests that supplies of Socket 478 parts did not increase quite as significantly as the company had hoped they would and that now, at the end of November, availability isn't any better than Intel said it would be at the end of October.

Early last month mobo makers claimed the supply situation would not be rectified until December. That forecast now looks optimistic, since it appears to have been based on the assumption, made on the basis of what Intel was saying at the time, that supplies of Socket 478 P4s would have increased significantly by now - which doesn't appear to be the case.

Certainly, Taiwan's DigiTimes yesterday reported that mobo makers are not experiencing the level of sales they had hoped to achieve this quarter and are putting the blame on P4 shortages. The site quotes sources close to the mobo industry who allege that even first-tier producers like Asustek and Gigabyte have been hit by the shortages and have seen sales fall 10-20 per cent this quarter.

The indications are that supplies will improve next month, though by how much is difficult to predict, not least because Intel is scheduled to cut P4 prices on 27 January by up to 18 per cent.

Gigabyte president Richard Ma recently said that sales during Q4 will not grow as much over previous quarters as is traditionally the case with the Christmas period. That, he reckons, will ensure that next quarter's traditional dip will not be as pronounced. The current state of the PC market as a whole is clearly a factor here, but it's hard not to see the shortage of P4s through Q4 and growing supplies through Q1 - plus the price cuts, of course - playing a part too. ®

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Related Links

DigiTimes: P4 shortage dragging down mobo sales and Smaller sales decline expected for mobo industry in 1Q 2002 says Gigabyte

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