OLPC parts shortage manageable, says maker

OLPC's XO notebook faces the same shortage of parts as the rest of the laptop computer industry, but it most likely won't affect shipments.

The company manufacturing the One Laptop Per Child notebook played down the impact of component shortages in the industry, rebutting local reports that the shortages will affect supplies of the computer when it ships in October.

Strong sales of notebook computers and a massive battery recall are causing shortages of many key components, including screens, certain kinds of chips and other parts, analysts and companies say.

The production schedule for OLPC's laptop is also problematic because it's starting in the peak season for notebook demand. OLPC shipments are slated to begin in October.

Back-to-school sales and the run-up to Christmas are hot times of the year for people to buy laptop PCs, and hype around Microsoft's Windows Vista and Intel's Santa Rosa laptop chips has given an added spurt to demand this year, said C. C. Leung, vice chairman and president of Quanta Computer, at a news conference Friday in Kuei Shan, Taiwan.

But the OLPC project should be shielded by commitments already made by companies in the supply chain, he said. The special screen used in the laptop could run into supply issues, but even that is backed by a major company that has given delivery assurances, he said.

A spokesman at Taiwan's Chi Mei Group, which is responsible for the laptop's screens, said there is no supply trouble and the company does not foresee any issues. Quanta will be building the first OLPC laptops.

All notebook computer makers are facing a shortage of LCD (liquid crystal display) panels, the screen part of a laptop, while only smaller companies are having trouble with shortages of batteries and hard disc drives, according to analysts. The OLPC laptop uses a special kind of screen, not an LCD.

The recall of around 10 million laptop batteries tied to Sony has kept the vital parts in short supply since last year. The shortage is tied to lithium-ion cells, and the OLPC laptop uses both lithium iron phosphate batteries and nickel-metal hydride batteries.

The tight supply of laptop parts could start to dissipate once the peak season ends and demand slows down after the holiday season.

About 78 million laptops will sold this year, according to Goldman Sachs (Asia) Quanta Computer, the largest contract laptop computer maker in the world, expects to ship up to 28 million, or more than a third of all laptops forecast to be shipped globally. The company declined to comment on how many OLPC notebook computers will ship this year.

OLPC is a nonprofit project formed by Nicholas Negroponte to distribute ultra-low cost notebook computers to children in the developing world. Several high-profile technology companies support the venture, including Advanced Micro Devices, Intel, Red Hat, Google and Nortel Networks.

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