Chipset shortage hurts PC industry, but will clear soon

A shortage of Intel chipsets has crimped PC sales and boosted rival AMD, but new supplies should be available in October.

A shortage of Intel chipsets has crimped PC sales during the third quarter, but more chipsets from other suppliers should ease the shortfall in October, according to the world's largest maker of computer motherboards.

On the surface, however, it might be hard to see the pain. PC sales have been far stronger than expected in the third quarter, causing market researchers such as Gartner and IDC to revise upward their full year PC growth forecasts. But third quarter sales could have been even better had the chipset shortage been avoided, director of marketing at Asustek, Sunny Han, said.

Over the past few months, Asustek has been unable to fulfill all of its orders due to the chipset shortage. The company could have sold 10-15 per cent more motherboards in each of the past few months if it had been able to secure enough chipsets, according to Han.

"There has been a serious shortage of chipsets this quarter, but it should clear up in October," he said. It takes several weeks to finish production of a chipset, meaning output increases can take some time to actually reach the market. This year has been especially hard because brisk demand for a number of electronics goods has kept chip factories humming, with little excess production left over for the chipset emergency.

In August, Intel said stronger-than-expected PC demand had forced it to reduce production of certain kinds of chipsets because its factories were already full of orders for higher-margin products. The manufacturer has been battling to keep up with chipset demand for much of the year.

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

Representatives from a handful of Taiwanese motherboard makers confirmed that the Intel chipset shortage has been particularly good for AMD.

"It's a shortage of Intel chipsets, AMD has been fine," said one Taiwanese motherboard executive, speaking on condition of anonymity. "A lot of distributors have been suggesting to their customers that they use AMD because there's no shortage of AMD components."

A representative for Taiwanese chipset maker, Silicon Integrated Systems (SiS), confirmed the company's production schedule should ensure better output of Intel-compatible chipsets soon.

"We can say with assurance that most of the demand in October will be satisfied, but we can't say we'll meet all orders," a company spokesperson said.

PC vendors are enjoying a far better than expected year in 2005 thanks in part to strong demand in Europe and Asia, according to revised market statistics from researcher IDC.

PC vendors could ship 204.6 million units this year, a 14.1 per cent improvement over 2004 shipment totals, according to IDC's new forecast. Earlier in the year, IDC was predicting global PC shipment growth of only 11.4 per cent this year, down sharply from a banner 2004, when growth reached 15.3 per cent.

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Dan Nystedt

IDG News Service
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