Intel notebook chip shortage worsens

The chipmaker hopes to meet demand for Arrandale chips by the end of this quarter

A shortage of the latest Intel laptop PC microprocessors worsened in April, but the chip giant says it will meet demand by the end of this quarter.

The shortfall comes at a bad time for PC vendors because laptops have been selling briskly so far this year, and analysts say the shortage has likely caused some companies to delay the rollout of new models.

The shortage involves the same chips analysts and companies fretted about last month, Intel's Arrandale laptop microprocessors, including some Core i3 and Core i5 chips.

"We saw the full force of the Intel Arrandale shortage [in April]," said U.S. chip distributor Converge, in a monthly research report.

Intel is ramping up production of new 32-nanometer chip technology to help battle the shortage. The technology gives it the ability to produce chips in greater volume.

"With regard to meeting demand for our popular Core products -- we are planning to meet demand by the end of the quarter," said Nick Jacobs, an Intel spokesman based in Singapore.

Intel's Arrandale processors are designed so PC vendors can create slimmer laptops. They come in a two-chip package that includes an Arrandale processing core made using 32-nm production technology and a graphics processor made using 45nm technology.

Some companies have adapted to the shortage by using older Intel laptop chips in their devices, but one executive who asked not to be named, said that's a losing strategy. "People always want the latest technology. They will make sure they're getting the newest chips, or they won't buy the laptop," he said.

Analysts say strong demand is more to blame than Intel for the shortage. Intel had planned to start shipping the new Arrandale chips in the first quarter, normally a slow time for PC sales because consumers in the West ease back on purchases after the holidays.

But this year, demand was far more robust than normal.

Global PC shipments surged 24.2 percent in the first three months of this year, with both desktop and laptop shipments beating forecasts, according to IDC. The market researcher predicts PC shipments will grow by more than 15 percent this year.

Growth in laptop shipments has far outpaced that of desktops, another reason for the chip shortage.

Demand for the devices has been so strong that Quanta Computer, the world's largest contract laptop computer maker, reported its best revenue and laptop shipments ever in the month of April. The company's revenue climbed 76 percent year-on-year during the month to NT$97.02 billion (US$3.07 billion), while laptop shipments hit 4.5 million units. The company's previous record was NT$93.30 billion, from last November.

Shortages for a range of components, from LCD screens used in laptops to DRAM memory chips, has affected PC vendors differently so far this year. Larger companies appear to be able to get all the components they need, while smaller companies suffer.

"We didn't see any big shortages in the first quarter," said Gianfranco Lanci, CEO and president of Acer, during the company's first quarter investors' conference two weeks ago. Acer's size -- it's the second biggest PC vendor in the world -- usually gives it top priority among component vendors, he said.

Jerry Shen, CEO of Asustek Computer, however, said component sourcing has been a headache this year, with high prices and tight supplies. Asustek is about half the size of Acer, judged by quarterly revenue.

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Dan Nystedt

IDG News Service
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