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May 18, 2010

Intel said today that it hopes to meet the growing demand for Arrandale laptop chips by June 30th.

The CPU shortage involves the same chips industry analysts were concerned about in April, and now the situation is rapidly getting worse by the week.

The chip shortage comes at a bad time for laptop vendors because they have been selling rapidly so far this year, especially with the success of Windows 7, and now industry analysts say the shortage has likely caused some PC and laptop makers to curtail the rollout of newer models.

U.S. semiconductor distributor Converge said in a monthly research report "last month, we saw the full force of the Intel Arrandale shortage, and we also predicted it would probably get worse in May and, to a lesser extent, in June."

The chip giant is ramping up production of new 32-nanometer CPU technology to help fight the growing shortage. The new technology offers Intel the ability to produce chips in greater volume.

"With regard to meeting the growing demand for our popular Core products, we are planning to meet it by June 30th as much as we can, said Nick Jacobs, an Intel spokesman based in Singapore.

Some PC makers have simply 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, and we certainly can't blame them for that. They will make sure they're getting the newest chips, or they won't buy the laptop," he said.

Analysts also say that a stronger demand is more to blame than Intel for the shortage. The chip maker had planned to start shipping the new Arrandale chips by early January which is normally a slow time for laptop sales because consumers in the U.S. and Canada simply ease back on purchases after the holidays.

But so far in 2010, demand was far greater than anyone had expected. There are still a few analysts that are predicting that this summer should also be a bit stronger that PC sales were in the summer of 2009, thanks in part to the popularity of MS Windows 7.

Intel's new Arrandale CPUs are designed so that laptop vendors can create slimmer and much lighter units. They come in a two-chip package that includes an Arrandale processing core made using 32-nm production technology and a smaller but more capable graphics processor made using 45nm technology.

Overall demand for the new processors 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.

Quanta's revenue climbed over 75.8 percent year-on-year during April to US $3.07 billion, while laptop shipments hit 4.5 million units. The company's previous record was $2.45 billion, from last November.

Additionally, shortages for a range of other vital components, from LCD screens used in laptops to DRAM memory chips, have also affected PC and laptop vendors differently so far in 2010. Larger companies appear to be able to get all the components they need, while smaller companies don't for some reason.

Overall, global laptop shipments grew almost 24.8 percent in the first 3 months of 2010, with both desktop and laptop shipments beating all forecasts, according to IDC. The market researcher predicts PC and laptop shipments will continue to grow by about 16 to 18 percent for the balance of 2010.

However, overall growth in laptop shipments has far outpaced that of desktops and especially workstations, another reason for the chip shortage.

Gianfranco Lanci, CEO of Acer says "we didn't see any big shortages in the first quarter. Acer's size -- it's the second biggest laptop vendor in the world -- usually gives it top priority among component vendors."

Source: Intel.

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