Gravity of Chip Shortage Waters Down Effect of Intel's CPU Price Cut
August 30, 2000 (TAIPEI) -- Intel Corp. started worldwide price cuts of its central processing units, targeting the high-end Pentium III and Celeron CPUs.
Intel's action to lower CPU prices is expected to hardly receive the deserved effect, as the serious CPU shortage remains unsolved. The Celeron CPU has the highest shortfall, which is believed will last until at least the year's end.
Intel's notice to its motherboard clients disclosed the shipment weightings of Pentium III and Celeron CPU for the fourth quarter. Of them, the Pentium III will make up 75 percent of Intel's CPU shipments. That is, the Celeron will only account for the remaining 25 percent. Intel was forced to make such a choice -- allocating majority capacity to the more profitable Pentium III -- due to a lack of wafer production, which cannot meet market demand for the time being.
Until the year's end, Intel won't come through its CPU shortage because of slow expansion in production. The company also will find it tough to shake off the shortfall of flash memory and Web devices. Following the production adjustment, Intel expects an easing of its Pentium III shortage soon, but is pessimistic on the supply of Celeron CPUs for the rest of this year.
Celeron CPUs reported the largest fall in Intel's CPU price cuts, which took effect on Aug. 28, by between 26 percent and 34 percent. The Celeron's lowered price sounds appealing, but has little impact in boosting buying because it is in such short supply.
The Pentium III prices were trimmed between 8 percent and 32 percent, with versions above 850MHz seeing higher cuts. The high-end Pentium III Xeon falls into the narrow cut of around 17 percent to 22 percent.
Intel's top executive of its Taiwan's branch said that Intel has been working at full capacity to meet strong demand in the market -- the only thing the company can do -- but declined to give its clients a promise of when it can resolve the CPU shortages.
Related story: Intel to Slash Prices of Pentium III Microprocessors
(Commercial Times, Taiwan) |
