Here is an interesting article from TSC concerning INTEL CPU shortages and the effect it is having on it's big boxmaker clients such as DELL, CPQ, etc... I am currently in the middle of purchasing a new PC for my parents and I can tell you that chip shortages as well as some other key components is negatively affecting DELL's sales and delivery... I still think that DELL will have a great 2000 though...Intel Above the Fray
By James J. Cramer
2/16/00 7:05 PM ET
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Eureka, our readers know the answer to just about everything.
Just when I was trying to figure out how Intel's (INTC:Nasdaq - news) stock could go up when the stocks of its largest customers, Gateway (GTW:NYSE - news), Dell (DELL:Nasdaq - news) and Compaq (CPQ:NYSE - news), are sucking wind, a reader sends me an email pretty much explaining it all.
The reader is a value-added reseller, or VAR, who custom-builds PCs for large clients, so she monitors Intel central processing units very closely. And here is what she says: "I have the answer to why Intel is no longer moving in sync with the PC boxmakers. There is a severe CPU shortage... None of the Intel-authorized distributors have any Intel CPUs available. None, zip, nada. (Intel motherboards are in short supply too.) So Intel is selling their entire CPU inventory."
The reader wonders whether Intel can even get a higher price than normal because of this shortage for the CPUs it does have.
Because of this shortage, the PC makers are all forced into ordering the highest-end CPUs even though you may not be ordering those CPUs. Intel looks to be sold out of all the lower-end CPUs. (When I checked a few sites, I found that only the high-end Xeon CPUs were available. )
Consequently, the reader reports, "If you try ordering a PIII 450 MHz system from X, you're likely to end up with a PIII 550Mhz with the upgrade compliments of X." (Name changed to protect the potentially hurt party.)
So, she says, it is entirely possible that the big PC companies are eating the difference between the midling and the high end to keep the customer happy, something that hurts their bottom lines but makes for a great bottom line for Intel.
Seems logical to me.
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