Chip shortage to affect White Box makers.
Hi Kemble:
Could be good news for brand name PC makers and not so good news for the White Box guys who still control +50% of the PC market.
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Tuesday December 22 1998
Computer makers' sales hit as chip storage takes hold
BLOOMBERG in Santa Clara
Intel Corp's microprocessors are in short supply this holiday season, and some personal-computer makers say the squeeze is costing them sales.
Intel, which sells more than 80 per cent of the chips used in PCs, did not expect a surge of year-end buying. Consequently, the world's biggest chip-maker is not churning out enough of some high-performance processors to meet demand.
''We're currently product-constrained,'' said Robert Manetta, an Intel spokesman. ''We expect to be meeting all customer orders by the end of the quarter.''
That could be too late for small computer makers such as Boldata Systems and distributors like Pinacor, the PC-sales business of MicroAge. These companies say the scarcity of the most powerful Intel chips is depriving them of sales in the critical fourth quarter, when about a third of all PCs are sold.
''We're suffering,'' said Anthony Cyplik, director of computer assembly at Pinacor. ''If we had more chips, we'd have more business.''
Arizona-based Pinacor sells unbranded PCs, or so-called white boxes, to computer dealers, who then sell them to small and medium-sized businesses.
While Pinacor may not be a household name, white-box makers as a group account for about a third of all PCs shipped worldwide, according to International Data Corp.
The dearth of Intel chips is not hurting Compaq Computer Corp, the world's biggest PC maker, or rival Dell Computer Corp, the top direct-seller. ''We haven't had any problems, and we don't expect to have any problems,'' Compaq spokesman Alan Hodel said.
For smaller makers, though, getting chips is often feast or famine. Processors were plentiful earlier this year, when it looked like a slowdown in the global economy would hurt PC sales. Then the holidays neared and US consumers and businesses started buying.
The late buying binge caught Intel off guard.
It first said that sales would be only slightly better than the third quarter's, then predicted that sales would increase as much as 10 per cent.
The flawed sales forecasts spilled over into production plans. It takes Intel about three months from start to finish to make a computer chip from silicon wafers, and three months ago, Intel executives were not expecting such happy holidays.
''We didn't start enough wafers three months ago to meet demand,'' Mr Manetta said. ''Things can change dramatically in a couple of months.''
Now, with PC sales booming, computer makers say there are shortages of the more powerful chips. Intel declined to say which chips were in short supply.
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