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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Tony Viola who wrote (108101)	8/23/2000 1:07:45 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 186894

OEMs feeling pinch of Intel's Xeon shortages By Ken Popovich eWEEK SAN JOSE, Calif. -- Amid already constrained supplies of Pentium III Xeon chips, Intel Corp. on Tuesday launched another new Xeon, a 1GHz version targeted for use in dual-processor workstations and servers. The announcement, made on the opening day of the three-day Intel Developer Forum here, comes as Compaq Computer Corp. struggles to meet customer demand for 700MHz "large cache" Xeons designed for use in multiprocessor systems, primarily four- and eight-way servers. According to a source at Houston-based Compaq, the company is unable to secure enough supplies of the chips to meet customer demand for its ProLiant servers. Questioned about the Xeon shortage, Craig Barrett, Intel's CEO, confirmed yesterday that some Intel products remain in tight supplies, although he avoided detailing which products. "There is still some tightness in various products," he said, "but we think we're in much better balance in the second half than we were in the first half." The lack of available Xeon chips marks a continuation of microprocessor shortages that major Intel business customers have experienced since the fourth quarter of last year, when the giant chip maker was forced to admit it was unable to meet heavier-than-expected demand for its chips. But while the Xeon shortages are frustrating to Compaq and its customers, a source within Compaq said the company is hopeful that it will have enough chips to meet demand later this quarter. "Of course, if the expected easing in the constrained supply doesn't occur, then the delays could result in significant financial losses for us as our customers look elsewhere for their server solutions," the source said. Bumping up speeds Basically, Intel's Xeon processors come in two flavors, with models such as the 1GHz Xeon featuring a 256K on-die memory cache designed primarily for use in dual-processor systems, and a "large cache" Xeon that features 1MB to 2MB of Level 2 cache designed for use in far more costly multiprocessor systems, such as four- and eight-way servers. Recently, the incremental increases in dual-processor Xeon speeds have closely matched the rising clock speeds of the Pentium III products designed for desktops, with the 1GHz Xeon representing only a 4 percent performance increase over the company's previously released 933MHz Xeon. But while the performance increase may be small, the potential market for the new chip is rapidly growing as more and more businesses tied to the Internet turn to two-way servers to handle their increasing online transactions. Intel, in particular, has benefited from this growth, with a report by International Data Corp. stating that about 75 percent of all deployed Internet servers use Intel processors. But while relatively small increases in performance are readily acceptable in low-end dual-processor systems, the same can't be said for far more costly four- and eight-way servers, as Intel learned when it began preparing to release an 800MHz "large cache" Xeon only three months after releasing a 700MHz version. In July, as Intel had already begun sampling the new 800MHz chip, the company was forced to cancel the product following heavy lobbying against the new chip by computer manufacturers. In particular, OEMs contended that they were ill-prepared to integrate a new chip into their systems after having just recently begun delivering four- and eight-way systems based on 700MHz Xeons released in May. The delay in delivering "large cache" Xeon systems resulted from the more rigorous testing and implementation standards that customers demand for the expensive higher-end servers, computer manufacturers said. With the scrapping of its plans to release an 800MHz Xeon, Intel currently has no plans to upgrade its multiprocessor Xeons until the first quarter of next year when it is scheduled to release a 900MHz version of the large-cache chip. In addition, the company introduced a new server motherboard specifically designed to support systems featuring dual-processor Xeons. The board, labeled SBT2, features integrated networking capabilities and supports 10 "hot-swap" drives, which allow customers to pull out a drive and swap redundant power supplies as the system is running. The 1GHz Xeon is available now in SC330 packaging with the processor priced at $719 in 1,000-unit quantities. The SBT2 server motherboard is priced at $575.