Doesn't Intel usually pre-announce an earnings warning when they become capacity constrained? If their factories become fully booked and they can't make any more products that usually is good news, am I right?
It looks like Intel is maxed-out on production of their Strongarm chips. Don't know if this is true for their other chips but this sounds like pretty good news to me.
Capacity crunch stymies Intel's StrongARM
By Mark Hachman, Electronic Buyers' News Feb 24, 1999 (5:40 PM) URL: ebnews.com
Palm Springs, Calif. - Intel Corp. is notifying customers that supplies of its StrongARM embedded processor will be limited for up to six months. The shortage is causing some smaller OEMs to tighten their belts, although one large customer is reporting no delays in its order fulfillment.
Demand for Intel's SA-110 and SA-1100 embedded processor is strong enough that Intel will remain capacity-constrained "most likely for three months and at maximum six months," according to Len Wegner, marketing manager for Intel's StrongARM and Bridges Division, part of the company's Texas-based Austin Design Center.
Prices are not expected to rise, although lead times are stretching out, Wegner said. Intel has just completed notifying its customers.
"The capacity's the issue," Wegner said, adding that Intel isacquiring additional test equipment to speed the StrongARM off the manufacturing line and out the door.
Wegner said the shortage resulted from an unexpected surge in fourth-quarter billings. To prevent the shortfall from happening again, Intel is asking customers to better forecast their demand, in much the same way it asks its PC microprocessors customers to do. Intel is still accepting new orders, according to Wegner.
The capacity crunch has left some smaller OEMs without adequate chip supply. A source at startup Ennovate Networks, Boxborough, Mass., told EBN that it has stopped receiving shipments of the StrongARM, the foundation for its first product, an IP switch.
Indeed, Intel confirmed that when it first discovered the capacity issue it temporarily interrupted supplies to some customers as it assessed the full scope of the shortage. "Our knee-jerk reaction was to stop everything," Wegner said.
Nevertheless, Kevin Havre, technical marketing manager for Hewlett-Packard Co.'s Asian-Pacific Computing Division, said that to his knowledge Intel has not curtailed its StrongARM supply. HP's handhled computer line is a major consumer of StrongARM chips.
"It's quite possible we're sucking up the available supply," Havre said.
Throughout the past year, Intel has promoted the StrongARM as an ideal microprocessor for communications, multimedia, and general-purpose embedded applications. Wegner said new customers are attracted by the chip's mix of low power and high performance.
To date, however, the reach of the StrongARM has been somewhat limited.
Tony Massimini, analyst for Semico Research Corp., Phoenix, said that Intel had reported "miniscule" revenue from the StrongARM through the end of 1998. Massimini said his preliminary estimate of StrongARM sales for all of last year is well below $100 million.
Analysts said the capacity constraints were unlikely to affect Intel's ability to win new designs, however, and the chip is seen as key to Intel's future success in the embedded RISC market. While Intel has sold millions of X86 microprocessors, none produce the mix of high performance and low power required by embedded designers, according to observers.
"The StrongARM fills a hole in Intel's marketing strategy," Massamini said.
The StrongARM is manufactured at Intel's Fab 18, the Hudson, Mass., facility it acquired from Digital Equipment Corp. when it purchased the assets of Digital's chip operations in May 1998. At the time of the acquisition, Massamini and other analysts said they believed that the StrongARM was the most important asset Intel purchased.
Because the StrongARM family is manufactured using Digital's proprietary fabrication process, the chips will remain essentially captive to the Hudson fab throughout their lifetime.
The next-generation StrongARM, however, will be optimized for Intel's manufacturing equipment, Wegner said.
Along with the StrongARM, Intel's Hudson fab also manufactures PCI bridge chips and the Alpha, a 64-bit microprocessor Intel committed to manufacture when it acquired Digital's chip assets. Digital, which was later acquired by Compaq Computer Corp., retains sole rights to the Alpha design. Wegner declined to comment on the number of StrongARM chips the Hudson plant is producing, or upon the ratio of StrongARM output to the other two products.
At Intel's semiannual chip conference here, the StrongARM was highlighted in a series of presentations describing Intel's products for embedded computing, including a joint presentation with Lernout & Hauspie, a developer of speech recognition software. No new StrongARM products were announced, although Intel said it is now shipping a Pentium with MMX optimized for the temperature variations found in automobile-based PC devices and a version of its Celeron processor designed for embedded computing.
Monica |
