Notebook demand puts the pressure onto Intel

Chip giant warns that chipset availability will be tight as it ups its third-quarter forecast

Intel has warned that the availability of notebook chipsets will remain very tight throughout the rest of 2005, but claimed that it expects to meet processor demand.

The bad news came as Intel upped its third quarter financial forecast to say that turnover for the quarter is now expected to be between $9.8bn and $10bn, compared with the previous forecast of $9.6bn to

$10.2bn. The double-digit, year-on-year growth is largely down to notebook demand, Intel said. The chipset shortage coincided with analyst iSuppli halving its forecast for the global chip market.

“In general, we are supplying processors as required by the marketplace,” said Andy Bryant, chief financial officer at Intel. “With reference to chipsets, I assumed we would be short as we began the quarter. We have known that chipsets were going to be tight for a while now. Chipset products will remain tight but in the microprocessor product lines we will meet demand [during Q4].”

However, changing market conditions have forced iSuppli to reign in previous chip-market predictions. It now estimates that global chip sales will rise by just 2.4 per cent over the course of 2004 to $232.7bn in 2005. This compares negatively with its previous forecast of a 5.9 per cent rise for 2005 sales.

Gary Grandbois, principal analyst, analog ICs/semiconductor forecast for iSuppli, said: “A weaker-than-expected first half, coupled with the likely impact of high oil prices in the second half, have been instrumental in bringing down iSuppli’s 2005 semiconductor forecast.”

Things will pick up slightly in 2006, iSuppli has predicted.

“The flattening in Q4 will lead into a very slow first half for 2006. Although 2006 will be an improvement over 2005, it will still be a very slow year for semiconductor sales growth,” Grandbois said.