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Intel PIII shortages hit Taiwan's board makers

Company denies packaging problems, blames 'forecasting errors'

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Intel has confirmed that its Pentium III chips are in short supply, a situation that will cut demand for Taiwan's hi-tech products, industry sources say. "If the customer can't buy the [Pentium III] CPU, then they don't want to buy motherboards, or some other PC products," said Tony Yang, a spokesman for motherboard manufacturer Aopen, a member of the Acer group. "Supply is a little bit tight now," admitted Intel Taiwan spokeswoman Deborah Yen. She attributed the problem to a forecasting error. "Forecasts from OEMs and our internal forecasts were a little low." However, sources at motherboard manufacturers claimed that the shortage is a result of a bottleneck at the CPU packaging stage, not just a forecasting error. According to these sources, Intel has experienced difficulties putting the CPU into FC-PGA packaging, which will enable it to connect to motherboards that use Intel's newer, cheaper, Socket 370 design -- the Pentium III was originally designed for Slot 1 motherboards. However, Yen emphatically denied this. "No, That's not true, in fact we had that product [Socket 370 Pentium III] available last year." "This definitely will affect some of Taiwan's hi-tech companies," commented Christine Lee, a PC industry analyst at Merrill Lynch. "But I think it will be very short-lived, just a blip. Intel can't afford to make any more mistakes after last year." In 1999, Intel suffered chip shortages and serious problems with the introduction of the new Rambus memory technology. There are a few alternatives to the high-end Pentium III chips which Intel says are most seriously affected by the shortage. AMD's Athlon is one. "I think people have been looking at alternatives. But they'll wait and see whether or not to switch over," said Lee. The effects of the supply problem are not yet apparent, said Yang. "The CPU shortage will impact the motherboard market a little in February and March. But we didn't see any problem yet." Yang was unable to quantify exactly how serious the problem would be for Aopen. In times of shortage, industry insiders say, Intel generally favours larger and more loyal customers at the expense of others. ® Related Story Memory makers suffer from Intel chip drought

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