Intel slide a little wafer thin

Analysts, pundits slap each others' backs

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Analysis There are lots of good and even wonderful things about being in Asia, close to what the CEO of Via calls the Greater China Manufacturing Engine, and one of them is you can watch the rest of the IT world as it wakes up to the news.

Seven hours ahead of Blighty, 12 hours ahead of Wall Street and a staggering 17 hours of California -- what a difference a day made for Intel.

Friday morning, Taipei time, we found ourselves in a rush to get out of the door and listen to the best of the rest of the Via Technology Forum, but managed to catch the fact that the INTCzilla corporation sneaked out a profit warning after the bell ding-donged on Wall Street.

Asian stock markets had already reverberated, with the local Taiex market showing a steep decline. Hong Kong (now a rather dull place, we're told), also bleeding. Snap and ditto for Shanghai and Japan. And when Europe woke up, ditto and snap for those markets.

Course, the world news channels had already started to wheel in the US financial pundits, and Bloomberg, a 24 hours news organisation which seems to hire staff who work 28 hours a day in sweaty button down shirts, was feverishly revolving and spinning. We saw on the Bloomberg carousel that First International Corporation (FIC), a big mobo firm which is a subsidiary of Formosa Plastics, which owns Via, had gone all incautious and said AMD was a better bet than Intel.

The US financial pundits are a mixed bunch indeed. Despite the fact that this is the second annus horribilis for Intel in a row, caused by cock ups, many seemed to be terribly confused by the difference between demand and supply, and obviously have no time to play Caesar III at the weekend, or perhaps are befuddled by Conspicuous Consumption and far too large pay checks to boot.

Demand is when someone (party A) wants something from someone else (party B), right? And supply is when Party B says, yeah, OK you can have it.

Limited supply is when Party B says it can't give Party A what it wants, meaning that it has to go elsewhere, that elsewhere being a second source like, for example, AMD and Via.

OK, so certainly the impact of the year 2000, the introduction of yet other versions of Microsoftware has had its effect on large corporate buying decisions. And sure, no one at a huge corporation wants to start rolling out 1GHz machines just a little while after they've rolled out 500MHz machines. And yes, the Euro has been weak.

But if Intel cannot supply chips it promises to, and you are a big European distributor or even a reasonably fair sized PC manufacturer, what are you supposed to do? Say OK, Intel, we'll wait until you've got your factories rolling and your chipsets working, while our businesses slide into desuetude?

No man, no way. Instead, if there's a second source, you use the second source, or even the third source, and carry on trading just as best you can.

Via, according to monthly reports that it issues, now sells three million PC-133 based chipsets, at a price of around $25, compared to the $40+ Intel is asking for its 815. Of those three million, two million support INTC chips, and one million support AMD chips.

All you have to do is multiply these figures up to see that demand for PCs remains pretty strong. These are real figures. Intel never breaks out its individual chipset sales. Taiwanese mobo makers we talked to last week say they won't buy 815 chipsets because they're too expensive, and they're too late. There's piles of the chips (and, we regret to note, mobos to boot) sitting in warehouses, waiting for INTC to drop the price to a reasonable level.

Taiwanese reports that TSMC major might start fabbing chipsets for Intel might be the product of a fervid imagination.

Intel is a verr, verr crafty company, and we noted when we wrote a story based on their last quarterly figures that some of the shortages -- shortages that INTC told its channel players and its OEMs about one day after it paper launched its Coppermine technology a year back -- were hidden by the revenues it accrued from interest and its highly profitable VC division.

So, financial pundits on the state of the Intel nation, before you pontificate, maybe it's time you went down to the Ingram Micro or Tech Data trading floor, to see just what the real world, unfettered from a Mercator projection which makes Wall Street the hub of the universe, is really like. Or get Caesar III, and see how revolting the natives can be when they cannot get supplies of their wheat, oil, wine or pork bellies. ®


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