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Analyst blames Intel for missed chip sales forecast

But is something more fundamental happening?

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Intel's chipset shortage was the reason investment house Handelsbanken Capital Markets' October global chip sales forecast overshot the mark, HCM strategist Bruce Diesen told clients last week.

HCM had predicted sales of $20.3bn for October 2005. According to the Semiconductor Industry Association (SIA), however, the month's total was $20.05bn.

The discrepancy, according to Diesen's report, which comes by way of EE Times, was "probably due to a chipset shortage at Intel" causing a "big slowdown in shipments of notebook PC processors".

The question is, who's to blame? Intel, for not allowing the chip industry to meet HCM's expectations, or HCM, for not accurately forecasting the state of the industry in October?

Intel CFO Andy Bryant said early in September the chip giant had "sold out" of notebook chipsets, some months after the company admitted it was temporarily focusing its production away from low-end chipsets and on to higher-end parts. The industry has abounded with Intel chipset shortage claims since the early summer.

Indeed, Bryant last week said the shortage doesn't look like ending until Q2 2006.

Interestingly, the "slowdown" Diesen mentions also affected AMD's notebook CPU sales, which doesn't require Intel chipsets. Intel's notebook chips shipments are significantly higher than AMD's, but the latter's sales dip suggests there was a decline in demand for laptop processors that goes beyond any difficulty Intel had in shipping chipsets. Notebook vendors' difficulties sourcing Intel-based motherboards doesn't appear to have forced them to turn to AMD-based alternatives to make up the numbers.

Overall, looking at both desktop and notebook segments, rival chipset vendors picked up the slack.

That suggests notebook demand is weak, which is why Intel can afford to allow itself to run out of notebook chipsets in what Diesen describes as "a heck of a time to have a... shortage". In short, Intel may simply be reacting to diminishing demand rather than causing it.

The truth, particularly in such a dynamic market, probably lies somewhere between the two. ®

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