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April 30, 2008 7:56 pm

Asustek warns of Intel chip shortage

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Asustek, the fledgling Taiwanese PC vendor, says it expects industry efforts to ship millions of low-cost small notebook computers will be hampered by a severe shortage of Intel’s new Atom processor this summer.

Atom is Intel’s smallest and least powerful processor, developed for cheap notebooks and affordable internet-focused devices.

No product using the processor has yet been brought to the market, but analysts say Intel is seeing strong demand for Atom due to plans by all leading PC companies to follow Asustek in launching low-end computers.

“We will see a severe shortage in Atom processors that will last well into the third quarter,” said Jerry Shen, Asustek CEO. He said Asustek expected to gain a competitive advantage over rivals from the shortage because the Taiwanese company does not rely on Atom processors exclusively for its low-cost machines.

Intel said demand for the Atom processor was better than expected and it was working with customers to meet their needs.

Asustek became the first computer vendor to sell a low-cost small notebook through commercial channels worldwide late last year. Demand for its EeePC, prices for which start at $299, has outstripped supply.

HP, the world’s largest PC vendor, recently announced plans for a low-cost notebook, and Dell and Acer, ranking second and third, intend to follow over the next two months.

“We will be facing strong competition starting from June which will certainly bring price pressure,” said Mr Shen. “But this shortage is good for us because we have two CPU [central processing unit] platforms to respond to demand.”

Asustek plans to launch a new version of the EeePC next month which runs on an Atom CPU. But the version already out, that uses older-generation processors, will continue to be on offer.

The company sold 700,000 EeePCs in the first quarter and forecasts shipments in the three months to June 30 to increase by 70 to 80 per cent to up to 1.3m units compared with the first quarter.

This would almost equal its shipments of traditional notebook computers, which the company forecast at 1.3 to 1.4m units for the current quarter. Its EeePC shipment target for the whole year remains at 5m units.

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