December 23, 2005

Advanced Micro Devices Inc. says demand for some of its Athlon 64 chips has been higher than expected and at least some distributors appear to be feeling the pinch.

A spokesperson for the Sunnyvale, Calif., chip maker said some Athlon 64 processors, which she declined to name, targeted at so-called value desktops, are in short supply due to difficulties sourcing chip packages.

"We are experiencing unprecedented demand for our desktop processors. As a result this demand has depleted our supply of [chip] packing components," the spokesperson said to eWEEK in an interview.

However, she said, AMD is "taking all of the necessary steps to fulfill all of the sales requests" received.

Click here to read about AMD's efforts to win more business customers.

Packages, the housings used to connect each a processor to a PC's motherboard with an array of electrical pins, are vital to chip makers such as AMD and Intel Corp.

Packaging shortages can affect AMD's ability to deliver finished processors in a timely manner, particularly at this time of year. The fourth quarter, which sees holiday season purchases from consumers and end-of-year corporate buying, is typically the height of each year for sales of computers and hence of processors and other components that go into building them.

One top distributor of the company's processors is indeed experiencing "significant shortages" of AMD chips, a top executive at that company said.

The executive, who spoke under the condition of anonymity, said the top-five distributor was down to a 10-day supply of AMD chips, whereas it generally tries to maintain a 30-day allotment. But despite although the situation is difficult—it prevents system makers from pre-building systems in anticipation of demand for them, for example—there have been enough processors available to keep up with PC orders, he said.

Click here to read more about the market-share battles between Intel and AMD.

"This is nothing that would keep computers from hitting seats in the market place," the executive said. "I just think [AMD] didn't see the demand coming. It's a nuisance, but nothing that will cause any real pain."

Indeed, despite the current situation, "We foresee this to be a short term issue," the AMD spokesperson said. "We don't foresee any issue in filing orders in Q1 2006."

An informal survey by eWEEK found numerous AMD chips, such as the Athlon 64 3200+, listed as in stock on the online retail sites of computer and computer parts sellers Monarch Computer Systems Inc. and TigerDirect Inc., who serve consumers and small system builders. However, the companies' sites do not list the exact number of chips they have in stock.

A spokesperson for Hewlett-Packard Co., one of AMD's top brand-name PC maker customers, said she was unaware of any problems procuring chips.

"What probably happened was there was a differential in [AMD's] capacity planning versus the actual market demand. That would crate a glitch like this," said Dean McCarron, principal analyst at Mercury Research Inc. "I'm sure [AMD] would rather sell the product than not, but the actual impact to the overall company is probably minimal."

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