AMD Cannot Supply Enough Chips as the Market Demands

Advanced Micro Devices admit they cannot supply with processors all its clients due to unexpected market demand, but hope to solve the supply issues by the first quarter of 2006.

Two system builder companies (which wanted to remain anonymous) claim that the Sunnyvale, California-based chip maker sent a letter to some of its partners stating that several of its desktop processor models were in high demand and would continue to be difficult to obtain. One of those systems builders said the note specified the Athlon 64 3500, 3800, the dual-core X2 3800 as well as the lower end Sempron 2600 and 2800 as being in tight supply.

An AMD spokeswoman acknowledged shortages in chip supplies but would not comment on specific model numbers. In a statement e-mailed to CRN, the spokeswoman said: "AMD is experiencing unprecedented demand for our desktop processors and this unprecedented demand has depleted our supply of packaging components." So, according to the company, the situation is due to problems concerning packaging, not to the lack of chips from the stocks.

To find a solution, AMD is now consulting with packaging suppliers (those that manufacture the components that house the CPU silicon). The spokeswoman also said the company has had no problems manufacturing enough silicon to meet current demand and feels confident that all sales requests can be met by the first quarter of 2006.

Manufacturing abilities of Sunnyvale, California-based AMD have always been brought into attention by industry experts and analysts. For instance, Michael Dell, the chairman of Dell Inc., the world's top maker of computers, said that his company would alone consume the whole output of AMD.
AMD isn't the only chip maker fighting supply issues. Manufacturing constraints forced Intel to stop manufacturing some chipset for desktop processors. In October Intel said it would use, for the first time in years, a third-party supplier to build chipsets for some of its desktop motherboards.