Atom supply still stymied by testing bottleneck

From InfoWorld: Demand for Intel's Atom processor is strong, with computer makers clamoring for more chips to plug into the small, portable laptops called netbooks, but the chips remain in short supply. The problem isn't that Intel can't make enough of the silicon chips -- the company can, and it is -- but availability remains stymied by a testing bottleneck that prevents the chip maker from meeting demand.

This bottleneck, first highlighted in a July conference call by Intel CFO Stacy Smith, exists because Intel underestimated the level of end-user demand for the chips found in netbooks. The shortage of Atom chips is so severe that Asustek Computer decided to use a much older Intel chip, the 900MHz Celeron M 353, in two models of its popular Eee PC.

There's no quick fix. Intel can't easily take away capacity from other processors to handle the higher Atom demand. Atom processors are cheaper than other Intel chips and priority in the testing process goes to more expensive models that command higher average selling prices (ASPs).

"It would not be fiscally prudent to take capacity away from Core processors, with a US$100-ish ASP, to service Atom, which have a $25-ish ASP," wrote Dean McCarron, president of Mercury Research, in an e-mail.

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