Intel Corp said it may be unable to meet demand for the Pentium 4 processor as sales of PCs show signs of rebounding from the worst slump since 1985.
"People are beginning to see the benefits of Pentium 4 PCs -- this is actually a hot buying season," Intel spokeswoman Evia Shum said in an interview in Hong Kong. "We are trying to remedy the tight situation this quarter."
Intel slashed the price of its most advanced PC chip by about 84 percent in its first year as computer demand fell for the first time in 16 years because of a slowing economy and the Sept. 11 terrorist attacks.
Demand for the chip may take off, analysts said, as computer retailer Gateway Inc and manufacturer Hewlett-Packard Co both reported a surge in October sales.
Shares in Asian PC companies, which rose from post Sept. 11 lows, may fall because the rebound in demand is probably linked to holiday sales and isn't sustainable, some investors said.
"There won't be a return to the golden days," said Devan Kaloo, who counts shares in Asian technology companies among the US$4 billion he helps manage at Aberdeen Asset Management Ltd. "We don't think demand in the US will be particularly strong."
Still, some companies in Taiwan that make Pentium 4 chipsets may benefit, Kaloo and other investors said.
The shortages are "positive for companies like VIA Technologies Inc and others in Taiwan that make chipsets for the Pentium 4," said Alain Barbezat, who counts shares in Asian technology companies among the US$500 million he helps manage at Darier Hentsch Asia Ltd in Hong Kong.
Chipsets work with processors to manage graphics and other functions in a PC.
Taiwan manufacturers, which make more than half the world's PCs, reported shortages of the processor, a local Chinese-language newspaper said yesterday.
Intel officials said that they're still not willing to say whether growing sales of the Pentium 4 are a sign of a rebound in demand for PCs.
"I don't think anyone is good at forecasting near term," said Andy Bryant, Intel's chief financial officer, at a Credit Suisse First Boston conference in the US yesterday. "It's pretty tough to predict just a few years out."
The company will slash prices by an average 14 percent from Jan. 27, a narrower margin than cuts in August and October, Salomon Smith Barney analyst Jonathan Joseph said in a report on Monday.
Joseph, the top semiconductor analyst in an Institutional Investor magazine poll, said he expects Pentium 4 shipments to beat his estimate of 12 million units this quarter.
The global PC market shrank 13.7 percent to 29.1 million PCs in the third quarter from a year ago, market researcher International Data Corp said in an October report.
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