Intel's Atom processor no longer in short supply

Evidence suggests that the shortage of low-cost Atom processors that system makers faced earlier this year is over.

The low-cost Atom processor is primarily used in low-cost laptops, called netbooks. The popularity of these devices initially exceeded Intel's expectations, resulting in a shortage of the chips for hardware makers eager to cash in on high netbook demand. In a bid to catch up with demand, Intel repeatedly increased its Atom output this year. (Read a story about the world's smallest storage device.)

Acer, the world's third largest PC maker and a major netbook vendor, says it's no longer having any problem obtaining Atom microprocessors. The company estimates it will ship 6 million Aspire One netbooks this year, a heady target considering it started shipping the devices at the end of June.

As recently as August, the company was still struggling to produce enough Atom chips. In a conference call, Intel CFO Stacy Smith pinned the shortage on a lack of adequate testing capacity to meet demand for the chips.

Some netbook makers blamed the shortage for disrupting netbook shipments. Asustek Computer, which created the netbook market with its Eee PC, even turned to using an older Intel chip, the Celeron M 353, because of the Atom shortage.

By October signs emerged that the Atom shortage had eased. One of the first confirmations came from Jeff Clarke, senior vice president of Dell's Business Product Group, who said plenty of Atom chips are available for its recently announced Optiplex FX160 thin-client computer. "I won't have a supply issue," he said.

Analysts also picked up on the increased availability of Atom.

"With respect to the Atom processor, any supply shortages seen earlier in the year are now resolved, with plenty of available supply," wrote Craig Berger, an analyst at FBR Capital Markets, an investment bank, in a report released last month.

The easing of the Atom shortage in October roughly meets Intel's stated goal of shipping Atom chips in high volume by September, and allays vendor fears that too few chips would be available for the year-end shopping season.

"We've always worked to meet customer demand and we've always been pleased with the strong reaction that Atom has been getting in the market," said Nick Jacobs, an Intel spokesman, noting the company has four plants producing 45-nanometer chips, including the Atom.

The IDG News Service is a Network World affiliate.