Pc Makers Scrambling To Get Chips Strong Demand Fuels Shortage Of Fastest Intel Microprocessors

Intel Corp. said its fastest chips are in short supply because of strong demand from computer makers, preventing some small PC companies from getting the processors they need.

Intel’s Pentium Pro 200 chip used mostly in sophisticated computers and servers is in shortest supply. Availability of top-of-the-line Pentiums used in PCs also is tight, the company said.

The dearth of chips contrasts with last year, when waning demand for PCs sparked price cutting to move out inventory. With inventory down, PC companies now are clamoring for powerful chips to make the high-end models that customers want.

“Demand is outstripping everybody’s expectations,” said Dan Niles, an analyst at Robertson Stephens & Co. “The smaller you are the more you will suffer.” One company that won’t have enough chips is Micron Electronics Inc., Niles said. He expected the PC maker to sell about $80 million worth of Pentium Probased machines this quarter, but dropped that estimate to $50 million because of the anemic supply.

Increasing demand coupled with tight supply is helping keep prices high. Niles said some Pentiums and Pentium Pros are being sold by distributors for as much as 30 percent above Intel’s list price. “The tightest stuff is at the high end,” said Intel spokesman Howard High. He noted that no computer maker is worried about having too many chips. Rather “they are more worried about ‘Do I have enough?”’

The biggest PC makers, such as Compaq Computer Corp. and International Business Machines Corp., have long-term contracts with Intel and are likely to receive their parts first. That means the crunch trickles down to smaller makers. Others likely to have a tough time getting all they want are Acer Inc., NEC Corp. and Toshiba Inc.

The robust demand for microprocessors is a shift from earlier this year, when PC makers slowed or canceled orders after weak fourth-quarter demand and sluggish sales in the first few months of the year left them with excess inventory.

“The market definitely has changed,” said analyst Tom Kurlak of Merrill Lynch.