Product recall - Shortage leaves Intel partners high and dry

Chip giant Intel is facing the prospect of losing some of its partners after it was discovered that the company is struggling to cope with insatiable distributor and reseller demand for its chips.

Intel also has had to recall almost one million faulty 820 motherboards that have caused PCs using SDRam to hang.

Neil Stevens, marketing manager at Tiny Computers and a former Intel employee, said Intel has made chip production a priority which is likely to hinder the manufacture of motherboards. He revealed that at least one of Intel's motherboard factories is to be overhauled as a processor fabrication plant.

Stevens said: "We currently already supplement our motherboard range with third-party technology from Via Technologies. This development is only going to make things tighter.

"Unless Intel can start to deliver, Tiny will have to look elsewhere.

We are already on good terms with AMD because of our connections in the US."

Fiona Squire, product manager Datrontech, an Intel-only distributor, said the company has suffered from the shortages since last year.

If these constraints are not eased, the distributor may be "forced to look at alternative solutions", she said.

An Intel representative said the company was not prepared to comment on third-party decisions. But chip shortages are set to continue well into the second half of this year with the vendor's announcement that it is to recall the faulty motherboards.

Meanwhile, the chip shortage problem stems from the product's memory translator hub, which causes a PC to crash if it is used with SDRam.

The product recall operation is expected to cost more than $300m (£200m) and Intel confirmed the figure is likely to have a noticeable impact on its second-quarter results.

Recall of the products also unintentionally revealed that, since last November, less than 500,000 motherboards with the 820 chip set and Direct RDRam have been shipped. According to analysts, this figure represents only one per cent of the total number of motherboards that were shipped in the first quarter.

"Intel is making a big mess of distribution and the market is suffering badly," said an anonymous reseller. "All this is just great news for AMD."