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By | Tony Smith 11th April 2006 09:28

Intel to boost chipset production, bank claims

Bad news for ATI and co?

Intel is set to stop shipping motherboards based on third-party chipsets, or at the very least significantly reduce its dependency on other companies' products, investment bank Friedman Billings, Ramsey Group (FBRG) has claimed.

According to EETimes, the institution has downgraded ATI as a result. The graphics chips maker has been one of the key beneficiaries of Intel's third-party chipset purchasing programme. FBRG reduced ATI to "market perform" from "outperform".

In a report to its clients, FBRG suggests Intel is shifting production of products not related to PCs out to third-party producers. That's freeing up production capacity for its own chipsets.

In August 2005, Intel responded to claims that it was pulling out of the entry-level chipset market by stating it was focusing its available production capacity on higher-margin parts. Soon after, Intel's motherboard division began shipping its first product based on a third-party chipset, in this case an ATI part.

With fewer low-end Intel chipsets in circulation, other motherboard vendors turned to ATI, SIS, VIA, Nvidia and others. The result was increased sales through to the end of 2005 and into 2006. Intel's sales have dipped, of course, but for that period it still garnered far greater revenues than its rivals.

The problem now, FBRG claims, is that some mobo vendors are increasingly replacing chipsets for Intel CPUs with parts for AMD chips, and Intel is allegedly increasing production of its own chipsets in a bid to counter the trend. Don't forget, it's also gearing up to ship its 965-series 'Broadwater' chipsets targeting its next-generation CPU architecture.

The upshot for ATI is a potential dip in H2 chipset sales, FBRG said, with a slowing PC market only making matters worse. ®

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