October 15, 2008

Converge CPU Update

In this month’s CPU update, we look back on a busy start to autumn, when a shortage market drove CPUs sales, and consider how the spot market can stimulate demand and provide value for buyers when a shortage market passes.

During a CPU shortage, supply chain professionals such as Converge scour the global spot market for the right parts to meet OEM demand. Generally, the requirements are created by market demand. When supply tightens on in-demand parts, requests intensify from concerned OEMs looking for parts to meet their production schedules. Finding cost savings in the market can be altogether trickier and more time consuming than filling shortages, but ultimately this is where Converge can help make a positive impact on a customer’s bottom line.

A Frenzied September
September saw a CPU split: 70% mobile sales, the remainder Xeon and desktops. Considering that traditionally desktop CPUs dominate in the spot market, this was an exceptional month. For example, end-of-life T7300s and T7500s were short, while the T7700 was a popular cost saver in OEM excess. Converge has long predicted that the expected Montevina family would be short, and this was realized in spectacular fashion as everything from the low-end Celerons and T1600s to the high-end Penryns, including T9600, T9400 and P8600, were in high demand. The T3200 and T5800 are interesting parts, as they work for both the current Santa Rosa refresh and the new Montevina platforms. Such dual compatibility is very rare and it adds to the popularity of these crossover specifications.

Fishing for Cost Savings
Shortages can end as suddenly as they began. At the time of writing this Market Insights, supply is relatively smooth and demand flat across the CPU market. In markets experiencing a relative calm, Converge focuses its attention on finding cost-saving opportunities for OEMs.

Converge will work with customers to identify parts used in their products and provide a customized model to identify potential cost savings on line items where excess supply may reside or to forecast possible shortages. The end goal is to provide customers with market visibility so they can identify parts that may become short and, just as important, where they can save money by buying through Converge.

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