May 12, 2010

Market dynamics offering double-digit margin savings

Converge CPU Update.

In April the market was active, as shortages and savings were in abundance across the range of processor families. This positive bounce, which was unanticipated, bucked the trend set in Q1 with sluggish demand across the main mobile and desktop markets.

In particular we saw the full force of the Intel Arrandale shortage, with the I-330M, I3-350M and I5-430M all suffering from depleted stock as OEMs moved from the Intel Montevina platform. This resulted in parts changing hands at inflated pricing during April. We expect the I3-330M to settle in the $100–$110 range, but spot market prices of around $130 have not been uncommon.

Currently, we are seeing a swath of excess inventory in the market as the Nehalem, Wolfdale and Montevina families go end of life. The T7700s, T8100s and P7350s are among the CPUs selling below their direct pricing in the spot market. Server chips continue to deliver savings, particularly in the 45 nm Nehalem and Dunnington families. In some instances, double-digit margin savings can be attained, making this an opportune time to gain a price advantage as we cross between new and old architectures.

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