Intel boosts Atom production to avoid supply squeeze

Demand for the upcoming processor higher than anticipated for slated June shipments

Early demand for an Intel chip that's being designed for small laptops and desktops is so much higher than anticipated, the company has been forced to ramp up pre-release production.

The new chip, code-named Diamondville, won't be officially released until June but Intel has already been inundated with demands for early shipments, said company spokesman Bill Calder. He added that several PC makers plan to announce in June that they're working on Diamondville-based products. Many of the products announced in June should ship in the third and fourth quarters of this year, Calder added.

"We had anticipated a certain amount of growth and ramp up," Calder said. "It's better than anticipated. We're adjusting and increasing output. We are meeting and will meet anticipated demand."

Diamondville is part of Intel's new 45 nanometer line of Atom chips. The company officially unveiled the low-power, newly architected Atom processor family at its Developer Forum in Shanghai on April 2. At the time, Intel unveiled five new processors, codenamed Silverthorne, which are aimed at the embedded and mobile Internet device markets.

The Diamondville chips are aimed at a different market and are slated to be formally announced next month.

A future version of Intel's low-powered laptop -- the Classmate PC -- is slated to run an Atom processor. The small laptop, aimed at the education market, is part of the company's so-called "netbook" category of computers, which consists of inexpensive, portable machines with small screens.

Dan Olds, an analyst with the Gabriel Consulting Group, said he's not surprised that there's so much demand for chips that will run small form factor PCs.

"There's a strong and growing market for ultra-portable systems," said Olds. "Travel warriors and others have a desire for a small system. Heavy work will be done on other machines. A small laptop would be easy to take with you. You'll use it mainly for Internet access. It makes even more sense when you consider how much stuff you can do with web services."

Calder said he doesn't foresee Intel having trouble increasing the production of the chips to meet the unanticipated demand. He noted that the Atom chips are so small that 2,500 can fit on a single wafer. That means a decent boost in wafer production could dramatically affect the number of Atom processors produced.

"This is good for Intel," said Olds. "Not enough production is a problem they can deal with. Not enough demand is a different and worse problem."

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