Shortage of Intel chips to hit Indian PC market

The shortage of Intel processor chips is set to chip away at the shipments of the overall traditional personal computers in India in the coming few quarters.

This decline was pointed out by the International Data Corporation (IDC) Quarterly Personal Computing Devices Tracker, November 2018. “IDC expects overall India PC market to decline due to Intel chip shortages and also on account of post Diwali slowdown of the market,” stated Navkendar Singh, Associate Research Director, Client Devices & IPDS, IDC India.

This comes even as Indian PC market witnessed a decline of 10.6 per cent in the third quarter of calender year 2018 compared to the same period last year.

“Though the shortage of Intel chips had a minimal effect on supply in October, when the old stock gets cleared up in November and December, this is going to impact all vendors, particularly those not having a great market share. HP, Dell and Lenovo are also facing the brunt of it, but not on a larger scale,” Jeffrey Mathews, analyst at IDC, told BusinessLine. Because of this shortage , Intel chips allocated to marginal players is the first to be impacted.

Intel,HP, Lenovo and Dell declined to comment.

From a sales point of view, Mathews felt that the amplification of the challenge cannot be commented on yet. “The impact will be close to two to three per cent on the supply of PCs in the market in the coming quarters,” he added.

It all started due to Intel’s delay in transitioning from 14 nanometer chipsets to 10 nanometer chipsets, because of which the 8th generation processor faced a shortage, as it did not anticipate the demand to be so great, Mathews explained. “Intel’s existing supply chain could not meet the excessive demand. As a result, the production of the 8th generation processors on 14 nanometer chipsets were underestimated, due to which there is a shortage in supply,” he said.

Though most countries are affected, in India, Intel still has a backup plan as the 6th and 7th generation chips are still in the market, though the 8th generation chips are unable to meet the unexpected demand he said.

Players such as Asus and Acer are particularly focussing on AMD processors, and AMD is capitalising on this opportunity and aggressively partnering with vendors and growing in the channels, Mathews explained. He said that HP, Dell and Lenovo are also of the belief that there is an opportunity for AMD, pointing out how HP is planning on launching new products with AMD processors.

He felt Intel will face competition from AMD due to its shortage of chips. “AMD is positioning its Ryzen series to compete with Intel’s i3 and i5processors. Though it has not really picked up now, in terms of pricing, it is slowly getting picked up because Intel processors are priced a bit at the premium. It offers the consumers a price point value proposition,” Mathews said.

“The way forward for Intel is to ensure the production and fasten the overall supply chain of 14 nanometer chipsets to meet the increasing demand. And additionally, ensure the smooth transition of production of 10nanometer chipsets,” Mathews said. As for vendors of personal computers, they can push forward the value proposition of the 6th and 7th generations through right price points as well as push AMD’s Ryzen series in the market, he said.