Intel is rumored to exit the entry-level chipset market amid tight supply of flip chip (FC) substrates, with chipset makers such as ATI Technologies, Silicon Integrated Systems (SiS), VIA Technologies to benefit from Intel’s exit, according to market sources.

Intel declined to comment on the rumors but said it has never “exited” or “returned” to the chipset market, as its products are allotted according to the most efficient arrangement.

Substrate makers said Intel has been adopting FC substrate technology but tight supply of FC substrates started to surface in the second half of 2005. Therefore, Intel ceased production of products such as the 865 and 915 chipset series, as they generate lower gross margins, and focused on higher-end series, the makers indicated.

In contrast, chipset makers such as ATI, SiS and VIA adopt PBGA (plastic ball-grid array) technology and will directly benefit from any reduced supply from Intel, sources said.

ATI was recently rumored to have placed orders for its entry-level chipsets with Taiwan Semiconductor Manufacturing Company (TSMC). Sources said the move was an attempt to increase its market share amid a drop in production on Intel’s part.

Motherboard makers, on the other hand, doubt other chipset makers will benefit from the move, as most makers still have satisfactory inventory levels of 865 chipsets, which may last through next quarter.

By: DocMemory
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