Intel Confirms Chip Component Delay

Intel(INTC - Cramer's Take - Stockpickr) confirmed that it is delaying the release of certain components at the heart of its forthcoming notebook PC package of chips.

The Santa Clara, Calif., chipmaker said the delay affects the integrated graphics processing and wireless chips in its so-called Montevina product, and will result in certain parts shipping a few weeks behind schedule.

The move doesn't affect Intel's financial forecast for the current quarter, and the company doesn't anticipate any change to its full-year forecast, said company spokesman Tom Beerman.

Shares of Intel were off 40 cents at $23.20 in recent trading Wednesday.

Earlier this week, analysts reported signs of trouble in Montevina, the code name of the new version of Centrino, the bundle of chips that Intel offers as a package of key electronic ingredients for notebook PCs.

Intel's Beerman confirmed that the company is retesting the graphics processing chips to address certain issues, while a "paperwork error" involving filings with the Federal Communications Commission means that the wireless component of Montevina will be also held up slightly.

Intel had initially promised to ship Montevina in the first half of 2008. The company now says it will ship the notebook microprocessor and other related Montevina chips on July 14. The rest of the components will ship a few weeks later, sometime in the first week of August, said Beerman.

He said that PC makers could fill out Intel's Montevina by incorporating graphics and WiFi components from other suppliers.

Whether or not other chipmakers have components that are compatible with Montevnia, which is a new product, isn't clear. If the chips are not compatible, PC makers may have to go with an entirely different bundle of chips until Intel can offer the complete package, says analyst Jon Peddie of Jon Peddie Research.
And the fact that Intel is missing the component for integrated graphics, which accounts for the bulk of the notebook PC market, could present rival Advanced Micro Devices(AMD - Cramer's Take - Stockpickr) with an opportunity to grab some market share.

"Every company in the industry has a hiccup from time to time. It's just the nature of the business" says Peddie. "The only thing that makes this one annoying and maybe a little scary is the fact that there is this timing for the back-to-school [sales] rollout."