CPU update: Intel Atom fails to take off in the spot market

USA: According to Converge Market Insights, May was a steady month in CPU activity, with a focus toward new product launches at the Computex show in Taipei in early June.

For this edition of Market Insights, this report will focus on two differing developments in the mobile and desktop markets: the failure of the tiny Atom to take off, and the surprise resurgence of the old heavyweight desktop processor.

The Intel Atom
As the first generation of Atom processors slides into end of life, it is worth looking at its impact on the spot market. These low-cost, low-speed chips for netbook and other mobile applications arrived on the market with much fanfare but have not yet caught on to be actively traded in the open market.

Intel estimated that the Atom accounted for approximately 20 percent of its mobile processor shipments in Q1 09, while spot market contributions were at a modest 6-7 percent.

The margins from the low-cost chips, combined with the frequent need to bundle with a chipset or small board, mean that the parts are not simple to move. It is interesting to note that as of yet, AMD has no direct competing technology to the Atom. Perhaps, we will see a rise in demand as main models, such as the N270, are replaced by the N450.

Boxing clever
The month of May saw a reemergence of demand for the desktop CPU at retail. In the past, the high cost of shipping retail desktops made them an uneconomical option, as the boxes contain a heavy cooling device that dramatically raises shipping costs while eroding margins.

With the introduction of inexpensive Intel cooling fans in the spot market, Converge has been able to bundle the fans and CPUs together in kits complete with full three year warranty providing a cost-effective solution to box builders. This has resulted in a resurgence in desktop demand in the spot market, as market cost variances are once again favorable.