The Extra Chip Mystery Due to Xbox?

Posted By Van Smith

Date: July 24, 2001

A VHJ reader has suggested that the extra chips no one seems to be able to account for in the second quarter may be the result of Intel Pentium III shipments to Microsoft for the Xbox.

A strange thing happened on the way to second quarter earnings reports: both AMD and Intel reported that sales of microprocessors were up.  And both chipmakers added market share in what everyone expected to be a depressed market.  Somewhat like Dark Matter, the mysterious, invisible and unaccounted for mass that seems to constitute a significant portion of the universe, we seem to have a similar situation in Q2 processor shipments.

Some suggest that part of this seeming paradox is due to lost market share from companies like VIA and Transmeta, but VHJ reader John Pettit poses the very interesting suggestion that the mysterious missing processors might be the result of unreported Xbox shipments.  Mr. Pettit writes:

I failed to see any mention of xbox processor shipments in Intel's earnings report conference. Could that account for the additional processor shipments? Would be nice if you could address this in a future column.

Considering the Xbox launch timeframe, this appears to be at least plausible.

Word from Intel spokesman George Alfs is as follows: 

I'd rather not comment on one customer's shipments. Also, we don't break out our product shipments beyond what we say at the earnings call.

I don't think you can attribute any kind of serious shipment math to one customers shipments. However there is a huge customer base worldwide that I'm sure the analysts are not tracking very well, which is the very large white box and distribution market. I think calling it a "missing chips phenomena" is a bit of a stretch, but I'll check around. What is AMD saying?

We urge readers who wish to share information or suggestions about the mysterious missing chip phenomena to contact us.  Is it nothing?  Is it Xbox?  Is it AMD or Intel or VIA and Transmeta?  Let us know what you think.

The Microsoft Xbox is a next generation gaming console set to launch on November 8th.  Promising unprecedented power, the Xbox contains a state-of-the-art NVIDIA chipset, 64MB of DDR SDRAM, hard drive, DVD drive, Ethernet and a 733 MHz Intel Pentium III processor.  The gaming machine is set to leverage DirectX, a hardware abstraction layer that should make it easy to port games to and from the PC.  However, at launch the Xbox will have more graphics power than any PC available at that time.