Intel Says Server Components In Short Supply

Intel is blaming a shortage of server chassis and components on a problem with one of its suppliers, but its system builder partners are blaming Intel itself.

Intel late last week sent an e-mail to its system builders apologizing for the difficulty in getting certain components, and said that it expects to see a partial recovery this later month.

That e-mail, viewed by ChannelWeb, addressed to Intel's channel customers and signed by Eric Thompson, director for North America channel and distribution at Intel, reads, "As you know, recently it has been difficult to obtain selected server components through Intel authorized distributors. This difficulty is the result of unexpected financial and execution failures on the part of one of our key server components suppliers. We respect the difficulty that the supply shortage presents and are acting to mitigate the situation by enabling two new vendors to augment our existing supplier. We are expecting to see partial recovery to backlogged demand in the month of December with full recovery early in 2009. You will find more details on both the issue and recovery plan in the attached letter from the General Manager of our server platform division."

Intel declined to comment on the e-mail.

One system builder said the word on the street is that Intel depended on Taiwan server chassis maker Enlight for its server chassis, and that it was the "key server components" supplier mentioned in the e-mail.

Enlight did not respond to requests for information. However, Digitimes, a Taiwan-based online publication close to Asia's IT industry, reported Tuesday that Enlight disclosed in a filing with the Taiwan Stock Exchange that one of its factories in China had been seized by a Chinese bank over an overdue loan of about $9.5 million.

One Intel system builder, who requested anonymity, said his company cannot get the server chasses and components it needs.

"It's been a real pain," the system builder said. "A lot of other system builders have been calling me for parts."

Even a simple part like a drive bay is causing problems for the system builder. "Drive bays are a big issue," the system builder said. "It's a stupid little piece of metal, and it holds up server sales. Intel prides itself in using Intel building blocks for its server, and now it all goes out the window."

Another system builder, who requested anonymity, said that his company recently had to resort to Amazon.com to purchase an Intel server redundant power supply.

System builders faulted Intel for relying on a single source for critical server components.

"Intel was single-sourcing its server chassis, and that company went bankrupt," the first system builder said. "So now they're scrambling."

Jalil Mahini, owner of Micronet Systems, a Niles, Ill.-based system builder, said issues with server components are Intel's responsibility.

"If they want us to buy their products, they must make sure the distributors have the items in stock," Mahini said. "But I have to be fair. Intel did tell us to contact them if we can't get a component from our authorized distributor, and they will try to help."

Another system builder, who requested anonymity, said a shortage of Intel server chasses and related components is a big deal despite the fact that there are many case suppliers serving the channel.

"We have some projects that require Intel cases, or some products that new customers want to try," the system builder said.

A lot of people prefer to use Intel chasses because of the brand name, the system builder said. "In many projects, if you don't have the right case, you're screwed. Also, how many companies offer a three-year, advanced replacement warranty? Only Intel. Intel will ship a replacement overnight. Its customer support is the best."

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