The move, expected to take place by the end of August, could delay shipments of low-end PCs from various manufacturers for a couple of months.
Sources close to the chipmaking giant's dealings confirmed reports that Intel would shutter production of its 910GL, 915GL and 915PL chipsets. The three microcontrollers that help feed the main brain of Pentium 4 and Celeron D chips were expected to make up about 20 percent of Intel's desktop chipset supply in the second half of this year.
An Intel representative dismissed reports suggesting the company was exiting the low-end chipset business altogether but said the company was in the middle of making changes to its manufacturing plants to make way for more mobile-focused and high-performance products. Despite reports of which products would be phased out, Intel declined to officially state which chipsets would be put on the back burner.
"Our factories are now running at full capacity, but we are experiencing changes and, temporarily, there will be shortages," Intel representative Bill Kircos said. He added that the company is expecting a: Pentium, Xeon and Itanium.
Intel's shift toward higher-performance chipsets may indicate that the company is ready to address next-generation chips with support for, new front-side bus architectures, new peripheral interfaces and a growing list of demands such as managing security and .
Rival chipset manufacturers such as Silicon Integrated Systems (SiS) and Via Technologies are primed to take advantage of Intel's production changes, according to a recent Morgan Stanley report.
"Between SiS and Via, they (Intel) prefer SiS chipsets for the Intel CPU platform given the better graphic quality," Morgan Stanley analyst Ellen Tseng said in a newsletter to investors.
However, Tseng noted that motherboard makers are also apt to increase orders based on Advanced Micro Devices giving Via a leg up on SiS. Via controls about 50 percent of the AMD platform-based chipset market.
Motherboard makers, however, are concerned about whether either SiS or Via can fill in the gap until late September or October, unless the two companies can resolve supply issues form Taiwanese fabrication plants UMC and TSMC, as well as their packaging and testing issues.
Via representative Richard Brown said Intel's movements are welcome since Via expects continued strong growth in the entry-level desktop PC segment over the long term.
"We are seeing very strong demand for our Pentium 4 IGP chipsets such as the Via P4M800 targeted at the entry-level desktop PC market," Brown said. "Intel's moves are of course one major reason for this, but growing demand in emerging markets such as India and China is just as important a factor."
Intel's laser focus on mobile chipsets is well documented. More than half of the mobile processors shipped by Intel, formerly code-named Sonoma, even though it is only three months old, the company said during its earnings call last month.