Intel Corp. admitted during the most recent conference call with financial analysts that the demand for Intel Atom chips is higher than expectations and that the company could not meet it in the third quarter. The company promised to deliver enough central processing units by the end of the year. Besides, the company revealed that Atom bring higher profits compared to traditional entry-level chips.

“We did not meet demand [for Intel Atom] in Q3 for the product, even though we were up substantially from the second quarter. We are up again substantially in the fourth quarter. Our expectation is that we will meet demand by the end of the year but not the early part of the quarter,” Paul Otellini, chief executive officer at Intel told financial analysts during quarterly conference call.

Still, the head of Intel says that sales of Atom processors were on the high-levels. Moreover, since the CPUs are really cheap to manufacture, even their low prices allow Intel to get profits similar to those it earns on the traditional low-end and mainstream markets.

“The Atom family is off to a very good start, with Atom microprocessor and related chipset revenues approximately $200 million this quarter. Total microprocessor ASP was lower than Q2 but was approximately flat without Atom, reflecting strength in the core business. […] When I look at the product margin, it is a nice [and] healthy product margin and on a dollar basis it is equivalent to what we see in Celeron and on a product margin percent, it is higher. So, if you look at it kind of relative to the low-end of our mainstream stack, it’s generating nice profit characteristics,” said Mr. Otellini.

Considering the fact that despite of low price Intel Atom processors bring more profits to Intel than higher-performance Celeron chips, over time Intel may become more interested in promoting the Atom microprocessors rather than more traditional products. This may indeed change the game on the whole PC market as the competition between computer vendors will get much more aggressive on the netbook side, where margins are even thinner than those on desktop or laptop markets.

Tags: Intel, Atom