IDC Presents Landmark Study Mapping the Global PC Supply Chain: Understanding Linkages Among Semiconductor Suppliers, ODM/EMS Providers, and Branded PC OEM is Key to Success

FRAMINGHAM, MA – JUNE 12, 2007 – IDC today released a landmark study mapping the very complex global PC supply chain. The study highlights key supply chain strategies and trends in the PC industry by identifying the linkages among PC semiconductor manufacturers, motherboard manufacturers, ODMs and EMS providers, and the branded PC OEMs.

"How companies interact in these usually hidden relationships will determine how products evolve, what the prices are, and what features are available," said Shane Rau, program manager for IDC's PC Semiconductor program. "Understanding how to work with different parts of the manufacturing and supply chain is critical to the long-term success of any actor in the PC industry."

"While the dynamic and ever-increasing competitive nature of the PC industry will bring additional challenges in the PC supply chain, opportunities will also be created for companies wherever they may compete in the supply chain," added Michael J. Palma, analyst for EMS at IDC. "Understanding the disparity between the number of components shipped and the number of end PC systems that ship, not only helps identify potential incremental market opportunities for PC products, but also can validate vendors' true share of the total PC market."

Major findings of IDC's PC value chain study include:

— Cost pressure and competition continues to drive PC OEMs to outsource system assembly and testing to the EMS and ODM industry.

— PC components often do not end up in PCs. In 2006, more than five and a half million desktop processors ended up being used in other PC form factors and nearly two million were use in embedded applications. An even greater relative share of x86 server processors were diverted to embedded applications.

— In 2006, processor vendors shipped over 600,000 x86 server processors directly to end customers who built over 200,000 servers. AMD's direct shipments of Opteron processors represented 4.4% of x86 server processors and Intel's direct shipments of Xeon processors represented 0.6% of x86 server processors.

— EMS providers continue to move away from PC system assembly and test even as ODMs migrate to hybrid EMS/ODM models that offer new services.

— While the EMS and ODM industry manufactured virtually 100% of motherboards for desktops, just under one third of the final desktop computers were assembled by the industry.

IDC's study, Mapping the 2006 Desktop PC, Mobile PC, and x86 Server Supply Chains (IDC #206914) describes the PC supply chain model that IDC developed to track the flow and transformation of PC microprocessors, core logic chipsets, and motherboards through the supply chain to finished PC products. The study answers the following questions:

— Where do the chips go, in addition to traditional PC and x86 systems?

— What is the most prevalent PC outsourcing model and where do various EMS and ODM providers participate in the supply chain?

— How are the dynamics in the marketplace affecting the EMS and ODM providers and how are semiconductor suppliers able to influence the supply chain?

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IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 900 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 90 countries worldwide. For more than 43 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting .

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