Despite being the slowest season of teh year, the worldwide largest notebook ODM Compal Electronics is seeing a supply gap between 10-20% to its clients in first-quarter 2019 due to Intel's CPU shortages, and the gap will widen in the second quarter, according to company president Martin Weng and vice chairman Ray Chen.

As ODMs will begin delivering orders for the education procurement market in the second quarter and CPUs used in notebooks for such market segments are ones with the most serious shortfall, ODMs' supply gap to clients are expected to grow bigger in the quarter, Chen said.

Currently, Chromebooks have the strongest demand in the education market and Quanta Computer is the largest Chromebook supplier. Compal mostly undertakes orders for Windows-based entry-level models from the education market, but supply of both Chromebooks and entry-level notebooks are expected to be affected by the shortages of Intel's entry-level CPUs, Chen noted.

Intel has shifted most of its 14nm capacity to manufacture mid-range to high-end processors in order to maintain its profitability, but ODMs, which rely on inexpensive mainstream notebook models for revenues, have suffered.

Most market watchers expect worldwide notebook shipments to grow by a single digital percentage sequentially in the second quarter, but supply of CPUs is unlikely to grow, resulting in worse shortages. With Intel's new 14nm capacity expected to come online in the third quarter, the market watchers believe the shortages will be eased, but the supply chain still remain cautious.

Since the third quarter will be the traditional peak season for the notebook market, with shipments to peak in September and October, whether Intel's newly added capacity is able to satisfy its downstream partners' demand will remain to be seen, Chen added.

To ease the pressure, Compal has also been increasing its adoption of AMD's solutions in its notebooks and servers, Weng noted.