It is not a secret that ATI Technologies faced unprecedented demand on its R300-based graphics cards. The company probably did not expect such strong demand for its chips in Fall 2002 since it has not been able to fulfill all the orders since December 2002 (see this news-story). We also reported about shortages of ATI VPUs as well as NVIDIA GPUs earlier this Spring (see this news-story) and we also said that the company planned to increase orders for its R300 chips at TSMC in early April (see this news-story) and now ramps up RV350 graphics processors’ production at the same foundry (see this news-story). But even all these measures are not enough! The Inquirer reports ATI’s AIB partners are not satisfied with the supply.

Some companies who wanted to integrate GeForce FX 5800 Ultra in their PCs earlier this year and who eventually faced great shortage of graphics cards based on the well-known unsuccessful NV30 graphics processor decided to go with solutions powered by ATI Technologies’ VPUs. Unfortunately for all, they were not able to get sufficient quantities of ATI’s latest products since there were [and looks like still are] loads of such demanders.

More importantly, our sources said that the yield of ATI RADEON 9800 graphics processor is lower than expected and the company may not be able to supply the chips in sufficient quantities. This was not confirmed by ATI last week, however, if eventually we find out that there are very few ATI RADEON 9800 and 9800 PRO-based graphics cards on the market, we will have an explanation for this.

According to an official from ATI Technologies, the situation with supply is improving. I believe this statement since the company managed to expand its market share and land new orders last quarter. We estimated that there will be more graphics cards powered by ATI’s VPUs sometimes in the second half of the year. It is expected that already in June there will be more RADEON 9500- and 9700-series of products available for purchase.

PS. I wonder if higher demand drives ATI’s revenue for the quarter upwards compared to $300 million expected officially. Also, if rumoured poor yields of the RADEON 9800 VPUs drive the margins down?