"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.