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Intel CEO Says Holiday Season May Not Lift PC Demand (Update2)
By J.S. Dhaliwall
Kuala Lumpur, Aug. 27 (Bloomberg) -- Intel Corp. Chief Executive Officer Craig Barrett said demand for personal computers and the semiconductors used in them may not rebound during the holiday season this year.
``There is always some anticipation of a holiday season up- tick in computer sales but whether that materializes or not is a question mark,'' Barrett said in an interview with Bloomberg Television.
The world's biggest chipmaker this week released four new PC microprocessors, the fastest yet, and cut the price of an existing chip to try to stoke sales after a prolonged slump in PC demand. The Santa Clara, California-based company will give a revised third-quarter earnings forecast on Sept. 5, Barrett said.
Intel earlier predicted third-quarter sales of $6.3 billion to $6.9 billion. Last week, Bear Stearns & Co. cut estimates for Intel's earnings in the third quarter, 2002 and 2003 on concern that demand for personal computers won't pick up during the rest of the year.
`Hopeless Task'
The semiconductor industry is emerging from the worst year in its 40-year history. Chip sales last year dropped by 32 percent to $155 billion, according to market researcher Dataquest Inc. Semiconductor makers expect the global market to grow slightly this year and some have forecast a rebound next year as customer inventories are depleted and orders pick up.
``Expecting someone to predict when the slowdown's going to end is probably a hopeless task at this stage,'' Barrett said. ``I can't tell you what the prospects are for the next three months.''
``It's difficult,'' he said. ``The computer sector is slow because of lack of corporate investments in IT infrastructure.''
Intel shares traded in Europe fell 35 euro cents, or 1.9 percent, to 18.25 euros at 12:53 p.m. Frankfurt time. The shares fell 17 cents, or 1 percent, to $18.13 yesterday in Nasdaq Stock Market trading. They have fallen 42 percent this year.
Pia Hellbach, who helps manage 40 billion euros ($39 billion) in equities, including Intel shares, at Union Investment GmbH in Frankfurt, said she expects the Christmas season to be weaker than last year. ``We have higher inventories and consumers are more cautious,'' she said. ``We also have no evidence of demand from the corporate side.''
PC Shipments
The Semiconductor Industry Association in June said it expects worldwide chip sales to rise 3.1 percent in 2002. The industry group had earlier forecast 6 percent growth. It sees sales rising 23 percent in 2003.
NEC Corp. and IBM Japan Ltd. last week said they've been forced to backtrack on price increases made three months ago for their personal computers because the higher prices hurt sales just as demand began to recover.
Personal-computer shipments slipped in the second quarter, as fewer consumers bought new machines and inventories became larger, IDC Corp. and Dataquest Inc. said in July.
In light of sagging demand, Apple Computer Inc. cut the prices of its flat-panel iMac computers by as much as 7.1 percent in the middle of August. Prices were reduced after iMac sales fell short of Apple's forecasts, the company said.
Computer-memory chip prices have also declined. The price of the benchmark 128-megabit dynamic random-access memory chip has plunged about 60 percent from its six-month peak on March 5 to $1.73 yesterday, the lowest price this year.
``Most personal computer makers have huge inventories of chipsets,'' Chin Wu, chief executive of Ali Corp., the world's No. 4 supplier of computer chipsets, said in an interview.
Chipsets work with processors such as Intel's Pentium 4 to manage computer functions such as graphics and memory. Ali this year switched most of its production into chips for DVD players because it expected profit margins in the PC business to narrow.
Intel said it's pushing ahead with expansion even amid weak demand for semiconductors. The company plans $5 billion in capital expenditure this year.
``That's what makes you a technology leader, invest continuously even in bad economic times,'' Barrett said. |
