Intel has lowered its revenue and profit margin estimates for the year as the personal computer market has stalled. Intel announced that its third-quarter revenue would be $13.2 billion, lower than the company’s previous revenue forecast of $13.8 to $14.8 billion. Intel also said its gross profit margins would drop to 62%, from an earlier estimate of 63%, due to the worsening market.
The PC market has been weak for most of the year with demand in emerging markets, like China, decreasing. Intel said, “The company is seeing customers reducing inventory in the supply chain versus the normal growth in third-quarter inventory, softness in the enterprise PC market segment and slowing emerging market demand.”
Business customers have become cautious as economies have slowed around the world. Lower demand for traditional products is prompting big manufacturers to keep their inventories low while they wait to see what kind of computers are wanted by consumers. Tablets use fewer Intel chips than desktop computers. However, demand for chips in the data centers forming the cloud-computing powerhouses to which mobile computers connect was still strong for the quarter.
Intel’s warning could signal that PC manufacturers are lowering their expectations for the holiday shopping season. However, the slowdown was not unexpected and may not be a reflection of broader economic troubles. As computing becomes a more mobile activity for many users, the desktop computer market is forecasted to shrink.
The latest projection from the analysts at the International Data Corporation predicted that the worldwide PC market would grow by 0.9% this year, to 367 million units. Some analysts expect the market to recover slightly in the last quarter of the year, after Microsoft releases Windows 8, a new version of its Windows operating system. Intel is the primary maker of computer chips and the world’s largest maker of semiconductors.