Intel Feeling The Pinch of PC Sales Decline, to Slow Down Production

intel-slow-growthIntel, the world’s largest maker of processor chips,  is already in troubled times. It has announced that, due to troubled economic conditions, it is slowing down production at its factories because of fewer orders from PC makers. The fourth quarter predictions for Intel hint at non-growing revenues and erosion of margins because the production facilities are underutilized and it is being forced to take inventory write-offs on its books. PC makers are operating with lean inventories because they are waiting for the launch of Windows 8 OS to correct the demand of PCs worldwide. This dull outlook comes on the heels of a report by IHS iSuppli , a research company, that PC shipments are destined to decline during 2012, for the first time during the last eleven years.

CEO Paul Otellini said that the growth of PC market was at half of the normal growth rate. He said that it remains to be seen that how much of this slow growth is attributable to tablets growth and how much is due to the coming Windows 8 launch. IDC research and Gartner have reported recently that PC shipments have declined by 8 percent during the third quarter due to consumers’ preference for tablets and smartphones.

Intel has said that around 140 new Intel powered thin and light ultrabooks will be available during the coming months. 40 of these will be coming with touch screens, powered by Windows 8. It was also stated that Intel processors will be powering more than a dozen hybrid convertible tablet-laptops and around 20 tablets.

Intel is still dominating the PC market with 80 percent of the PCs powered by Intel processors but analysts are skeptic about Intel’s ability to expand into growing smartphones and tablet markets.

However, Intel CEO sounded optimistic. “Intel has a history of navigating the industry’s transitions and emerging better and stronger,” Mr Otellini said.

 

photo by: Ryan Holst