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Intel Q3 revenue hit by weak demand
Peter Clarke
9/7/2012 9:03 AM EDT
LONDON – Intel Corp. has lowered its forecast for its third quarter revenue and said that it will reduce capital spending for 2012 below the previous minimum estimate of $12.1 billion. In a statement Intel put the lowered revenue forecast down to weak demand due to "a challenging macroeconomic environment."
Intel said it is now predicting 3Q12 revenue of between $12.9 billion and $13.5 billion, compared to the previous expectation of between $13.8 billion and $14.8 billion. The change is a reduction of 7.7 percent in the mid-point of the forecasts.
Intel said that its customers are reducing inventory in the supply chain, in contrast to the normal growth in third-quarter inventory in advance of the equipment builds for the holiday buying season. Intel said there is softness in the enterprise PC market segment; and demand in emerging markets is slowing. However, the data center business is meeting expectations.
The company said that its estimates for R&D and marketing, general and administrative spending in 2012 remain unchanged but that its full-year capital expenditure is now expected to be below the previous outlook of between $12.1 billion and $12.9 billion. Intel said it would accelerate the re-use of existing equipment for the 14-nm manufacturing process node.
Related links and articles:
Chip sales grew slightly in July
London Calling: ARM's East copes with uncertainty
Apple said to cut Samsung memory order
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song-chou-1
9/7/2012 9:57 AM EDT
Paul O. needs a new business model for Intel. No model works for 40 years without adjustment.
It is easy to blame "macro environment" but that will not slow exceptional strong iphone 5 sales which are looking to break all past records.
Intel's problem is the cost of new technologies just keeps going up while the new silicon technologies are offering much less market value in return. To put 3D 22nm finfet in production will cost a record ~$20B capex (~10B/year for 2 years) for little to no real product level improvement (sandy bridge is just as good as ivy bridge to nearly all users).
Going forward intel needs to fund suppliers like ASML ($5B check already) to develop technologies plus even higher capex.
There much be a better way to send ~$25B to get a better ROI in market.
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peter.clarke
9/7/2012 11:32 AM EDT
Song Chou
I don't disagree with much of what you say
BUT the phrase "exceptional strong iphone 5 sales which are looking to break all past records," seems premature.
How do you know iPhone 5 will sell strongly?
I do agree that it is unlikely to have a 20-nm processor inside and could be 45-nm, 32-nm or 28-nm.
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song-chou-1
9/7/2012 3:58 PM EDT
Peter,
Yes "exceptional strong" iphone 5 sales is just a prediction not a fact. We will know shortly. Data I see in supply chain suggest OEMs are building product assuming
(1) iphone sales in Q3/Q4/2012 over 2011 will show strong unit growth
(2) PC sales (laptop,desktop, netbook) will show a year over year decline (even when compared to a weak Q4/2011 due to disk drive shortage)
my point being I don't simple buy Intel's "macro environment" excuse. I think the slow sales result from poor product improvement. Have netbooks even improved in last 3 years? same for sandy vs ivy laptops? Just shocking after you look at how much intel spent to make the new products
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m00nshine
9/8/2012 8:57 AM EDT
It would be quite suprising to see apple release another device with 45nm SOC. I guess it should be 32nm or 28nm.
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lonecowboy
9/7/2012 11:52 AM EDT
Intel will start chopping next week. Could be another big time like 2006...
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goafrit
9/7/2012 8:46 PM EDT
I am not a big fan of Intel. They are using scale to destroy the market without much value.
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rick.merritt
9/7/2012 11:53 AM EDT
Not a good sign for the electronics industry. However, most growth these days is in smartphones, tablets and the LTE infrastructure roll out--places where Intel has no strong play.
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song-chou-1
9/7/2012 4:11 PM EDT
Rick,
I am more optimistic on electronics industry.
Agreed Intel should of said "My revenue is decreasing since (i) Intel only sold miniscule ~100K smartphones since my Atom only runs Android 2.3 and is only at best on part with 3 year old Arm9 and (ii) Intel does not even have an LTE chip yet to market and (iii) Intel does not have any tablet sales (even though we have talked about having 20-30 tablet design wins for the past 2 year)
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goafrit
9/7/2012 8:47 PM EDT
Of course, despite all the noise about apps and software, electronics will drive the world. Without processor, there is no 21st century.
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goafrit
9/7/2012 8:46 PM EDT
$12.1 billion is a lot of money. That is the GDP of most African nations.
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m00nshine
9/8/2012 9:09 AM EDT
Currently, Intel cannot compete in low margin business...it's just not in their corporate DNA. They spend huge amount of money wastefully because they sell parts at a few hundred dollars each, try selling for a tenth of that and it changes their entire manufacturing model. So they are stuck, keep trying to create high margin business at low volume and watch sales stagnate (at a likely high level) or try to get into low-cost, low power mobile business at high volume. I argue that everything from their payroll to their R+D to their Fab infrastructure would have to be overhauled drastically to compete with not only ARM but the companies that make ARM chips like TSMC. And I don't see intel as nimble enough to pull that off.
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KB3001
9/8/2012 9:53 AM EDT
Hardly surprising... this trend will continue.
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resistion
9/9/2012 11:21 AM EDT
Going against ARM should have been nonstarter for them.
http://mobile.atomicmpc.com.au/Article.aspx?CIID=299929&type=News
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resistion
9/9/2012 11:30 AM EDT
Ultrabook offerings were also disappointing thus far.
http://arstechnica.com/gadgets/2012/08/a-worthy-ultrabook-appears-the-thinkpad-x1-carbon-reviewed/
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