UPDATED 14:57 EDT / DECEMBER 12 2011

Intel Slashes Outlook Due to Thailand Disaster

The flooding in Thailand has led to a decline in output for the local hard-drive manufacturing industry, which has become a sore spot for hardware manufacturers considering the plants in the nation  ship the majority of the products on the market. Chipmakers have taken a direct hit, and Intel is clearly no exception.

Today the company lowered its sales expectations for the fourth quarter by $1 billion plus/minus $300 million.  Intel’s margin is also expected to take a slight hit, moving down by half a percentage point to within two points either above or below 64.5 percent. The chipmaker forecasts the hard-drive shortage will last for the next several months.

“Intel added that it expects sales of personal computers to be up sequentially in the period, despite the flooding and PC makers buying fewer chips,” reports The Wall Street Journal.  “The company said it expects hard-disk drive supply shortages to continue into the first quarter, followed by a rebuilding of microprocessor inventories as supplies of hard-disk drives recover during the first half.”

Intel’s shares are down by about four percent to  $23.98. The flooding has affected other stocks as well – competitor AMD slid by 3 percent on the stock exchange, along with PC makers Hewlett-Packard and Dell.

In addition to decreased sales throughout the next few quarters, Intel also has to worry about mounting competition from other chipmakers. AMD is one of them, and its recently launched 16-core Opetron server chips have gained it a lot of momentum in one of Intel’s most profitable markets. ARM is not falling behind either and made  recent pushes in the mobile space such as the launch of a new Android toolkit designed to help developers optimize their apps for handsets running on the firm’s chips.


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