Intel Corp, the world's largest chipmaker, said last night that net first-quarter profit fell 38% from a year ago to $1.3 billion on sluggish demand for personal computer chips.
Intel employs more than 5,200 people at its Leixlip and Shannon plants in Ireland.
The results, amounting to 23 cents a share including stock option expenses, matched Wall Street expectations. Sales fell 5% to $8.9 billion, also in line with analyst forecasts.
Intel also extended its warning about lower revenues, saying it sees a drop of about 3% for its full-year 2006 sales compared with 2005 revenues of $38.8 billion.
Just three months earlier, Intel said it had been expecting a 6-9% increase in sales.
The chip giant has taken its knocks this year as smaller rival Advanced Micro Devices has grabbed market share. But the company said that despite the weakness in the key segment of PC chips, it hopes for improvement later this year.
'We believe PC growth rates have moderated over the course of the past few quarters, leading to slower chip-level inventory reductions at our customers and affecting our revenue in the first half of the year,' said Intel president and CEO Paul Otellini.
Otellini said Intel plans to launch new processors for servers, desktops and mobile PCs in the third quarter, 'giving Intel performance leadership across the server, desktop and mobile segments and setting the stage for a strong second half.'
Intel is betting on this product overhaul to stave off market share losses to AMD, which beat Intel to market last year with a key technology that puts two processing engines on a single chip. That helped AMD gain a bigger share of the lucrative server market.
Some analysts expect Intel to make deep price cuts to clear out its older inventory ahead of the new product releases. The price cuts are expected to hurt Intel's gross profit margin through the September quarter.
