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Intel cuts its Q3 sales forecast by around £1 billion

Intel on Friday lowered its third-quarter sales forecast by as much as $1.6 billion (£999.5 million) while warning of softer than expected demand for its chips in developing markets and the commercial PC market.

The chip giant is now projecting third-quarter revenue of $13.2 billion (£8.2 billion), plus or minus $300 million (£187 million), after originally forecasting sales of $13.8 billion (£8.6 billion) to $14.8 billion (£9.2 billion), Intel said in a statement. The company will report its third-quarter earnings on 16 October, and is kicking off its annual Intel Developer Forum in San Francisco next week.

Intel also reduced its forecast for third-quarter gross margin to 62 per cent, down from 63 per cent, and withdrew its full-year forecast for 2012, saying it would be updated on 16 October.

The lowering of Intel's sales forecast came on the heels of an IHS iSuppli report that suggested a diminishing role for PC microprocessors in an overall global chip market where non-Intel chips used in smartphones and tablets are taking greater shares.

But Patrick Moorhead, principal analyst for Moor Insights & Strategy, contended that there was also evidence that smartphone makers, and not just PC manufacturers, were also feeling the pinch during the slow, shallow recovery from the economic crisis of 2008-09.

"After ARM lowered expectations for smartphones earlier this week, the Intel Q3 warning for lower PC demand was not a surprise to many. This is clearly a macroeconomic issue, reducing growth for both phones and personal computers," Moorhead said.

"The new piece of information here was about decreased demand for business PCs, which mirrors reports from both HP and Dell in their latest earnings reports. One bright spot for Intel continues to be data centres, which are taking advantage of Romley's performance per watt improvements by rolling out the new Xeons into their enterprises," he added, referring to the code name for Intel's latest generation of server chips.

Intel's warning came on the day that a disappointing US jobs report was released. The Labour Department reported that the US economy added just 96,000 jobs in August, well short of the 125,000 or so that had been expected.