Analyst Predicts Intel Price War, Profit Warning

LONDON — Reading the runes on the World Semiconductor Trade Statistics numbers for April, Bruce Diesen, analyst at Handelsbanken Capital Markets, predicted a profits warning would soon be forthcoming from Intel Corp. where he said processor volumes fell 21 percent and processor prices had fallen 40 percent compared with April 2005.

Diesen said that Intel had stopped trying to make a profit on its current generation of PC processors and had initiated a price war with its rival Advanced Micro Devices Inc. (AMD). The average price of a PC processor in April was less than half what it was in March, Handelsbanken (Stockholm, Sweden) said.

"We expect another profit warning from Intel, guiding Q2 sales to $7.9 billion versus a consensus of $8.4 billion," Diesen said in a note to clients. "After Intel stuffed the channels with chips in February and March, the floor fell out in April, and [PC processor] sales dropped 52 percent year-on-year," he added.

"Intel has obviously given up on making any money on their current generation of processors and has started a price war with AMD," concluded Diesen.

News source: EETimes

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